Partnerships Flashcards by Jamone Car

Primary Difference between Partnerships and Agency Relationships

Agency relationships are _______.

Partnerships are _______.

hierarchical

egalitarian

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Agency Relationships are hierarchical

Principal – very top and underneath the principal is – agents

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Partnerships are egalitarian

Partnerships are different they are egalitarian which means that the liability and profits is distributed evenly.

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Primary Benefits of Partnerships over Limited Liability Entities?
1. ?
2.
3.

Simplicity

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Primary Benefits of Partnerships over Limited Liability Entities?
1.
2. ?
3.

Flexibility

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Primary Benefits of Partnerships over Limited Liability Entities?
1.
2.
3. ?

Favorable Tax Treatment

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Primary Benefits of Partnerships over Limited Liability Entities?
1.
2.
3.

Simplicity
Flexibility
Favorable Tax Treatment

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The Origins of Partnership

Common Law (“_____ _______”)

Joint Ventures

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_____ ______ comes from English Common law that was standardized and adopted by the states.

Agency Law

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_______ ________ refer to when 2 or more people come together to do one specific business objective.

Joint Ventures

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designated time they will end and specific mission they will accomplish – designed time frame for when that ends.

Joint Venture

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_______ _______
oUniform Partnership Act (1914) (“UPA”) 549-565

oRevised Uniform Partnership Act (1997) (“RUPA”) 567-61

Statutory Law

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A _________ is an entity distinct from its partners.

partnership

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A partnership is an ______ distinct from its ______.

entity
partners

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The difference between the two theories is that whoever won argument between deans was the new approach and they went with the ______ ______.

entity theory

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_______ ______ suggests that partnerships have separate legal identities apart from any one individual. debate between the two.

entity theory

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__________ have a greater risk because you are open to personal liability.

Partnerships

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Partnerships have a greater risk because you are open to ________ ______

personal liability

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_________ _________:

The association of two or more persons, to carry on as co-owners a business for profit forms a partnership, whether or not the persons intend to form a partnership. RUPA § 202(a).

Partnership Formation

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Partnership Formation:

The ________ of two or more persons, to carry on as co-owners a business for profit forms a partnership, whether or not the persons intend to form a partnership. RUPA § 202(a).

association

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Partnership Formation:

The association of ______ __ ____ ______ to carry on as co-owners a business for profit forms a partnership, whether or not the persons intend to form a partnership. RUPA § 202(a).

two or more persons

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Partnership Formation:

The association of two or more persons, to _____ ____ ___ _________ a business for profit forms a partnership, whether or not the persons intend to form a partnership. RUPA § 202(a).

carry on as co-owners

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Partnership Formation:

The association of two or more persons, to carry on as co-owners a _____ ____ ______ forms a partnership, whether or not the persons intend to form a partnership. RUPA § 202(a).

business for profit

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Partnership Formation:

The association of two or more persons, to carry on as co-owners a business for profit ______ __ ________, whether or not the persons intend to form a partnership. RUPA § 202(a).

forms a partnership

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Partnership Formation: The association of two or more persons, to carry on as co-owners a business for profit forms a partnership, whether or not the persons ______ to form a partnership. RUPA § 202(a).

intend

Partnership Formation 1. ? 2. 3. 4.

1. two or more persons

Partnership Formation 1. 2. ? 3. 4.

2. carry on a business

Partnership Formation 1. 2. 3. ? 4.

3. as co-owners

Partnership Formation 1. 2. 3. 4. ?

4. for profit

Partnership Formation 1. 2. 3. 4.

1. two or more persons 2. carry on a business 3. as co-owners 4. for profit

An ______ _______ is not required to form a partnership.

express agreement

An express agreement is not required to form a _________.

partnership

An express agreement to ______ ______ is not a required element of the definition of partnership.

share profits

_________ _______ is evidence of a partnership but not a required element of the definition of a partnership.

profit sharing

Profit sharing is evidence of a _________ but not a required element of the definition of a partnership.

partnership

In determining whether a partnership exists, the receipt by a person of the _____ ___ _______ of a business is prima facie evidence that they are a partner in the business. (UPA § 7(4)).

share of profits

In determining whether a partnership is formed, a person who receives a _____ ___ ______ of a business is presumed to be a partner in the business. (RUPA § 202(c)(3)).

share of profits

UPA and RUPA agree that receiving a ____ ___ __ _____ of a business is the strongest evidence you can have of whether or not a partnership is formed but it is not an element of the definition.

share of the profits

What is the strongest evidence you can have of whether or not a partnership is formed, but it is not an element of the definition?

