Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

FL Bar Review > Partnerships > Flashcards

Partnerships Flashcards

You may prefer our related Brainscape-certified flashcards:
MBE flashcards
1
Q

Factors to determine who is a partner:

A

(1) Capital investment - a capital contribution is not required
(2) Control - the right to control may be enough, even if control is never exercised [Owners usually have the right to control operations.]
(3) Profit - a person who is entitled to receive a share of the firm’s profits is presumed to be a partner (“prima facie evidence”). [Most important factor!]

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Rob Camiletti’s bakery owes Pillsbury money, but Rob & the firm are broke. Pillsbury claims Rob’s main squeeze, Cher, is a partner because she gets 20% of the profits. Is this true?

A

Cher is presumed to be a partner because she shares in profits; BUT she can rebut with other evidence (i.e., can’t control).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Rob Camiletti’s bakery owes Pillsbury money, but Rob & the firm are broke. Pillsbury claims Rob’s main squeeze, Cher, is a partner because she gets profits as wages, rent, repayment of a debt, or interest on a loan. Is this true?

A

No presumption in any of these cases; BUT Pillsbury can try to show from other evidence that Cher is.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Rob Camiletti’s bakery owes Pillsbury money, but Rob & the firm are broke. Pillsbury claims Rob’s main squeeze, Cher, is a partner because she gets 20% of gross receipts. Is this true?

A

No presumption; BUT Pillsbury can try to show from other evidence that Cher is.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Is a writing required to form a partnership?

A

Partnership law does NOT require one, but the Statute of Frauds may.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Ice T and Ice Cube form a partnership to record two rap albums. Is a writing required?

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Ice T and Ice Cube form a partnership to last for 2 years. Is a writing required?

A

Yes, because falls within the Statute of Frauds (can’t be performed in 1 year).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Is a Registration Statement required to form a partnership?

A

A partnership MAY file a registration statement with the Department of State, but it’s a prerequisite to filing other statements.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

If no partnership was formed, parties may still be liable as _______________ to protect reasonable reliance by third parties.

A

Purported partners

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Grace applies to a bank for a loan. Will lets Grace say he’s her partner, even though he’s not. Is Will liable to the bank if it loans money to Grace based on her statement?

A

Yes. Will let Grace hold him out as her partner, therefore he is liable AS IF he really were. She created the impression.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Grace applies to a bank for a loan. Will lets Grace say he’s her partner, even though he’s not. Can the bank recover from Grace if it loans money to her based on her statement?

A

Yes. The one who does the holding out is liable.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Grace applies to a bank for a loan. Will lets Grace say he’s her partner, even though he’s not. Can Grace’s other creditors recover from Will based on the statement?

A

Only if Will let Grace make the statement publicly.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

If property is acquired in the partnership’s name or in a partner’s name if the instrument transferring title indicates he is acting for a partnership (e.g. mentions “a partnership” or representative capacity).

A

Property is partnership property

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

If partnership funds are used to pay for property.

A

Property is presumed to be partnership property

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

If property is acquired in his name without partnership funds and there is no sign he’s acting for a partnership.

A

Property is presumed to be a partner’s property

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

AB Partnership acquired a truck in A’s name. A paid with her own money. The partnership uses the truck for deliveries. Is the truck partnership property or A’s separate property?

A

Presumed to belong to A under Rule 3 if instrument doesn’t indicate A was acting in representative capacity.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Partnership’s rights in partnership property

A

Totally unrestricted [it owns the property!]

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

If the partnership owns a truck, may the partnership pledge it as collateral for a loan?

A

Yes, the partnership can do what it wants with its own property.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

If the partnership owns a truck, may a creditor of the partnership attach it?

A

Yes, the partnership creditor can get at partnership property.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Partner’s rights in partnership property

A

Very limited! He can use it only for partnership purposes, unless the other partners consent. That right can’t be transferred.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

If the partnership owns a truck, may A use it on her vacation?

A

No, unless B consents (belongs to the partnership NOT partners).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

A and B form a partnership. They acquire a truck in the partnership’s name and use it for deliveries in the regular course of business. Which of the following is true?

(A) A has the right to use the truck for both business and personal purposes.
(B) A has the right to sell his one-half interest in the truck.
(C) Personal judgment creditors of A may attach A’s one-half interest in the truck.
(D) None of the above

A

(D) None of the above

Partners only right in partnership property is to use for partnership business.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

The right to receive a share of the profits (e.g., a 25% stake).

A

A partner’s economic interest in the partnership

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Is a partner’s economic interest in the partnership transferable?

