Partnerships

Question 1

General partner

Answer 1

Has unlimited liability

Question 2

What is a partnership?

Answer 2

An association of 2 or more persons to carry on as co-owners a business for profit.

Question 3

Joint venture

Answer 3

A joint venture is an ad hoc, one shot partnership, limited to a specific undertaking (rather than to an entire business)

Question 4

Partners’ Authority and Governance

Answer 4

UPA § 9 and RUPA § 301 both provide that a partner is an agent of the partnership and has the authority to bind the partnership and copartners when acting in the ordinary course of business.

Acts not in the ordinary course of business must be specifically authorized by the other partners

Question 5

Can you sue a partnership or must you sue the partners themselves?

Answer 5

A partnership is an entity distinct from its partners. You can sue and be sued by the partnership.

Question 6

Can you limit the authority of partners in a partnership?

Answer 6

RUPA § 8303 says that a partnership may limit the authority of some or all of the partners to enter into other transactions on behalf of the partnership, and any other matter.

Question 7

Can a partner transfer his interest in the partnership?

Answer 7

Yes, but only his interest (the partner’s share of the profits and losses of the partnership and the partner’s right to receive distributions).

Not management rights (or conduct of the partnership business, to require access to information concerning partnership transactions, or to inspect or copy the partnership books or records).

Question 8

Charging order

Answer 8

A court-authorized right granted to a judgment creditor to attach distributions made from a business entity to a debtor who is a partner of the business entity.

Question 9

Can a personal creditor have a claim against the partnership itself?

Answer 9

A personal creditor of a partner does not have a claim against the partnership itself but can seek satisfaction out of the partner’s interest in the partnership.

A “charging order” is the remedy used by personal creditors to attach the ownership interest of the individual partner. The charging order operates like a lien on the partner’s interest in the partnership. RUPA § 8504

Question 10

Who is liable for the wrongful acts of a partner?

Answer 10

Partners are jointly and severally liable for the wrongful acts of a partner, or partnership, with a right of contribution against co-partners

Question 11

Is the partnership bound to acts made by other partners?

Answer 11

Yes, to admissions made by partners and the partnership is also charged with the knowledge of individual partners

But acts out of the ordinary course of business will not bind the partnership unless it so agrees.

Question 12

The rights and duties of partners in a partnership

Answer 12

UPA § 20 requires partners to render true and full information to other partners

UPA § 18 defines the rights and duties of partners in the absence of a partnership agreement providing otherwise. This provision of the UPA, among other things, provides that all partners must consent to the admission of new partners, and all partners have equal rights of management.

Question 13

Agreement

Answer 13

No formal agreement is required to form a Pship; the parties’ intent may be implied from their conduct.

Question 14

Consent

Answer 14

Unless otherwise agreed, no one can become a partner without the express or implied consent of all partners.

Question 15

Governing Law

Answer 15

Generally, the RUPA provides a default set of rules. Partners can agree through a partnership agreement to abide by different rules for governing the relationships among themselves, and the RUPA will govern only those issues not provided for in the agreement.

But note that certain RUPA provisions cannot be waived.

Question 16

Statement of Pship authority

Answer 16

A Pship may file a statement of pship authority with the DOS, which can give constructive knowledge of the extent of the partner’s authority to enter into real estate Ks on behalf of the pship.

Question 17

Pship capital

Answer 17

the property or money contributed by each partner for the purpose of carrying on the pship’s business.

Question 18

Pship property

Answer 18

In its broadest sense is everything the pship owns, including both capital and property subsequently acquired in pship transactions.

Question 19

Property presumed to be pship property

Answer 19

Under the RUPA, if it was purchased with pship funds, regardless of in whose name title is held. Pship funds includes not only the pship’s cash, but also the pship’s credit.

Question 20

Property presumed to be partner’s separate property

Answer 20

Under the RUPA, if property is held in the name of one or more partners and:

1. the instrument transferring title does not indicate the person’s capacity as a partner or mention the existence of a pship, and
2. pship funds were not used to acquire the property,

the property is presumed to be separate property even if the property is used for pship purposes.

Question 21

Rights of partner in pship property

Answer 21

A partner is not a co-owner of pship property and has no transferable interest in specific property of the pship. Thus, a partner’s creditor may not reach pship property to satisfy the personal obligations of a partner.

A partner has no right to use pship property other than for the benefit of the pship.

Question 22

A partner’s interest in the pship is:

Answer 22

1. Treated as personal property,
2. Transferable (voluntarily or involuntarily) without dissolving the pship or causing the transferring partner’s dissociation, and
3. Attachable.