Partnerships Flashcards
What is a general partnership?
Priority: High
A partnership is an association of TWO OR MORE PERSONS to carry on a FOR-PROFIT BUSINESS as CO-OWNERS.
When is a general partnership created, and what is required?
Priority: High
A general partnership is created when (1) TWO OR MORE PERSONS, (2) as CO-OWNERS, (3) carry on a BUSINESS FOR PROFIT.
No written agreement or formalities are required.
A person’s intent to form a partnership or be partners is not required.
How can you tell if a business arrangement is a partnership?
Priority: High
The key test applied to ascertain whether a business arrangement is a partnership is whether there is a sharing of the profits from the business; if so, such an arrangement generally is presumed to be a partnership, and persons who share in the profit are partners.
In what scenarios does someone share profit from a business without being presumed to be a partner?
Priority: High
Typically, a person who receives a share of the profits of the partnership business is presumed to be a partner unless the profits were received in payment of a DEBT, for WAGES as an employee or independent contractor, of RENT, of an annuity or other RETIREMENT BENEFIT, of INTEREST/LOAN CHARGES, or for the SALE OF THE GOODWILL OF A BUSINESS.
What rights can a partner transfer to another?
Priority: Medium
A partner may transfer the right to share in the profits and losses of the partnership and to receive distributions.
The transfer of that partnership interest creates in the transferee a right to receive distributions to which the transferor would otherwise be entitled.
Does a transferee have the right to access partnership records or participate in the partnership?
Priority: Medium
A partnership must provide its partners and their agents with access to all its records but a transferee is not entitled to participate in the management or conduct of the partnership business or access partnership records.
How can a transferee become a partner?
Priority: Medium
Unless a written partnership agreement states otherwise, ALL PARTNERS MUST CONSENT for a transferee of a partnership interest to become a partner in the business.
What is considered partnership property?
Priority: Medium
All property ACQUIRED BY A PARTNERSHIP (in the name of the partnership) or WITH PARTNERSHIP ASSETS is owned by the partnership and not the partners individually.
How can a partner use partnership property?
Priority: Medium
Generally, a partner may use or possess partnership property only on behalf of the partnership.
Any personal use of the property requires the consent of the other partners.
How may a partner withdraw from a partnership?
Priority: High
A partner has the power to dissociate from the partnership at any time, even if the dissociation is wrongful.
When is a partner’s dissocaition wrongful in an at will partnership?
Priority: High
For a partnership that is unlimited by time or undertaking, a partner’s dissociation is wrongful only when it is in breach of an express provision of the partnership agreement.
What is a partnership at will?
Priority: High
A partnership at will is an open ended partnership that does not have a fixed termination based on a period of time or particular undertaking.
When is a partnership at will dissolved?
Priority: High
A partnership at will is dissolved when a partner chooses to dissociate from the partnership by giving notice of withdrawal.
What rights does a dissociated partner have?
Priority: High
A dissociated partner generally does not have the right to participate in the management or conduct of the partnership business.
What happens to a partners duties after dissociation?
Priority: High
A partner’s duty not to compete terminates upon dissocation.
The dissociated partner’s other duties of loyalty and care terminate with respect to post-dissociation events, unless the partner participates in winding up the partnership’s business if the partnership itself dissolves.
