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Heidi's Homemade MEE > Partnerships > Flashcards

Partnerships Flashcards

1
Q
A
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2
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A
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3
Q

liability of the partnership for contracts

A

A partnership is liable for all contracts entered into by a partner

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4
Q

A principal will incur liability for the acts of an independent contractor if:

A
  • inherently dangerous activities were invovled
  • nondelegable duties were delegated, or
  • the principal knowingly selected an incompetent independent contractor
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5
Q

define

partnership

A

An association of two or more persons to carry on as co-owners of a business for profit

A person can be an individual, trust, corp, partnership, or other entity

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6
Q

A partnership will be liable for loss or injury caused by a person’s tortious conduct if the person committing the tort was:

A

a partner or employee acting
- in the ordinary course of business of the partnership OR
- acting with authority with the partnership

Basically if the partner or employee was acting with **apparent authority **

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7
Q

An outgoing partner remains liable for what type of obligations?

A

obligations incurred while they were a partner
unless there has been payment, release, or novation

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8
Q

apparent authority in partnerships

A

RUPA says a partner is an agent of the partnership

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9
Q

intent required to form a partnership

A

intent to carry on a business as co-owners in a business for profit
no need to subjectively intend to be partners

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10
Q

how long is a proxy writing good for?

unless otherwise stated

A

11 months

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11
Q

intent required to form a partnership

A

intent to carry on a business as co-owners in a business for profit
no need to subjectively intend to be partners

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12
Q

Factors to consider in determining whether an association rises to a partnership

A
  • profit sharing (creates a rebuttable presumption of partnership)
  • each person has power to control the business
  • whether there is no sharing of losses -> disfavors partnership
  • title to property is held in joint tenancy or as tenants in common
  • parties designate their relationship as a partnership
  • venture undertaken by the parties requires extensive activity
  • sharing of gross returns
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13
Q

when is a writing required to form a partnership?

A

if the partners wish to have an enforceable agreement to remain partners for more than one year under the SoF

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14
Q

partnership by estoppel

A

partner liability is imposed when a party, who is not a partner in fact, holds themselves out or lets other people hold him out to be a partner to the world

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15
Q

is there a duty to deny a partnership?

A

No- a person held out by another as a partner is not liable as a partner unless they actually consent to the holding out
failure to deny a representation of partnership does not create partnership liability

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16
Q

is an agreement required to form a partnership?

A

No
But if there is an agreement, it may be written, oral, or implied

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17
Q

capacity required to enter a partnership

A

capacity to enter into a binding contract

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18
Q

governing law of partnerships

A

revised uniform partnership act
partners can agree to abide by different rules in a partnership agreement

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19
Q

what voting and management rights do partners have

A

all partners have equal rights in the management of the of the business and equal votes

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20
Q

do partners get a salary for services rendered to the partnership?

A

No- a partner has no right to compensation for services rendered to the partnership unless otherwise agreed

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21
Q

how are profits and losses shared in a partnership

A

equally among the partners unless otherwise agreed

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22
Q

when is a partnership liable for the tortious conduct of a partner or employee of the partnership ?

A
  • when the partner or employee was acting in the ordinary course of business of the partnership or
  • with authority of the partnershi
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23
Q

actual authority

partnerships

A

authority a partner reasonably believes they have based on communications between the partnership and the partner

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24
Q

where does actual authority come from

partnerships

A
  • from the partnership agreement
  • by vote of the partners
  • by the partnership filing a statement of partnership authority with the state
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25
Q

what is a statement of partnership authority

A

A statement filed with the secretaryof state that grants or limits a partner’s actual authority to enter into transactions on behalf of the partnership

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26
Q

appare

who is the principal and who is the agent in an agency relationship for a partnership

A

partnership is the principal
partners are the agents

27
Q

partners have ____ authority to bind the partnership to any contract ___________

A

apparent; within the scope of the partnership business

28
Q

when will a partnership not be bound by a partner’s act?
- what does the partner lack?
- what must the third party have/not have?

A
  • the partner must lack actual authority

AND
- the person with whom the partner dealth with either knew or received notification of the lack of actual authority

knowledge means what the person actually knew- not what they should have known

29
Q

liability of the partners

A

each partner is jointly and severally liable for all obligations of the contract, whether arising in tort or in contract

30
Q

indemnification of partners

A

since all partners are personally and individually liable for the entire amount of partnership obligations, one partner who pays the whole obligation of the partnership is entiteld to indemnification from the partnership (partnership pays partner the money he paid for the obligation)

31
Q

A newly admitted partner is/is not personally liable for partnership obligations that arose before their admission

A

is not

32
Q

duties each partner owes to the partnership

A

duty of loyalty
duty of care
duty of disclosure
duty of obedience

owed to both the other partners and the partnership

33
Q

duty of loyalty in a partnership
- to whom is it owed
- what is it
- type of duty

