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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
When may a partnership sue a partner?
1. Breach of PA | 2. Fiduciary duty
26
When may a partner sue a partnership?
To enforce the partner's rights under the PA or statutory law
27
What causes disassociation?
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
When is a partner's disassociation?
When it is breach of an express provision of the PA?
29
What are the effects of disassociation?
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
When can a partner bind the partnership?
When the partner acts with actual or apparent authority
31
When can a partner bind the partnership with apparent authority?
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
When does a partner have authority to transfer partnership property?
Transfer property held in the partnership's name or in the names of partner(s)
33
When can a partnership recover transferred property?
1. The transferee had reason to know it was the partnership's, and 2. The transferee knew the partner lacked authority to transfer
34
For what obligations is a partnership liable?
For all; partners are jointly and severally liable
35
Can a partnership be convicted of a crime?
Yes, and penalties may be levied on it
36
What is the effect of a judgment against a partnership?
Satisfied from partnership assets first, then partners'
37
When can a partnership convert to a limited partnership?
1. Unanimous approval | 2. Articles of conversion filed with state
38
Are former general partners liable for obligations incurred before becoming an LP?
Yes
39
When can a limited partnership convert to a partnership?
1. Unanimous approval by general and limited partners | 2. Cancel LP certificate
40
Does a conversion affect the partnership as an entity?
No, legal proceedings against it occur as though there were no change
41
When can a partnership merge with another?
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
What approval is needed for a merger?
If general, all; if LP, as necessary
43
When can an at-will partnership be dissolved?
A disassociating partner gives notice of withdrawal
44
When can a partnership for a term or undertaking be dissolved?
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
What is winding up?
The partnership disposes of and transfers property and may discharge liabilities
46
Who has priority over partnership assets, creditors or partners?
Creditors
47
Can a partnership continue carrying on business after dissolution?
Yes
48
What distinguishes an LLP?
An LLP partner is not personally liable, only for his own misconduct
49
What is required to form an LP?
1. One GP and LP; LP's liability limited to capital contribution 2. Must file certificate of limited P
50
What is the default rule for profits?
Based off partner contributions

Business Organizations (3 decks)

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