Partnerships

Question 1

Formation of partnership

Answer 1

(1) two or more persons (2) as co-owners (3) carry on business for profit - intent is irrelevant

Question 2

Who participates in managing partnership

Answer 2

All partners have equal rights in management, absent a contrary agreement

Question 3

Decisions regarding ordinary course of business

Answer 3

require a majority vote of partners

Question 4

Decisions regarding matters outside of ordinary course of business

Answer 4

require the consent of all partners

Question 5

Fiduciary duties owed by partners to other partners and partnerships

Answer 5

duty of loyalty and duty of care

Question 6

duty of loyalty

Answer 6

(1) refrain from self-dealing (2) refrain from competing with partnership (3) provide important information

Question 7

duty of care

Answer 7

acting as a reasonable person would in a like situation

Question 8

Remuneration as a partner

Answer 8

not entitled to get paid for services performed in partnership

Question 9

Legal actions against partnership

Answer 9

Partnership may be sued; judgment against partnership is not judgment against partners - need separate judgment against partners

Question 10

Apparent authority of Partners

Answer 10

(1) act of any partner (2) carrying in ordinary course of business (3) binds partnership ; unless partner had no authority and person dealing knew partner lacked authority

Question 11

Civil liability of partners

Answer 11

partners are joint and severally liable on contracts entered into by other partners in scope of business (contract) or tort committed in ordinary course of business (tort)

Question 12

criminal liability of partners

Answer 12

partners not criminally liable for crime of other partner unless they participated

Question 13

Right to partnership property

Answer 13

all property acquired by partnership or with partnership assets is owned by partnership and not individual partner ; property acquired in name of a partner is presumed to be separate property as long as no partnership assets were used and title does not reference partnership

Question 14

Transfer of Partnership Ownership

Answer 14

partner can only transfer interest in profits/losses and right to receive distribution; consent of all partners is required to transfer partnership’s ownership

Question 15

events of dissociation of partner

Answer 15

notice (oral or written) of partner’s withdrawal as partner; occurrence of agreed upon event; partner’s bankruptcy; death of partner; court order

Question 16

dissociation

Answer 16

a partner ceases to be associated with partnership; does not cause dissolution; dissociated partner still liable for certain things