A
  • owed to each other and the partnership
  • put the partners’ and partnership’s interest ahead of your own -> treat them fairly
  • fid duty
34
Q

duty of care in a partnership
- to whom is it owed
- what is it
- type of duty

A
  • to each partner and the partnership
  • duty to refrain from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law -> **excuses regular negligent behavior **
  • fid duty
35
Q

duty of disclosure in a partnership
- to whom is it owed
- what is it
- type of duty

A
  • partners and the partnership
  • duty to provide complete and accurate information concerning the partnership
  • statutory duty outlined in RUPA -> must supply info without demand and on demand
36
Q

duty of obedience in a partnership
- to whom is it owed
- what is it
- type of duty

A
  • to partners and partnership
  • duty to obey all reasonable directions of the partnership and not act outside the scope of his or her authority
  • fid duty
37
Q

which duties may a partnership NEVER eliminate

A
  • duties of loyalty
  • duty of care
  • duty of obedience
    can never eliminate fid duties
    can eliminate duty of disclosure bc it’s statutory
38
Q

partnership capital

A

property or money contributed by each partner for the purpose of carrying on the partnership business

39
Q

define

partnership property

A

everything the partnership owns, including capital and property

40
Q

types of property presumed to be partnership property

A

property purchased with partnership funds, regardless of whose name the title is in

41
Q

property presumed to be partner’s separate property

A

rebuttably presumed to be partner’s separate prop if:
- it is held in the named of one or more partners
- the title instrument makes no mention of the parties acting for a partnership AND
- partnership funds were not used to acquired the property

42
Q

A partner is a BLANK of the partnership for business purposes

A

an agent

43
Q

apparent authority

in the partnership context

A

Exists when a partner:
- acts in the ordinary course of partnership business or business of the kind of the partnership
- to enter into a contract with a third party AND
- the third party is reasonably led to believe that the partner is acting with authority on behalf of the partnership

analyze whether the partner is acting within the scope of the partnership or making a deal for soemthing reasonably related to the partnership

44
Q

In a partnership:
- who is principal?
- who is the agent?

A

Partners are agents of the partnership.
The partnership is the principal.
The partners are agents of the partnership.

45
Q

business of the kind

context of partnership authority

A

transactions that would reasonably be for carrying on business of the kind run by the partnership
use common sense here!!!

46
Q

liability of the partners

A

Each partner is jointly and severally liable for all obligations of the partnership, whether arising in tort or contract
Plaintiff must first exhaust partnership resources before seeking to collect from an individual partner’s assets

47
Q

explain

partner indemnification

A

Where one partner pays the whole obligation of the partnership, they are entitled to indemnification from the partnership

48
Q

management rights of a partner

A

a partner’s right to participate in the management of the business, to get info about the partnership, and be recognized as a partner

49
Q

financial rights of a partner

A

the partner’s right to receive his share of any profit distributions made by the partnership

50
Q

can a partner unilaterally transfer his management rights?

A

No- unless otherwise agreed upon by the partners.
A partner cannot unilaterally transfer his management rights and make the transferee a partner
Admission of a new partner requires a unanimous vote of the existing partners

51
Q

can a partner unilaterally transfer his financial rights?

A

Yes- the transferee has the right to receive profit distributions from the partnership that would have otherwise gone to the partner. The transferee is not a partner and the transferee is still a partner and retains all managementrights

52
Q

dissociation

A

when a partner withdraws from or leaves the partnership

53
Q

methods by which a partner becomes dissociated from the partnership

A
  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. partner’s bankruptcy
  5. partner’s death or incapacity to perform partnership duties
  6. a court decision saying a partner is incapable of performing partnership duties
  7. termination of a business entity that is a partner
54
Q

when does wrongful dissociation occur

A

when a partner dissociates in breach of an express term in the partnership agreement or if the partner withdraws, is expelled, or becomes bankrupt before the end of the partnership term

55
Q

A partner who wrongfully dissociates will be liable for what

A

any damages to the partnership caused by the dissociation

56
Q

define

at-will partnership

A

Partnership with no definitive end point

57
Q

what is the default form of partnership

A

at-will

58
Q

define

term partnership

A

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

59
Q

types of property deemed to be partnership property

A

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

60
Q

most important factor in deciding whether an association is a partnership

A

sharing of profits
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 annuity or other retirement benefit, as interest on a loan, or for
the sale of goodwill of a business.

61
Q

when can a plaintiff collect from an individual partner’s assets

A

after plaintiff has first exhausted partnership resources

62
Q

what percentage of the vote is needed for matters outside the ordinary course of business of a partnership

A

unanimous consent of all partners

63
Q

third parties are deemed to have constructive notice of the statement of partnership authority for real property transactios if the statement is filed where

A

statement is recorded in the county where the property is located

64
Q

criminal liability of partners

A

partners will not be criminally liable for the crimes of other partners committed within the scope of their partnership business unless the other partners participated in the crime as principals or accessories

Heidi's Homemade MEE (10 decks)

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