Partnerships Flashcards
1
Q
General Partnership
A
association of two or more persons to carry on as co-owners of a business for profit, whether or not the persons intended to form the partnership.’”
profit sharing - rebuttable presumotion of a P, unless it is for rent, debt, etc
2
Q
General Partnership Formation Timing
A
formed as soon as it happens, regardless of whether the parties subjectively intended to form a partnership
3
Q
General Partnership Determination
A
courts generally look to the intent of the parties
4
Q
General Partnership Determination Question
A
“did the parties intend to carry on as co-owners a business for profit is just another way of asking whether their association meets the definition
5
Q
Factors for Deciding Whether Partnership Exists
A
(1) sharing of profits raises presumption of partnership
(2) Right to Participate in Control
6
Q
Sharing of Profits Raises Presumption of Partnership
A
sharing of profits raises a presumption of partnership unless the share was received as payment of a debt, as wages or compensation, for services rendered, as rent payment, as an anunity or other retirement benefit, as interest on a loan, or for the sale of goodwill of a business
7
Q
Profit Sharing - Rebuttable Presumption
A
if there is profit sharing, and therefore a presumption of partnership status, one can try to rebut that presumption with evidence suggesting the lack of co-ownership relationship
8
Q
Additional Evidence of Partnership
A
these do not raise a rebuttable presumption: (A) title to property is held in joint tenancy or tenancy in common(B) parties designate their relationship as a partnership(C) venture undertaken by the parties requires extensive activity(D) sharing of gross returns
9
Q
Writing if More Than One Year
A
if partners wish to have an enforceable agreement to remain partners for more than one year, they generally must execute a writing reflecting their agreement
10
Q
Partnership by Estoppel
A
A partnership created by law when a person holds him or herself out as a partner in an existing or apparent partnership and a third party relies on the person’s representation.
OR
A partnership doesn’t exist, but a person is treated as a partner of the purported partnership
11
Q
Liability of Person Held out as Partner
A
when a person by words or conduct represents himself as a partner or consents to being represented by another as a partner, he will be liable to third parties who extend credit to the actual or apparent partnership in reliance on the representation
12
Q
No Presumption of Partnership When “Holding Out”
A
a person held out by another as a partner is not liable as a partner unless they actually consent to the holding out - mere failure to deny a representation of the partnership does not give rise to liability as a purported partner
13
Q
Partnership Agreement Form
A
partnership agreements may be written, oral, or implied
14
Q
Partnership’s Entity Status
A
partnership is a legal entity distinct from its partners - may sue or be sued in the partnerships name
15
Q
Additional Formation Considerations
A
(a) capacity - anyone who is capable of entering into a binding contract may be a partner
(b) legality of purpose - must have legal purpose or its void(
c) consent - no one can become a partner without the express or implied consent of all partners
(d) Statement of partnership authority
16
Q
Statement of Partnership Authority
A
may choose to file a statement of partnership authority with the secretary of state, which can give constructive knowledge of the extent of the partner’s authority with regard to the partnership
17
Q
Governing Law of Partnership - No Agreement or Silent Agreement
A
the Revised Uniform Paternship Act provides a default set of rules - if agreement RUPA will provide for issues not in the agreement
18
Q
Governing Law - Partnership Agreement
A
partners are free to agree through a partnership agreement - to abide by different rules for governing the relationships among themseleves
19
Q
Partner’s Equal Rights
A
all partners have equal rights in
the management decisions of the business and
equal votes (one vote - one partner)
20
Q
Decisions within Ordinary Course of Business
A
decisions regarding matters within the ordinary course of partnership business requires a majority vote of the partners
21
Q
Decisions outside the Ordinary Course of Business
A
matters outside the ordinary course of partnership business require the unanimous consent of all partners
22
Q
No Right to Salary/Compensation
A
unless otherwise agreed, a partner has no right to compensation for services rendered to the partnership
23
Q
Partner Who Fails to Follow Through Promise
A
if a partner has impliedly or expressly promised to devote time to the partnership, and fails to do so, they may be charged in accounting for damages caused to the partnership
24
Q
Partners’ Accounts
A
each partner is deemed to have an account that is credited with an amount equal to the partner’s contribution plus his share of any profits and debited with the partner’s share of any losses and partnership liabilities
25
Partner Profits at Partnership's Expense