A

Yes. A conveyance redirects the flow of profits; it does NOT confer any other rights or impose any obligations.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

A and B form a partnership. The partnership owns a truck. Bank obtains a judgment against A for defaulting on a personal loan. Which of these statements is correct?

(A) Bank may attach the truck
(B) Bank may attach A’s interest in the truck
(C) Bank may attach A’s interest int he partnership
(D) None of the above

A

(C) Bank may attach A’s interest in the partnership

Can attach to economic interest in partnership itself like it can attach to A’s other financial assets.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

A, B, and C are partners. B assigns his interest in the partnership to D. The partnership loses $50,000 in an ill-fated venture. Which of the following is correct?

(A) B must share in the loss
(B) D must share in the loss
(C) Neither B nor D must share in the loss
(D) Both B and D must share in the loss

A

(A) B must share in the loss

All an assignment does is redirect the flow of share of profits, NOT obligations. B is still responsible for the partnership’s losses.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Can partners waive access to books, duties of loyalty and care, or the power to dissociate or expel a partner?

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Rachel, Phoebe and Monica form the RPM Partnership. Rachel contributes 60% of the capital; the others contribute 20% each. Unless otherwise agreed (“UOA”), how will profits be split?

A

Equally, NOT in proportion to capital contribution.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Rachel, Phoebe and Monica form the RPM Partnership. Rachel contributes 60% of the capital; the others contribute 20% each. Unless otherwise agreed (“UOA”), how will they share the losses?

A

Unless otherwise agreed, in the same proportion as profits (so equally!). But, they can agree to split profits and losses differently.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Rachel, Phoebe and Monica form the RPM Partnership. Rachel contributes 60% of the capital; the others contribute 20% each. If they agree Rachel won’t bear any loss, is she free from liability to a third party?

A

No! Partners cannot limit rights of 3rd parties without that party’s consent, BUT effective among partners themselves.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Monica runs RPM. Is she entitled to compensation?

A

No! Only when winding up partnership affairs at the end of the partnership’s life.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Rachel gets 60% of profits; Phoebe and Monica get 20% each. Rachel votes against selling goods to Charlie Sheen. Phoebe & Monica vote in favor. What result?

A

Unless otherwise agreed, majority rules, so sale approved 2 to 1. However, unanimity is required for acts outside the ordinary course of business AND to amend partnership agreement.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Phoebe pays out $10,000 on a debt owed by RPM. What are her rights against RPM?

A

Right to be paid back (indemnified) PLUS interest.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Partners owe the partnership certain duties. Partners cannot eliminate these duties but may determine the applicable standard if reasonable:

A

(1) Care: No grossly negligent or reckless conduct or intentional misconduct.
(2) Loyalty: Must account for profit from use of partnership property and cannot compete before dissolution without full disclosure of all material facts.
(3) Good faith and fair dealing
(4) Information: Must provide without demand information a partner needs to exercise her rights, and on reasonable demand any other information.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Does a transferee have the right to inspect books and to demand an accounting?

A

Transferee has no right to inspect and can get an accounting only on dissolution.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Rachel and Monica want to admit Ryan Reynolds as a partner. Phoebe objects. Result?

A

Unless otherwise agreed, requires unanimous assent so Ryan not admitted.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

If Ryan is admitted as a new partner, is he liable for debts the partnership had previously incurred?

A

Yes, BUT he is cut some slack because he wasn’t around when the debts incurred. He can lose economic interest in the partnership but nothing more (no personal liability).
He will be liable for future debts like the rest.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

If Phoebe retires from RPM, will she still be liable for RPM’s outstanding debts?

A

Yes! Unless released by the creditor.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

What type of authority?

P tells A to act on P’s behalf.

A

Actual Authority

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

What type of authority?

P leads T to believe A has authority to bind P even though A has no actual authority. It protects T’s reasonable reliance.

A

Apparent Authority

Key fact: T’s reasonable belief must be created at least in part by P, and not by A alone. Otherwise, it wouldn’t be fair to P.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

Frodo tells Paris Hilton, “If you want to buy the ring, see Gandalf.” Frodo has never given Gandalf authority to sell it. If Paris contracts with Gandalf to buy the ring, is Frodo bound?

A

Yes. Because Frodo lead Paris to believe Gandalf has the authority. Apparent authority.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

Gandalf, in Frodo’s presence, tells Paris he’s Frodo’s agent, even though he has no actual authority. Frodo says nothing to contradict him. If Paris contracts with Gandalf for the ring, is Frodo bound?

