Partnerships 1-10 Flashcards
When is a General Partnership created?
When:
Two or more persons;
As co-owners;
Carry on a business for profit.
*No written agreement or subjective intent is required.
Priority: HIGH
When is a Partnership presumed?
When there is an agreement to share profits equally.
Absent an agreement:
Each partner has an equal vote;
Profits are shared equally; and
Losses are shared the same as profits.
Priority: HIGH
A Limited Liability Partnership (LLP) is where all partners have limited personal liability.
Any partnership may become an LLP upon what two events?
Approval by the same vote that is necessary to amend the partnership agreement; AND
By filing a Statement of Qualification with the Secretary of State.
*Unless otherwise agreed, a unanimous vote is required to amend a partnership agreement.
Priority: Medium
What information must a
Statement of Qualification include?
The name and address of the partnership;
A statement that the partnership elects to become an LLP; AND
A deferred effective date (if any).
*The filing DOES NOT create a new partnership; it continues to be the same entity that existed prior to the filing.
Priority: Medium
What does the court consider to determine whether two businesses are separate entities rather then a partnership?
Whether the business:
Operates under a separate name;
Keeps the files of the business in a separate room;
Uses the same office staff;
Has contributed money to the other person/entity;
Intends to share the profits; AND
Pays rent for a separate office.
Priority: Low
When does a partner have Express Actual Authority to bind the partnership?
Upon receiving said authority from the partners.
Acts within the ordinarycourse of business = approved by a majority vote of partners.
Acts outside the ordinary course = can only be approved unanimously.
Priority: Medium
A partner with Apparent Authoritywill NOT bind the partnership during what circumstance?
The partner lacked authority; AND
The third-party knew or had notice that the partner lacked authority.
Priority: Medium
When does a partner have Implied Actual Authority?
When he has to take actions that are reasonably incidental ornecessary to achieve the partner’s authorized duties.
Priority: Medium
When is an act considered to be within the “ordinary course of business”?
If the act is normal and necessary for managing the business, and a person would reasonably conclude that.
Priority: Medium
What is the liability for General Partners?
Incoming Partners?
Outgoing Partners?
General Partners: Personally liable for ALL obligations of the partnership (joint and severally liability with the other partners).
Incoming Partners: NOT liable for obligations incurred prior to their admission, but still at risk for losing capital contributions made to satisfy partnership obligations.
Outgoing Partners: Remain liable for debts while they were still a partner UNLESS there was a novation/release/payment.
Priority: HIGH