where a partner personally profits at the expense of the partnership, the partner must account to the partnership for those profits
26
Partner's Entitlement at Dissolution
upon dissolution, a partner is entitled to settlement of their account
27
Indemnification of Partners
a partnership must indemnify every partner with regard to payments made and obligations reasonably incurred in carrying on the partnership business
28
Partner's Advance
if a partner makes a payment or advance on behalf of the partnership beyond the contribution the partner agreed to make, the payment or advance constitutes a loan that must be repaid
29
Rights to Books and Information
each partner has a right to inspect and copy the partnership books stored at the cheif executive office
30
Demand Full Information
upon demand, each partner must render true and full information of all things affecting the partnership
31
Legal Actions Against Partner by Partnership
a partnership may sue a partner for breach of the partnership agreement or of a duty owed to the partneship
32
Legal Actions Against Partnership by Partner
a partner may sue the partnership or other partners to enforce a right created by partnership act or agreement, or a right otherwise belonging to the partner
33
R.U.P.A. Agency Presumption
generally provides that each partner is an agent of the partnership for the purposes of its business
34
Partnership Liability in Tort
a partnership is liable for loss or injury caused to a person as a result of the tortious conduct of a partner (or an employee) acting in the ordinary course of business of the partnership or with authority of the partnership
35
Partnership Liability in Contract
a partnership is liable for all contracts entered into by a partner in the scope of the partnership business or with actual or apparent authority of the partnership
36
Partnership Liability in Contract - Actual Authority
actual authority is the authority a partner reasonably believes they have based on communications between the partnership and the partner
37
Partnership Liability in Contract - Actual Authority Sources
(a) partnership agreement
(b) vote of the partners
(c) statement of partnership authority
38
Partnership Liability in Contract - Actual Authority - Statement of Partnership Authority
actual authority can also be created by the partnership's filing of a statement of partnership authority with the secretary of state
39
Partnership Liability in Contract - Transactions Involving Reall Property - Third Parties
grants of and restrictions on partner authority to transfer partnership real property in the statement are binding on third parties if the statement is also recorded in the county where the property is located
40
Partnership Liability in Contract - Apparent Authority
RUPA provides that a partner is an agent of the partnership, and that a partner has apparent authority to bind the partnership to transactions within
the ordinary course of the partnership's business OR
business of the kind carried out by the partnership (unless the third party is knew or was notified that the partner lacks actual authority to do so)
41
Partnership Liability in Contract - Knowledge under R.U.P.A.
knowledge means subjective knowledge - what the person actually knew - not what they should have known based on the circumstances
42
Partnership Liability in Contract - Notification under R.U.P.A.
a notification is effective either when it comes to the persons attention or when it is duly delivered
43
Partnership Liability in Contract - Transfers of Partnership Property Lacking Authority
if the transferring partner lack authority, the partnership may recover the porperty from the initial transferee but not from the a subsequent bona fide purchaser
44
Liability of Partnerships - Joint and Several
a defining characteristic of a partnership is that **each partner** is **jointly and severally liable** for all obligations of the partnership wither arising in tort or contract
45
Plaintiff's Recovery Against Partners and Partnerships
a plaintiff must first try to recover from the partnership's assets before seeking to recover from personal assets - a judgment is not personally binding on a partner unless they have been served and the creditor has exhausted partnership assets, or exhaustion is excused by agreement or court order because the partnership is bankrupt
46
Extent of Partnership Liability
each partner is personally liable and individually liable for the entire amount of partnership obligations
47
Liabilities of Newly Admitted Partners
a newly admitted partner is not personally liable for partnership obligations that arose before their admission - they can only lose the amount of their investment in the partnership
48
Liabilities of Disassociating Partners
an outgoing or disassociating partner remains liable for obligations arising while they were a partner unless there has been payment, release, or novation - an outgoing partner can also be liable for acts done after dissociation
49
Criminal Liability of Partners
partner is generally not liable for partners crimes unless the other partners participated in the commission of the crime either as principals or accessories
50
Notice Under R.U.P.A.