A

Yes. Frodo’s silence in the face of Gandalf’s statement. Created apparent authority (reasonable for Paris to believe).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

Apparent authority can linger even after actual authority has been terminated if:

A

T is not aware of the termination.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

Beavis, Butthead’s office manager, bought goods from KMart without permission. Butthead paid, but told Beavis not to do it again. Beavis does it anyway. Did he have actual authority to buy more?

A

No. Butthead told him not to.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

Beavis, Butthead’s office manager, bought goods from KMart without permission. Butthead paid, but told Beavis not to do it again. Beavis does it anyway. Did he have apparent authority to buy more?

A

Yes! Look at it from KMart’s perspective: Beavis had bought supplies from them before and Butthead had paid for them, so it’s reasonable for KMart to think Beavis is authorized to do it again (as long as KMart did not know about the prohibition).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

Beavis, Butthead’s office manager, bought goods from KMart without permission. Butthead paid, but told Beavis not to do it again. Beavis does it anyway. How can Butthead destroy this apparent authority?

A

Butthead can tell KMart Beavis has no authority to bind him.

Note: It is harder to destroy apparent authority since it can exist in the minds of many 3rd parties.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

Hannah and Jess are partners. Hannah hires a lawyer for the partnership over Jess’s objection. Jess consistently objects to using partnership funds to pay the lawyer. Which of the following is true?

(A) Hannah can bind the partnership, and thus hire the lawyer only if she is managing partner.
(B) Hannah can bind the partnership on partnership affairs, and thus hire the lawyer.
(C) Hannah cannot hire the lawyer without Jess’s consent.
(D) Hannah and Jess should dissolve their partnership if they cannot agree on the lawyer.

A

(B) Hannah can bind the partnership on partnership affairs, and thus hire the lawyer.

Because had statutory actual authority to do so.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

May be created by the partnership agreement, a majority vote of partners or the statute, which makes every partner an agent for carrying on business in the usual way [but can be negated by partners].

A

Actual Authority

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

Look at the partner’s title and past conduct.

A

Apparent Authority

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

Lebron knows that Monica is RPM’s managing partner and has signed contracts for RPM before. Rachel and Phoebe forbid Monica to sign new contracts, but she signs one with Lebron anyway. Did Monica have actual authority to bind RPM to Lebron?

A

No. Partner majority told her not to - deprived of statutory authority.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

Lebron knows that Monica is RPM’s managing partner and has signed contracts for RPM before. Rachel and Phoebe forbid Monica to sign new contracts, but she signs one with Lebron anyway. Did Monica have apparent authority to bind RPM to Lebron?

A

Yes. Because Lebron knew she was managing partner and had done before. Reasonable for Lebron to do again.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
52
Q

A grant of or limit on authority to transfer real property is good only if the statement is recorded at:

A

The county recording office where the property is situated and with the Department of State

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
53
Q

RPM owns land in Dade County. RPM files a statement of authority with the Department of State and the Dade County Recording Office barring Phoebe from selling the land. Phoebe sells the land to Miley Cyrus. Is the restriction effective against Miley?

A

Yes because duly filed in both places.

54
Q

RPM owns land in Dade County. RPM files a statement of authority with the Department of State and the Dade County Recording Office barring Phoebe from selling the land. Phoebe sells the land to Miley Cyrus. Is the restriction effective against Miley, even if Miley did not know of the restriction?

A

Yes. Filings give her constructive knowledge - should have checked.

55
Q

If a statement of authority grants a partner authority to enter transactions on the partnership’s behalf other than the transfer of real property, the grant is:

A

Conclusive in favor of a BFP

56
Q

RPM owns a boat and has filed a statement of authority permitting Phoebe to sell it. Phoebe sells the boat to Miley. RPM claims that it had terminated Phoebe’s authority before the sale. Result?

A

If Miley is a BFP, then RPM is bound.

57
Q

RPM owns a boat and has filed a statement of authority prohibiting Phoebe from selling it. Phoebe sells the boat to Miley. RPM claims that it had terminated Phoebe’s authority before the sale. Result?

A

This restriction would be effective against Miley ONLY if she actually knew about it!

Other transactions, filing is only effective if transferee KNEW about restriction (not likely to check, so no constructive knowledge).

58
Q

A partner listed in a statement of authority may limit her authority by filing a ______________ with the Department of State.

A

Statement of denial

59
Q

May join all the partners as ∆s or sue any one (or more) individually for the full amount.

A

Joint and several liability

60
Q

A claimant must first exhaust partnership resources before recovering from a partner.

