Partnerships Flashcards
Formation of a General Partnership
- usually a YES on the MEE if they are asking
A partnership is the association of
(1) 2 + PEOPLE;
(2) carry on as CO-OWNERS
(3) a business FOR PROFIT
INTENT = IRRELEVANT
Profit Sharing and Partnerships
PRESUMPTION that there is a partnership if PROFIT SHARING
Other facts to show Partnership exists
capital contributions, mutual agency
Do you need writing or certificate to form a General Partnership?
NO
Do partners have equal rights to comanage ordinary affairs?
YES
If disagreement in Partnership what do you do?
Majority vote wins if disagreement
Extraordinary Matters require ______ vote
unanimous
In a General Partnership Partners are _______ for partnership debts.
JOINTLY AND SEVERALLY LIABLE
Is an incoming partner liable for prior debts?
NO, not personally liable
Partners Fiduciary Duties
Must act in GOOD FAITH
DUTY OF LOYALTY
Duty of care
DUTY TO ACCOUNT (must account for ANY profits)
Does a DISSOLUTION end partnership?
NO
When does a partnership end?
WHEN WINDING DOWN COMPLETES
Three (3) Steps of Ending Partnership
Step one—dissociation
Step two—winding up:
Step three—termination: this is the true end of the partnership!
Disassociation
The dissolution of a partnership is the change in the relation of the partners. Prior creditors are entitled to personal notice of the dissolution of the partnership. Others who knew of the partnership are entitled to newspaper notice. Note that a partner can withdraw from a partnership by giving notice at any time. This will trigger dissolution in an at will partnership.
Winding Up
This is where partnership assets are liquidated and creditors are paid.
Note that partners are still liable for any liabilities that occur during the winding up phase.