a partner has notice of a fact when the partner: (1) has actual knowledge of the fact(2) is notified of the fact(3) has reason to know of the fact based on the surrounding circumstances
51
When is Notice Effective?
notification is effective not only if and when it comes to a partner's attention, but also when it is delivered to a place of business held out by the partner as a place for receiving communications
52
Impute of Notice
a partner's notice of a fact relating to the partnership is imputed to the partnership immediately unless the partner having notice is participating in a fraud against the partnership
53
Four Fiduciary Duties Owed to the Partnership/Partners
(1)** duty of loyalty** (unless falls under safe harbor)
(2) **duty of care **
(3) **duty of good faith adn fair dealing **
(4) **duty to account ** for any profits
NOTE: these duties terminate upon dissociation
54
Fiduciary Duty - Duty of Loyalty
requires each partner: (1) to account to the partnership for any benefit derived by the partner in conducting the partnership business, using the partnerships property, or appropriating a partnerships opportunity (2) to refrain from dealing with the partnership in the conduct of its business as a party having an interest adverse to the partnership and (3) to refrain from competing with the partnership in the conduct of its business
55
Fiduciary Duty - Duty of Care
requires each partner to refrain from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of the law
56
Fiduciary Duty (Statutory) - Duty of Disclosure
a partner also has a duty to provide complete and accurate information concerning the partnership
57
Fiduciary Duty (Statutory) Duty of Disclosure under R.U.P.A.
each partner and the partnership shall furnish to a partner: (1) without demand, any information concerning the partnership's business and affairs reasonably required for the proper exercise of the partner's rights and duties and (2) on demand, any information concerning the partnership's business and affairs (except to the extent demand or the information demanded is unreasonable or otherwise improper under the circumstances)
58
Fiduciary Duty - Duty of Obedience
duty of obedience requires the partner to obey all reasonable directions of the partnership and not act outside the scope of his or her authority
59
Partnership Agreement - Elimination of Duties
May eliminate: duty of disclosureMay Not eliminate: duty of loyalty or care
60
Partnership Capital
property or money contributed by each partner for the purpose of carrying on the partnership's business
61
Partnership Property
everything the partnership owns, including both capital and property subsequently acquired in the partnership transactions
62
Common Law on Partnership Property Determination - Property Deemed to Be Partnership Property
titled property is partnership property if it is acquired **in the partnership's name **or in a partner's name where it is apparent from the document that they are acting for a partnership
63
Partnership Property Determination - Property Presumed to be a Partnership Property (R.U.P.A.)
property is rebuttably presumed to be partnership property if it was purchased with partnership funds, regardless of in whose name it is titled
64
Partnership Property Determination - Property Presumed to be Separate (R.U.P.A.)