A

Exhaustion requirement

61
Q

After passing the bar, you all form a law firm as a general partnership. A lawyer at the firm commits malpractice representing a client. Are you personally liable to the client?

A

Yes! Client can serve ANY partner as long as served with process because jointly and severally liable - BUT client has to exhaust partnership resources first.

62
Q

After passing the bar, you all form a law firm as a general partnership. Your firm breaches a contract with a supplier. Are you personally liable to the supplier?

A

Yes. Client can serve ANY partner as long as served with process because jointly and severally liable - BUT client has to exhaust partnership resources first.

Same is true in contract as in tort!

63
Q

After passing the bar, you all form a law firm as a general partnership. A lawyer at the firm commits malpractice representing a client. If you pay the client, what are your rights against the partnership and the other partners?

A

Partnership must pay you back (indemnify) when it has the money & other partners must contribute (if they have $).

64
Q

A partnership can convert or be merged into another business form if ___________ consent.

A

All partners (or less than all, if in the partnership agreement)

65
Q

A partner in a converted/merged partnership remains _______________ liable on obligations that arose before the conversion/merger.

A

Jointly and severally

66
Q

If a partner had no authority, the partnership can get its real property back from the ____________ (who should have checked on authority) but not from a _____________ (who had no reason to check).

A

Initial transferee; subsequent BFP

67
Q

Phoebe sold land owned by RPM to Olivia Pope without authority. Olivia in turn sold it to Huck. Can the partnership get the land back from Huck?

A

Not if Huck was a BFP - didn’t deal with partner.

68
Q

A partner’s knowledge or receipt of notice is imputed to the partnership except where that partner commits __________________.

A

A fraud on the partnership

69
Q

Causes of dissociation:

A

(1) A partner’s express will to withdraw
(2) Occurrence of agreed-upon event (e.g. a partner turns 65)
(3) A partner’s expulsion, bankruptcy, death, or incapacity
(4) Termination of a partner that is a business entity
(5) Appointment of a receiver for a partner
(6) Distribution of substantially all a partner’s interest in the partnership

70
Q

A dissociating partner may have apparent authority for _________ after dissociation, but the partnership can protect itself by notifying creditors (effective immediately) or filing a statement of dissociation with the Department of State (becomes effective _______ after it is filed).

A

1 year; 90 days

71
Q

On May 5, Phoebe dissociates from RPM. On June 10, she contracts for RPM with Olivia. Is RPM liable to Olivia on the contract?

A

Yes, partnership is liable if Phoebe had apparent authority AND Olivia had not been notified of Phoebe’s dissociation.

72
Q

On May 5, Phoebe dissociates from RPM. On June 10, she contracts for RPM with Olivia. Would RPM be liable to Olivia if it had filed a statement of dissociation on May 6?

A

Yes! Because takes 90 days to be effective after filing.

73
Q

Is a dissociating partner liable to existing creditors?

A

Yes, unless released (expressly or impliedly) by creditor and all partners have to agree.

74
Q

Is dissociating partner liable to subsequent creditors?

A

Liable to subsequent creditors who reasonably believed he was then a partner and were unaware of his dissociation [but he can file a statement of dissociation to protect himself]. Potential liability lasts for 1 year.

75
Q

Is dissociating partner liable to other partners?

A

Yes, for wrongful dissociation (breach of contract).

76
Q

If RPM has a two-year term, can Phoebe dissociate after one week?

A

Yes, but liable for wrongful dissociation in breach of contract.

77
Q

If RPM is formed to accomplish a particular undertaking, like buy a piece of land, subdivide it and sell off the lots, can Phoebe dissociate after one week?

A

Yes, but will be liable for breach of contract (agreed to stay until all lots sold).

78
Q

If RPM was formed to run a bar, can Phoebe dissociate after one week?

A

Yes. Partner may dissociate at any time without liability for breach.

79
Q

Events requiring dissolution and winding up:

A

(1) Event in partnership agreement requiring winding up (unless partners unanimously agree to continue);
(2) Event making it unlawful to continue;
(3) Judicial decree;
(4) Notice of express will in a partnership at will (unless partners unanimously agree to continue); or
(5) If there’s a definite term or particular undertaking: (a) term ends or undertaking is completed; (b) partners unanimously agree to wind up; or (c) at least half the partners agree to wind up within 90 days after death, incapacity, bankruptcy or wrongful dissociation

80
Q

RPM has a two-year term. Phoebe dies before the term is up. Must RPM be dissolved?

A

Only if within 90 days, 1/2 the partners agree to wind up.

81
Q

Partners who _________ wrongfully dissociated may wind up. The partnership will be liable for expenses incurred in winding up.

