Partnerships Flashcards
What is the required intent to form a partnership?
Specific intent to carry on a for-profit business as co-owners
True or False: When there is no partnership agreement regarding division of losses, losses are divided in accordance with capital contribution.
False
A partner’s apparent authority depends on the _________________
partnership’s communication with third parties
What is the key test to ascertain whether a business arrangement is a partnership?
Whether there is a sharing of the profits from the business
What is required to become an LLP?
A partnership must file a statement of qualification with the Secretary of State (SOS). A partnership becomes an LLP at the time of filing of the statement or on the date specified in the statement.
What is required to become a corporation?
A de jure corporation is one that is formed in accordance with the law. Corporate formalities require that the articles of incorporation be filed with the SOS. The advantage of operating as a corporation is that the shareholders are shielded from personally liability for the corporation’s obligations.
Who are members?
Members are owners of an LLC.
Who are sharholders?
Shareholders are owners of a corporation.
Where does express authority come from?
It can arise from the partnership agreement itself, an authorization of the partners, or a statement of authority filed with the state.
What is implied authority based on?
A partner’s reasonable belief that an action is necessary to carry out his express authority.
Where does apparent authority come from?
Apparent authority exists if the partnership holds a partner or employee out as possessing certain authority, thereby inducing others to reasonably believe that such authority exists. The third party must reasonably rely on the holding out.