property is rebuttably presumed to be a partner's property if: (1) its held in the name of one or more partners, (2) the instrument transferring title gives no sign that theyre acting for the partnership, and (3) partnership funds were not used to acquire the property
65
Common Law Determination of Untitled Property (RUPA Inapplicable)
(1) acquisition of the property with partnership funds(2) Use of the property by the partnership in conducting the partnership's business(3) entry of the property in the partnership's books a an asset(4) a close relationship between the property and the business operations of the partnership(5) improvement of the property with partnership funds(6) maintenance of the property with partnership funds
66
Partnership's Rights in Partnership Property
totally unrestricted, but a partner cannot derive a personal benefit from the use or possession of partnership property
67
Partner's Rights in the Partnership Property
not a co-owner of partnership property and the partner has no interest in the property which can be transferred - can simply use property for partnership purposes
68
Partnership Interest
partner's ownership interest in a partnership - personal property of the partner
69
Partnership Interest Rights
(1) management rights(2) financial rights
70
Partnership Interest Rights - Management Rights
partner's right to participate in the management of the business, to obtain information about it, and to be recognized as a partner
71
Partnership Interest Rights - Financial Rights
partner's right to receive his share of any profit distributions made by the patnership)
72
Unilateral Transfers of Management Rights Prohibited
unless otherwise agreed, a partner cannot unilaterally transfer his management rights and thereby make the transferee a partner
73
Default Rule for Partnership Admission
requires a unanimous vote of the existing partners
74
Unilateral Transfer of Financial Rights Permitted
a partner can unilaterally transfer his financial rights - transferee merely has the right to the profit distributions from the partnership that would have otherwise gone to the partner
75
Dissociation
change in the relationship of the partners caused by any partner ceasing to be associated in the carrying on of the business - partner withdraws or bows out
76
Events of Dissociation
(1) oral or written notice of the partner's express will to withdraw
(2) happening of an agreed event
(3) valid expulsion of the partner
(4) the partner's bankruptcy or the appointment of a receiver for a partner
(5) the partner's death or incapacity to perform the partnership's duties
(6) the decision of a court that the partner is incapable of performing a partner's duties
(7) termination of a business entity that is a partner
77
Notice of A Partner's Dissociation
notice of a partner's express will to withdraw from a partnership will automatically trigger dissolution of the partnership
78
Notice of A Partner's Dissociation
notice of a partner's express will to withdraw from a partnership will automatically trigger dissolution of the partnership
79
When Does Wrongful Dissociation Occur?
(1) dissociation is in breach of an express term in the partnership agreement(2) withdraws, is expelled, or becomes bankrupt before the end of the term
80
Wrongful Dissociation Liability
a partner who wrongfully dissociates is liable to the partnership for any damages caused by the dissociation
81
At-Will Partnership (Default)
an at will partnership is one where the partners have not agreed to remain partners until the expiration of a definite term or the completion of a particular undertaking
82
Term Partnership
it is a partnership where the partners have agreed, explicitly or implicitly, to remain partners for a definite term or until the completion of a particular undertaking
83
Consequences of Dissociation - For Partnership
one of two statutory avenues is implicated:
(1) the partnership is dissolved and that its business must be wound up - partnership business will be liquidated OR
(2) partnership continues in existence with the dissociated partner **becoming entitled to a buy out of their interest**
84
Consequences of Dissociation - For Partner
partnership must purchase their interest at either liquidation or going concern value, and must indemnify them against known pre-dissociation liabilities as well as against post dissociation liabilities not incurred by the dissociating partners acts
85
Consequences of Dissociation - For Wrongdoing Partner
partner who wrongfully dissociates before the expiration of a partnership term or completion of a particular undertaking is not entitled to payment of the buyout price until the term expires or the undertaking is completed unless, they can establish that earlier payment will not cause undue hardship to the partnership business
86
Two Main Dissolution Circumstances
(I) when a partner dissociates by express will in an at-will partnership, the partnership is dissolved and its business must be wound up and (II) in a term partnership, if one partner dissociates wrongfully, or if dissociation occurs because of a partner's death or bankruptcy, dissolution and winding up of the partnership are required only if, within 90 days after the dissociation, at least one half of the remaining partners agree to wind up the partnership
87
Buyout and Continuation
if a partner's dissociation does not result in dissolution and winding up, the partner is entitled to receive a buyout of his partnership interest - remaining partners continue on
