Partnerships Flashcards
partnership formation
partnership is the association of two or more persons to carry on as co-owners, a business for profit, whether or not the persons intended to form the partnership. formation of a general partnership does not require much
profit sharing presumption
profit sharing creations a presumption that a person is a partner unless the profits were received in payment of debt, rent, wages
other indicia of partnership: capital contributions, mutual agency. no writing required
partner compensation
partner not entitled to separate payment for services because a partner is compensated by the profits
partners as comanagers
partners are agents and comanagers of the partnership; have equal rights to comanage ordinary affairs even if profits are not shared equally
extraordinary matters
extraordinary matters require unanimous vote from partners, otherwise majority vote for other things
partner liability for debts
in general partnership: partners are jointly and severably liable for partnership debts
incoming partner not personally liable for prior debts of partnership, outgoing partner personally liable for debts incurred during their time at the partnership
partnership fiduciary duties
partners are in a fiduciary relationship with one another and must act in good faith
duty of loyalty: may not usurp opportunities, engage in self-dealing, or compete with partnership
duty of care
duty to account: must account for any profits
dissolution does not end a partnership - it ends once winding up is complete
step one - dissociation: dissolution of partnership is a change in the relation of partners. prior creditors entitled to personal notice, others who knew of partnership entitled to newspaper notice; partner can withdraw by giving notice at any time
step two - winding up: this is where the partnership assets are liquidated and creditors are paid
step three - termination: true end of partnership
