Partnerships 6-10

Question 1

When does a partner have Express Actual Authority to bind the partnership?

Answer 1

Upon receiving said authority from the partners.

Acts within the ordinarycourse of business = approved by a majority vote of partners.

Acts outside the ordinary course = can only be approved unanimously.

Priority: Medium

Question 2

A partner with Apparent Authoritywill NOT bind the partnership during what circumstance?

Answer 2

The partner lacked authority; AND

The third-party knew or had notice that the partner lacked authority.

Priority: Medium

Question 3

When does a partner have Implied Actual Authority?

Answer 3

When he has to take actions that are reasonably incidental ornecessary to achieve the partner’s authorized duties.

Priority: Medium

Question 4

When is an act considered to be within the “ordinary course of business”?

Answer 4

If the act is normal and necessary for managing the business, and a person would reasonably conclude that.

Priority: Medium

Question 5

What is the liability for General Partners?

Incoming Partners?

Outgoing Partners?

Answer 5

General Partners: Personally liable for ALL obligations of the partnership (joint and severally liability with the other partners).

Incoming Partners: NOT liable for obligations incurred prior to their admission, but still at risk for losing capital contributions made to satisfy partnership obligations.

Outgoing Partners: Remain liable for debts while they were still a partner UNLESS there was a novation/release/payment.

Priority: HIGH