88
Liability of Dissociated Partner - Pre Dissociation
a dissociated partner remains liable for pre-dissociation partnership obligations
89
Liability of Dissociated Partner - Post Dissociation
can be liable for post-dissociation partnership liabilities incurred within two years after the dissociation (presuming no dissolution) if: (i) when entering the transaction the other party reasonably believed the dissociated partner was still a partner and (ii) did not have notice of the partners dissociation
90
Protection of Dissociating Partner After Dissociation
a dissociated partner (or the partnership) can protect themselves by notifying creditors directly (effective immediately) or by filing a public notice of dissociation (effective 90 days after filing)
91
Dissociated Partners Power to Bind Partnership (Through Apparent Authority)
a partnership can be bound by an act of a dissociating partner undertaken within two years after dissociation if: (i) the act would have bound the partnership before dissociation and (ii) the other party to the transaction (a) reasonably believe the dissociated partner was still a partner and (b) did not have notice of the dissociation
92
Dissolution
if the assets of the partnership are insufficient, individual partners are required to contribute in accordance with their loss shares
93
R.U.P.A. Dissolution Cases
pg 27
94
Priority of Distribution After Dissolution
(1) the partnership must pay all outside and inside creditors (trader creditors, suppliers, partners who loaned money)(2) the partnership must repay all capital contributions paid into the partnership by partners(3) profits and losses, if any
95
Partnership After Dissolution - But Before Winding Up
partnership **continues to exist** after dissolution until the partnership is wound up
Must be wound up completely before P is ended
P liable for any liabilities incurred during winding up phase
96
Who May Wind Up
all living partners have a right to participate in the winding up of a partnership's business except partners who have wrongfully dissolved the partnership and bankrupt partners
97
Partner's Ability to Bind to Third Party on New Business
partners retain apparent authority to bind the partnership to a third party on a new business even after an event requiring winding up
98
Partner's May Waive Dissolution and Continue
anytime before the winding up of the partnership business complete, the partners may decide to waive the dissolution and continue the partnership by unanimous vote of the partners who have not wrongfully dissolved
99
Limited Partnership
limited partnership is a partnership with at least one general partner and at least one limited partner
At least one GP must be listed on the certificate filed with the state
100
Limited Partnership Liabilities
general partner is personally liable for partnership obligations, while the limited partner generally does not have any liability beyond the liability to make agreed upon contributions
101
Difference between Limited and General Partnership
a limited partnership can be created only by filing a certificate of information with the state
102
Certificate of Limited Partnership
must be fled with the secretary of state
103
Certificate of Limited Partnership Requirements
signed by all general partners - information required: (1) name of the partnership(2) the names and addresses of the agent for service of process and (3) the names and addresses of each general partnershould also include whether limited liability partnership
104
Agent for Service of Process
a limited partnership must maintain in the state an agent for the service of process
105
Name
limited partnership name must contain the phrase limited partnership or the abbreviation LP or LLLP
106
Limited Partnership Agreement
can be written, oral, or implied
107
General Partners
has equal rights to the management and conduct of the LPs activities - any matter relating to the partnership's ordinary business activities may be exclusively decided by the general partner or majority of general partners
108
Vote of All Partners When:
unless otherwise agreed, the vote of all partners is necessary for certain extraordinary activities including:(1) amend the agreement(2) convert the partnership to a limited liability limited partnership(3) dispose of all or substantially all of the partnership's property outside the usual and regular course of the partnership's business(4) admit a new partner(5) compromise a partner's obligation to make a contribution or to return an improper distribution
109
Limited Partnership Financial Rights
unless otherwise agreed, distributions from an LP are made on the basis of a partner's contribution
110
When a Limited Partnership May Not Make a Distribution
if after making the distribution the limited partnership would be unable to pay its debts as they become due or the total assets would be less than the sum of its total liabilities, including sums needed to satisfy superior preferential rights upon dissolution
111
Partners Rights to Distributions
a partner has no rights to distributions unless the partner makes a contribution to the partnership - a contribution may be in the form of any benefit to the partnership
112
Partner's Contribution Obligation
not excused by death or other disability and may be compromised only on the consent of all partners
113
Improper Distribution Liability of General Partner
