Partnerships Flashcards
General partnership -At least how many people?
2 or more; no agreement necessary
Key Test - _______ Sharing
Profit
Duty to Deny
When held out as partner without consent, no duty to deny representation.
Partnership Liability
Unlike Corps with shareholders, partners have no protection from personal liability for partnerships obligations.
Partnership Agreement _______
Governs
Partner Duties
Loyalty - refrain from competing, advancing adverse interest, usurping partnership opportunity UNLESS partner accounts to partnership for such benefit. | Duty of Care
Partnership profits/losses
Agreement controls. Absence of, equal share. When only profits are mentioned in agreement, profit and losses are are direct proportion (70/70)
Partners cannot ______ distros
Demand. Can’t be forced to accept either.
Partnership NO interest in
Partnership property, - Assuming have to sell and then get assets. | All property acquired by partnership belongs ONLY to partnership, not partners.
Transfer of Partnership
Does not trigger disso, does not trigger dissoc, gives transferred to party rights to distros only. (Can’t do management or voting). [Partnership Agreement can brick transfer].
To bring in a new partner:
Consent of ALL existing partners.
Decisions made by Partnership
Ordinary business - Majority; Special - ALL.
Partner services to partnership
No renumeration for this: Exception for business wind up.
Partnership Loan Reimbursement
Partner can make loan to partnership. Partnership pays it back including interest.
Partner Liability Indemnification
Partner can incur liability for partnership business. Partnership is required to indemnify.
Personal Use of Partnership Property
Personal benefit usage means has to compensate partnership
Partnership records
Absolute right to inspection for current and past partners (limited to when they were a partner)
Dissociation Triggers
Expulsion, random events, bankruptcy, termination of entity partner (LLC/Trust)
Dissociation results
Partners must buy out interest.
Statement of Dissoc
Kicks in after 90 days.
Partnership Liability Dissoc
Partners liable for items that occurred PRIOR to Dissoc
Third Party Relationship - Contractual Binding
Apparent authority exists unless third party knows or given notification. Real property equal automatic knowledge if SoA is filed.
Partnership Liability for:
Tortious Acts (Fraud, etc).
Judgment against Partnership Assets
Judgment against partnership is not against partner unless against specific partner. Partnership assets get tapped first before partner. (bankruptcy, consent, or independently liable are exceptions)
Events Causing Dissolution
(i) At will; (ii) term; (iii) all partners agree to term; (iv) Partner gets dissoc’d due to death, bankruptcy, etc, and within 90 days at least half of remaining partners agree to dissolve.
Winding Up
Any person not wrongfully dissoc’d, judicial supervision - Can dispose/transfer property and discharge liabilities.
Creditor order partnerships
Creditors first (even internal ones) External first, internal second. Partnership can be necro’d if all agree to waive termination
LLP REq’s
Need to file Cert of Limited Partnership with the State
Effective LLP Date
Active on filing of cert
Failure to File LLP
Parties still assume liability as if they are GP’s. Same also if mislisted as GP.
How to become LP in LLP
Consent of All, merger, partnership agreement, conversion.
LLP Approval of ALL limited partners when
Amending cert, admitting any new partners, expulsion of partner, disposing of property, compromising partner’s obligations on cont/improper distro
LLP Distros
Profits/Losses based upon contri.
Suing partnership
Partnership entitled to receive. Also, partner can get back expenses, att. fees.
Court Order Disso of LP requires
Partner demo not reasonably practicable.
LP Merger or Conversion approval requires
All GP and LP WHO own majority of rights to receive distros.
Buyout Rights
Gets buyout payable if wind up + interest, when term would expire. Can only get early if not undue hardship on business.
LLP name must end with
LLP or RLLP
Statement of Disso cannot be filed when
No registration made.
LP Certs don’t need
LP names/addresses.
How to limit own authority in Partnership
Statement of Denial
Foreign LP are and require?
Anything outside of state (not just international), require Cert of Authority to do busines.
Merger and liability
Merger does not destroy personal lia for obligations.
LP Apparent Authority Timing
Lasts for 2 years without SoD. GP is one year.
Partnership CAN but not required to file
Registration Statement
Minors lack
Capacity as partner
Math for Debts
Paying more than share entitled to contribution from others to equalize share. Rest is split evenly.
Transferee of Interest can get
Accounting, but only on Dissolution.
Creditor claim order when partnership assets are toast
Individual and Partnership creditors have equal claim here.
Have to serve all partners if
want to go after individual partner assets
LLP Distros
SAME AS GP. Unlike LP unless otherwise stated.
Limit Authority to transfer Real Prop
Stat of Auth with DoS AND with county recording office where prop is located. GP has to file Reg Statement beforehand to do this though (GP doesn’t require RS normally)
Foreign LP Application req
Name and business address of gen partners, signature of all gen partners, name of partnership.
LP written agreement req’s
Cash amount/value of services for each partner, disso events, contribution times, transferable interest info for party who is gp and lp.
GP when partner can be charged with fraud
Only if they participated (knowledge of isn’t enough…okay)
LP appraisal rights not available when
pub traded, 500 partners, and 10m market value.
Merger plan of GP req’s
unan vote/consent must be evidenced in writing or record.