Receiving a share of the profits

Parties who _______ _______ to associate as co-owners with the intent to carry on a business for profit have established a partnership. Once the elements of that definition are established, other provisions of the (RUPA) and the conduct of the parties supply the details of the agreement.

expressly agree

Parties who expressly agree to associate as co-owners with the _______ to carry on a business for profit have established a partnership. Once the elements of that definition are established, other provisions of the (RUPA) and the conduct of the parties supply the details of the agreement.

intent

Parties who expressly agree to associate as co-owners with the intent to carry on a business for profit have established a partnership. Once the elements of that definition are established, other provisions of the (_______) and the _______ of the parties supply the details of the agreement.

RUPA conduct

Must intend to do the ______ that give rise to partnership; need not intend to actually ______ a partnership.

acts create

You can form a partnership agreement with anything you want. If you don’t have that you will have gap fillers of the RUPA. You don’t have to intend to create a partnership you just have to do the acts that intend to give rise to the partnership. People do it without intending but the law will hold them to the formation by virtue of actions and circumstances of that association. What are you actually doing and saying? !!

What Doesn’t Form a Partnership (RUPA § 202(c) & UPA 7(2)-(4)) 1. ? 2. 3. 4. 5.

1. Joint Tenancies

What Doesn’t Form a Partnership (RUPA § 202(c) & UPA 7(2)-(4)) 1. 2. ? 3. 4. 5.

2. Sharing Gross Returns

What Doesn’t Form a Partnership (RUPA § 202(c) & UPA 7(2)-(4)) 1. 2. 3. ? 4. 5.

Lender/ Creditor Borrower/ Debtor

What Doesn’t Form a Partnership (RUPA § 202(c) & UPA 7(2)-(4)) 1. 2. 3. 4. ? 5.

4. Independent Contractor/ Employee Relationship (may be agency or may not be, but it is NEVER a partnership relationship)

What Doesn’t Form a Partnership (RUPA § 202(c) & UPA 7(2)-(4)) 1. 2. 3. 4. 5. ?

5. Landlord/ Tenant

Can a partnership be created by accident?

yes

A partnership can be created by accident and perhaps even when the parties don't desire to _____ _____.

create one

The ________ ________: The agreement whether written, oral or implied, among the partners concerning the partnership, including amendments to the partnership agreement. (RUPA § 101(7)).

Partnership Agreement

The Partnership Agreement: The ________ whether ______, ______ or _______, among the partners concerning the partnership, including amendment to the partnership agreement. (RUPA § 101(7)).

agreement written oral implied

The Partnership Agreement: The agreement whether written, oral, or implied, _______ the ________ concerning the _________, including amendment to the partnership agreement. (RUPA § 101(7)).

among the partners partnership

The Partnership Agreement May NOT (RUPA § 105(b)) 1. vary certain rights and duties about _________ and _________ for _________ certain documents. 2. 3. 4. 5. 6. 7. 8. 9.

maintaining providing inspection

The Partnership Agreement May NOT (RUPA § 105(b)) 1. ? 2. 3. 4. 5. 6. 7. 8. 9.

1. May not vary certain rights and duties about maintaining and providing for inspection certain documents

The Partnership Agreement May NOT (RUPA § 105(b)) 1. vary certain ______ and ______ about maintaining and providing for inspection certain documents. 2. 3. 4. 5. 6. 7. 8. 9.

rights and duties

The Partnership Agreement May NOT (RUPA § 105(b)) 1. 2. eliminate the ____ ____ _____. 3. 4. 5. 6. 7. 8. 9.

2. duty of loyalty

The Partnership Agreement May NOT (RUPA § 105(b)) 1. 2. ? 3. 4. 5. 6. 7. 8. 9.

2. eliminate the duty of loyalty

The Partnership Agreement May NOT (RUPA § 105(b)) 1. 2. 3. ________ ______ the duty of care. 4. 5. 6. 7. 8. 9.

3. unreasonably reduce

The Partnership Agreement May NOT (RUPA § 105(b)) 1. 2. 3. ? 4. 5. 6. 7. 8. 9.

3. unreasonably reduce the duty of care

The Partnership Agreement May NOT (RUPA § 105(b)) 1. 2. 3. 4. ________ the ________ of good faith and fair dealing 5. 6. 7. 8. 9.

4. eliminate obligation

The Partnership Agreement May NOT (RUPA § 105(b)) 1. 2. 3. 4. ? 5. 6. 7. 8. 9.

4. eliminate the obligation of good faith and fair dealing

The Partnership Agreement May NOT (RUPA § 105(b)) 1. 2. 3. 4. 5. vary the power to ________ by ______ ______ 6. 7. 8. 9.

5. dissociate by express vill

The Partnership Agreement May NOT (RUPA § 105(b)) 1. 2. 3. 4. 5. ? 6. 7. 8. 9.