a general partner who consents to an improper distribution is personally liable to the limited partnership for the amount that the distribution exceeds what could properly have been distributed
114
Improper Distribution Liability of Partner Receiving Distribution
any partner who receives an improper distribution knowing that it is improper may be forced to return the improper amount
115
Expulsion Grounds
transfer of a partners entire transferable interest in the partnership is grounds for expulsion
116
General Partner Liability
jointly and severally liable for all obligations of the LP, just as they are in a general partnership
117
Incoming Partner Liability
a person who becomes a general partner of an existing limited partnership is not personally liable for an obligation that the limited partnership incurred before he become a general partner
118
Torts of Limited and General Partners
the limited liability shield of any business organization does not protect a person from liability for their own torts
119
Fiduciary Duties of General Partner
a general partner owes the LP and the other partners the same fiduciary duties of loyalty and care that general partners owe in a general partnership - does not automatically violate the duty of loyalty merely because the general partner's conduct furthers his own interests
120
Fiduciary Duties of Limited Partner
limited partner owes no fiduciary duty to the partnership or another partner solely by reason of being a limited partner - they are free to compete with the partnership and have interests adverse to those of the partnership unless the partnership agreement provides otherwise
121
Limited Partner's Liability to Third Parties
if the partnership is formed as per the limited partnership statute and the partner is not a general partner, liability is limited to their contribution
122
Right to Dissolve
any partner may apply for a decree of dissolution of the limited partnership whenever it is not reasonably practicable to carry on the business in conformity with the partnership agreement
123
Direct Action Against Limited Partnership by Partner
a partner ay maintain a direct action against the limited partnership or another partner for legal or equitable relief to enforce their rights or interests
124
Derivative Action
a partner may maintain a derivative action to enforce a right of a limited partnership if the partner makes a demand on the general partners to bring an action to enforce the right and the general partners do not bring the action within a reasonable time or demand would be futile
125
Who May Bring a Derivative Action
only by a person who is a partner at the time the action is commence and (1) who was a partner when the conduct giving rise to the action occurred; or (2) whose status as a partner developed upon him by operation of law or pursuant to the terms of the partnership agreement from a person who was a partner at the time of the conduct
126
Right to Information by limited partner
each limited partner has the right to inspect and copy any partnership records required to be maintained
127
Indemnification of General Partners
the limited partnership must indemnify a general partner for liabilities that they incur in the ordinary course of the activities of the partnership
128
Admission of Additional General and Limited Partners
a person may be admitted to the limited partnership as a general or limited partner as provided in the partnership agreement, as a result of a merger or conversion, or on the consent of **ALL** partners
129
Conversion and Merger
a limited partnership may convert to or merge with another form of business entity upon the consent of all partners and filing of a certificate (of conversion or merger) with the secretary of state
130
Events Causing Dissociation
events that will cause dissociation of a partner in a general partnership will also cause dissociation of a partner in a limited partnership
131
Limited Partners Right to Dissociate
a limited partner has no right to dissociate before termination of the limited partnership
132
Effect of Dissociation on a Limited Partner
a limited partner is treated as a transferee of the limited partner's transferable interest
133
Effect of Dissociation on a General Partner
similar to the effects of dissociation of a partner in a general partnership
134
Dissolution of Limited Partnership Common Methods
(a) may be judicially dissolved upon application of a partner if it is no longer reasonably practicable to carry on the limited partnership in conformity with the agreement(b) administratively dissolved by the secretary of sate for failure to pay fees or file an annual report but the partnership may apply for reinstatement by curing the defect within two years of the dissolution
135
Dissolution of Limited Partnership Other Methodologies
(i) happening of an event specified in the agreement (ii) consent of all general partners and limited partners hold a majority of the right to receive distributions(iii) after dissociation of a general partner, upon consent of partners owning a majority in interest if another general partner remains; if no general partner remains, after 90 days unless the partners admit a new general partner(iv) ninety days after dissociation of the last limited partner, unless a new limited partner is admissed within 90 days
136
Other Methodologies for Dissolution
