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Business Organizations > Partnerships > Flashcards

Partnerships Flashcards

1
Q

What is a partnership?

A

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

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2
Q

Who can enter a partnership?

A

Any person or entity with legal capacity.

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3
Q

Is specific intent needed to form a partnership?

A

No, just a general agreement to become business partners. Profit sharing establishes a presumption of a partnership relationship.

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4
Q

What is required for a partnership?

A
  1. General intent
  2. An agreement (can be conduct-based)
  3. Extensive activity or profit sharing
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5
Q

What does profit sharing establish?

A

A presumption of a partnership

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6
Q

When is someone a partner by estoppel?

A
  1. A representation as such
  2. The person makes or consents to the representation,
  3. A third party reasonably relied on the representation, and
  4. A third party suffered damages on the reliance
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7
Q

What fiduciary duties do partners have?

A

The duties of loyalty and care

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8
Q

Can partners contract around fiduciary duties?

A

Yes, within reasonably bounds

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9
Q

Do fiduciary duties extend beyond dissolution?

A

Only to the extent the partner is involved in winding up the partnership’s business

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10
Q

What is the default profit-sharing rule?

A

Profits are shared equally

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11
Q

What is the default loss-sharing rule?

A

Losses are shared in the same manner as profits

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12
Q

Can a partner demand a distribution?

A

No, but the profits can be credited to her account

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13
Q

Can a partner transfer their partnership interest?

A

Yes, in full or in part

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14
Q

Does transfer cause dissolution or disassociation?

A

No

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15
Q

What are the rights of the transferor partner?

A

The transferor partner retains all rights and duties of a partner

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16
Q

What are the rights of a transferee partner?

A
  1. Receive distributions
  2. See judicial order for dissolution
  3. Get an accounting on dissolution
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17
Q

What are not the rights of a transferee partner?

A

No right to participate in the management or conduct of business, access to the partnership records, or demand other information

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18
Q

What property belongs to the partnership?

A

All property acquired by the partnership

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19
Q

When is property presumed to belong to the partnership?

A

When it was purchased with partnership assets or credit; other factors may include property’s use, tax treatment, and the source of funding

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20
Q

When can someone become a new partner?

A

With the consent of all existing partners

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21
Q

What partners have management rights?

A

All partners

22
Q

What is required for a partnership to make ordinary business decisions?

A

A majority vote of the partners

23
Q

When must a partnership reimburse a partner?

A

When he takes loans made in furtherance of the partnership

24
Q

When must a partnership indemnify a partner?

A

For personal liability incurred in the partnership’s ordinary course of business

25
Q

When may a partnership sue a partner?

A
  1. Breach of PA

2. Fiduciary duty

26
Q

When may a partner sue a partnership?

A

To enforce the partner’s rights under the PA or statutory law

27
Q

What causes disassociation?

A
  1. Notice of withdrawal
  2. Expulsion, unanimous vote, or bankruptcy
  3. Death or a termination of an entity partner
  4. Appointment of a guardian or judicial determination of incapacity
28
Q

When is a partner’s disassociation?

A

When it is breach of an express provision of the PA?

29
Q

What are the effects of disassociation?

A
  1. The partner cannot participate in the management or conduct of the business
  2. The duty not to compete ends; other fiduciary duties continue with respect to post-disassociation events.
  3. The partnership must buy out his interest
30
Q

When can a partner bind the partnership?

A

When the partner acts with actual or apparent authority

31
Q

When can a partner bind the partnership with apparent authority?

A

When they perform an unauthorized act in the ordinary course of the partnership’s business, but a third party cannot hold the partnership liable if they knew or was notified the partner lacked authority

32
Q

When does a partner have authority to transfer partnership property?

A

Transfer property held in the partnership’s name or in the names of partner(s)

33
Q

When can a partnership recover transferred property?

A
  1. The transferee had reason to know it was the partnership’s, and
  2. The transferee knew the partner lacked authority to transfer
34
Q

For what obligations is a partnership liable?

A

For all; partners are jointly and severally liable

35
Q

Can a partnership be convicted of a crime?

A

Yes, and penalties may be levied on it

36
Q

What is the effect of a judgment against a partnership?

A

Satisfied from partnership assets first, then partners’

37
Q

When can a partnership convert to a limited partnership?

A
  1. Unanimous approval

2. Articles of conversion filed with state

38
Q

Are former general partners liable for obligations incurred before becoming an LP?

A

Yes

39
Q

When can a limited partnership convert to a partnership?

A
  1. Unanimous approval by general and limited partners

2. Cancel LP certificate

40
Q

Does a conversion affect the partnership as an entity?

A

No, legal proceedings against it occur as though there were no change

41
Q

When can a partnership merge with another?

A
  1. Must set forth names of both entities
  2. What type the surviving entity will be
  3. T and C of merger
  4. Manner of converting interests and obligations
  5. Address of surviving entity
42
Q

What approval is needed for a merger?

A

If general, all; if LP, as necessary

43
Q

When can an at-will partnership be dissolved?

A

A disassociating partner gives notice of withdrawal

44
Q

When can a partnership for a term or undertaking be dissolved?

A
  1. Term expires or undertaking is completed; OR
  2. All partners agree to dissolve, OR
  3. Partner is disassociated and 1/2 of others agree to dissolve within 90 days
45
Q

What is winding up?

A

The partnership disposes of and transfers property and may discharge liabilities

46
Q

Who has priority over partnership assets, creditors or partners?

A

Creditors

47
Q

Can a partnership continue carrying on business after dissolution?

A

Yes

48
Q

What distinguishes an LLP?

A

An LLP partner is not personally liable, only for his own misconduct

49
Q

What is required to form an LP?

A
  1. One GP and LP; LP’s liability limited to capital contribution
  2. Must file certificate of limited P
50
Q

What is the default rule for profits?

A

Based off partner contributions

Business Organizations (3 decks)

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