5. vary the power to dissociate by express will

The Partnership Agreement May NOT (RUPA § 105(b)) 1. 2. 3. 4. 5. 6. Vary the right of a _______ to _______ a partner in certain circumstances 7. 8. 9.

court expel

The Partnership Agreement May NOT (RUPA § 105(b)) 1. 2. 3. 4. 5. 6. Vary the right of a court to expel a ______ in ______ _______. 7. 8. 9.

partner certain circumstances

The Partnership Agreement May NOT (RUPA § 105(b)) 1. 2. 3. 4. 5. 6. 7. Vary the requirement to ___ _____ the partnership business in certain circumstances. 8. 9.

wind up

The Partnership Agreement May NOT (RUPA § 105(b)) 1. 2. 3. 4. 5. 6. 7. ? 8. 9.

7. vary the requirement to wind up the partnership business in certain circumstances

The Partnership Agreement May NOT (RUPA § 105(b)) 1. 2. 3. 4. 5. 6. 7. 8. Vary the law applicable to a ______ ____ ______. 9.

limited liability partnership

The Partnership Agreement May NOT (RUPA § 105(b)) 1. 2. 3. 4. 5. 6. 7. 8. 9. ?

9. Restrict the right of third parties

______ _____ of a partnership. Ending the partnership – roll of string we are going to wind this up we are done with the business, and we are going to put it away.

Winding Up

The Partnership Agreement ______ _______ (RUPA § 105(b)) *Vary certain rights and duties about maintaining and providing for inspection certain documents. *Eliminate the duty of loyalty *Unreasonably reduce the duty of care *Eliminate the obligation of good faith and fair dealing *Vary the power to dissociate by express will *Vary the right of a court to expel a partner in certain circumstances *Vary the requirement to wind up the partnership business in certain circumstances *Vary the law applicable to a limited liability partnership *Restrict the rights of third parties

may NOT

The Partnership Agreement may NOT (RUPA § 105(b)) *Vary certain rights and duties about maintaining and providing for inspection certain documents. *Eliminate the duty of loyalty *Unreasonably reduce the duty of care *Eliminate the obligation of good faith and fair dealing *Vary the power to dissociate by express will *Vary the right of a court to expel a partner in certain circumstances *Vary the requirement to wind up the partnership business in certain circumstances *Vary the law applicable to a limited liability partnership *Restrict the rights of third parties If a partnership agreement on MC tries to do one of these things. Partner drafts agreement that the duty of loyalty is eliminated – they cannot do that. Lawsuit brought against partnership – party sues another for breach of duty of loyalty and they say we don’t have the duty of loyalty – the claim doesn’t die because the agreement says we don’t have a duty of loyalty it would continue because you cannot eliminate the duty of loyalty. RUPA will say sorry, but you will be held to the duty of loyalty. We are not giving the secretary of state any of the documents if they ask for them – invalid in the partnership agreement. You cannot do that. Provisions would be invalid, and law of RUPA would kick I to proscribe how to handle lawsuit. !!

Each partner is an _______ of the partnership for the purposes of its business. (RUPA § 301).

agent

Each _______ is an agent of the ________ for the purposes of its business. (RUPA § 301).

partner partnership

Each partner has ______ ______ in the management and conduct of the partnership business. (RUPA § 401(h)).

equal rights

Each partner has equal rights in the ________ and _______ of the partnership business. (RUPA § 401(h)).

management and conduct

Each partner has equal rights in the management and conduct of the __________ ________. (RUPA § 401(h)).

partnership business

______ ______ only admitted by unanimous consent of the existing partners. (RUPS § 402)

New partners

New partners only admitted by ________ _________ of the existing partners. (RUPS § 402)

unanimous consent

How are new partners admitted to a partnership?

unanimous consent of the existing partners

*Each partner is an agent of the partnership for the purposes of its business. (RUPA § 301). *Each partner has equal rights in the management and conduct of the partnership business. (RUPA § 401(h)). *New partners only admitted by unanimous consent of the existing partners. (RUPS § 402) That is the default, but you can change the default rule in the ________ _______-. You cannot really change the agency rule, but you can change the other two.

partnership agreement

+ Case: Vecchitto v. Vecchitto (Italian Ice case) * The issue was whether filing a lawsuit was within the partnership’s ordinary course of business. o If yes, partnership claims may proceed with majority vote. o If not, partnership claims are dismissed. - Here, they found that filing a lawsuit was not within the ordinary course of business, so they dismissed the claim. - There are four equal partners in this partnership and the partnership agreement does not authorize or give one partner the power to bring the litigation on behalf of the partnership. The partners never consented to the filing of this lawsuit, and, therefore, the partnership cannot request that the issues complained of be adjudicated. Simply stated, the partnership lacks standing. Since the partnership does not have standing to file this lawsuit, this court lacks subject matter jurisdiction, and therefore, the defendants’ motion to dismiss should be granted. - Outside the ordinary course of business, you need unanimous vote if not a unanimous vote you do not have standing to bring the lawsuit. !!