(i) happening of an event specified in the agreement (ii) consent of all general partners and limited partners holding a majority of the right to receive distributions(iii) after dissociation of a general partner, upon consent of all partners owning a majority of the in interest if another general partner remains; if no general partner remains, after 90 days unless the partners admit a new general partner(iv) ninety days after dissociation of the last limited partner, unless a new limited partner is admitted within 90 days
137
Winding Up
a limited partnership continues after dissolution only for the purpose of winding up - partners must discharge liabilities, settle and close partnership activities, and marshal and distribute its assets
138
Power to Bind Partnership after Dissolution
a partnership will be bound by any acts of a general partner that are appropriate for winding up the partnership - also bound by acts of a general partner that are not appropriate for winding up the partnership if the acts would have bound the partnership before dissolution and the party with whom the general partner dealt did not have notice of dissolution
139
Distribution of Assets upon Winding Up
(1) first to creditors (including partners who made loans to the limited partnership) (2) second, any surplus must be paid in cash as a distribution
140
Distributions Where Assets are Insufficient to Satisfy Debts
each person who was a general partner when the obligation was incurred must contribute to the partnership to satisfy the obligation - contribution is in proportion to the right to receive distributions in effect when the obligation was incurred
141
Partner Who Pays Additional
a person who pays additional contribution may recover from any person whose failure to contribute necessitated the additional contribution, but may not recover more than the amount additionally contributed
142
Limited Liability Partnerships (LLP)
an LLP all partners have limited liability (that is, no partner is personally liable for a partnership obligation beyond their contribution to the partnership) - apply general partnership rules
BUT, they are still liable for personal torts
143
Limited Liability Limited Partnership (LLLP)
the general partners and the limited partners have limited liability for the obligations of the business - apply limited partnership rules
144
Formation of a Limited Liability Partnership
must file a statement of qualification with the secretary of state - executed by two partners
145
Required Information of Statement of Qualification
(1) the name and address of the partnership (2) a statement that the partnership elects to be an LLP(3) a deferred effective date, if any
146
Time for Becoming an LLP
becomes LLP when statement is filed or the date specified within - whichever is later
147
Name of an LLP
must end with the words "registered limited liability partnership" or "limited liability partnership" or LLP, LLP, RLLP or R.L.L.P.
148
LLP Voting
terms and conditions on which a partnership becomes an LLP must be approved by whatever vote is necessary to amend the agreement or, if specified, the vote necessary to amend the contribution obligations of the partners
149
LLP Voting if Partnership Agreement is Silent
if the agreement is silent as to how it may be amended, all partners must approve the terms and conditions of the partnership becoming an LLP
150
Liability in LLP
a partner is an LLP is not personally liable for the obligations of the LLP, whether arising in tort, contract, or otherwise - just personally liable for their own wrongful acts
151
Partnership Assets Insufficient to Indemnify
if partnership assets are insufficient to indemnify them for an obligation they incurred on behalf of the LLP, they forfeit the right to receive contributions from other partners in exchange for being relieved of the obligation to contribute for their personal liability
152
What can a Creditor get in a partnership when they come to collect? (individual partner v. partnership itself)
If a creditor has a claim **against a partner**, the creditor can obtain an interest in the partnership. This includes profits but not management or voting rights.
If a creditor has a claim **against the partnership**, the creditor can try to collect from the individual partners.
153
154
When a partner dissociates, are they entitled to a buy out?
When a partner dissociates from the partnership** but** the partnership is* not* dissolved, the partnership** must buy out** the dissociated partner’s partnership interest
A dissociated partner may **maintain an action against the partnership to determine the buyout price and to compel the partnership** to pay that amount to the partner.
155
Does an "at will" partnership dissolve if just 1 partner leaves?
Yes, this dissolves the at-will partnerhsip
How the remaining partners can continue:
Once a partnership has been dissolved, but before the winding up of its business is complete, the partnership **may resume** carrying on its business as if dissolution had never occurred.
But, in order to do so, all partners (including any properly dissociated partners) **must agree to waive the right to terminate** the partnership.
156
When does a transaction require approval of all members of a parternship (or LLC)?
A transaction or purchase **OUTSIDE THE OCB** requries approval of all the partners/members.
157
Does dissolution of an LLC member trigger dissolution of the LLC?
NO, unlike an at-will partnership, dissolution of one member will not trigger dissolution of the LLC
