Partnerships Flashcards
What is the applicable law governing partnerships on the exam?
RUPA
What are the elements required to form a general partnership?
- Association
- Of two or more persons
- To carry on a for-profit business
Is a written agreement required to form a general partnership?
No, a written agreement is not required.
What presumes the existence of a partnership?
Sharing of profits presumes a partnership.
What are exceptions to sharing profits that do not constitute a partnership?
- Payments for a debt
- Interest on a loan
- Rent
- Wages
- Goodwill payments from sale of a business
- Retirement or health benefits paid to a deceased or retired partner’s beneficiary
What is a consequence of a valid partnership?
Creates a separate legal entity.
Are partners in a general partnership limited in liability?
No, partners are personally liable for partnership obligations.
Is a partnership agreement required in a general partnership?
No, but if made, it is subject to the Statute of Frauds.
What is partnership by estoppel?
Third parties can recover as if a valid partnership were formed if one is held out as a partner with consent and a third party relies and suffers damages.
What are the fiduciary duties owed by partners to the partnership?
- Duty of Loyalty
- Duty of Care
What does the Duty of Loyalty entail?
A partner must not compete, advance an adverse interest, or self-deal without approval after full disclosure.
What does the Duty of Care entail?
A partner must not knowingly violate the law or engage in reckless conduct.
What is the liability of an incoming partner for pre-existing partnership obligations?
Limited to his capital contribution.
What is the management and control structure in a partnership without an agreement?
Each partner has an equal right to manage and control.
What is required for approval of ordinary business decisions in a partnership?
Approval by a majority of the partners.
What rights do partners have regarding partnership records?
Partners have the right to inspect and copy records.
What happens to profits and losses in a partnership absent an agreement?
Profits and losses are shared equally.
How is partnership property ownership determined?
By how it is titled, the type of funds used, and in whose name it is held.
What is required for adding a new partner to a partnership?
Unanimous consent of the other partners.
What are the consequences of a partner’s dissociation?
- The partnership must purchase the partner’s interest
- Dissociation does not necessarily trigger dissolution
What is the process of termination of a partnership?
Involves dissolution and winding up.
What triggers dissolution of a partnership at-will?
Dissolution occurs when any partner dissociates.
What is a Limited Liability Partnership (LLP)?
A partnership where partners have no personal liability for partnership obligations.
What is required to form a Limited Partnership (LP)?
Filing a certificate of LP with the state.