A

Have not

82
Q

Apparent authority continues after an event requiring dissolution even if a partner is not winding up unless the partnership ____________ (effective immediately) or ______________ (becomes effective 90 days after filing).

A

Notifies a creditor; files a statement of dissolution

83
Q

Rachel contracts for RPM with Olivia 6 months after an event requiring dissolution. The contract is not for winding up partnership affairs. Is RPM liable to Olivia on the contract?

A

Yes! As long as Rachel had apparent authority to bond RPM to Olivia.

84
Q

Rachel contracts for RPM with Olivia 6 months after an event requiring dissolution. The contract is not for winding up partnership affairs. If RPM is liable to Olivia, will she have any rights against the partners individually?

A

Yes - jointly & severally liable (even post) but has to exhaust partnership options first.

85
Q

Rachel contracts for RPM with Olivia 6 months after an event requiring dissolution. The contract is not for winding up partnership affairs. How could RPM or the partners have protected against this liability?

A

If they notified Olivia of dissolution or filed a statement of dissolution with the Department of State.

86
Q

Rachel contracts for RPM with Olivia 6 months after an event requiring dissolution. The contract is not for winding up partnership affairs. If RPM is liable to Olivia, will RPM have any rights against Rachel?

A

Yes, have the right to be reimbursed for any losses she caused.

87
Q

RPM has $100,000 in assets and owes $30,000 to Pink, a 3rd-party creditor. Rachel and Monica each contributed $5,000. Rachel also loaned RPM $15,000. Who gets what, when?

A

1st: to creditors, including partners who are creditors $30,000 to Pink, $15,000 to 3rd-party creditors & partner creditors
2nd: to partners for what is in their accounts (capital + share of profits - share of losses). Rachel $5,000 contribution, Monica $5,000 contribution, plus 1/3 profits unless otherwise agreed.

88
Q

X and Y form a partnership. X contributes $3,000 cash; Y contributes services worth $2,000. X also loans the partnership $1,000. On dissolution, there is $6,000. There are no third-party creditors. Unless otherwise agreed, how is the $6,000 distributed?

(A) $3,000 each
(B) $3,500 to X and $2,500 to Y
(C) $4,000 to X and $2,000 to Y
(D) $5,000 to X and $1,000 to Y

A

(D) $5,000 to X and $1,000 to Y

X loans $1,000 (first), X cont. $3,000 (second). So $2,000 profits that are split even = $1,000 each.

Because no right to get contribution for services UNLESS agreed to!

89
Q

RPM has $33,000 in assets and owes $30,000 to Pink, a third-party creditor. Rachel and Monica each contributed $5,000. Rachel also loaned RPM $15,000. Who gets what, when?

A

There’s not enough to pay the creditors in full, so they split the $33,000 pro rata [RPM owes Pink twice as much as Rachel, so Pink gets twice as much as Rachel: $22,000 vs. $11,000]. The rest of the debts ($12,000) and the partners’ capital contributions ($10,000) are partnership losses (which the partners split the same as profits unless otherwise agreed).

90
Q

Phoebe and RPM are both insolvent. If Phoebe’s separate creditors assert claims against RPM’s assets, who has priority - RPM’s creditors or Phoebe’s separate creditors?

A

Partnership creditors have priority on partnership assets.

91
Q

Phoebe and RPM are both insolvent. If Phoebe’s separate creditors assert claims against Phoebe’s separate assets, who has priority - RPM’s creditors or Phoebe’s separate creditors?

A

Both sets have equal claims on a partner’s separate assets.

92
Q

A Limited Liability Partnership is just like a general partnership except in one respect:

A

Liability

93
Q

A partner in an LLP is not _____________ for any LLP obligations except her own torts and those of someone under her direct supervision.

A

Personally liable

94
Q

The LLP ________ for torts committed within the scope of its business and contracts executed by an agent acting with authority or a substitute for it.

A

Is liable

95
Q

This time, you form your law firm as an LLP (PLLP). Your partner commits malpractice defending Justin Bieber in a paternity suit. From whom can Justin recover?

A

Can recover from your partner. Can recover from the PLLP. Cannot recover from you and the other partners unless directly supervising tortfeasor when tort occurred.

96
Q

Your partner, acting with authority, contracts for the PLLP with Justin. Who’s liable on the contract?

A

Only the PLLP

97
Q

To form an LLP, must file a _____________ with the Department of State.

A

Statement of qualification

98
Q

A limited partnership is a partnership with one or more ___________ and one or more ______________.

A

General partners (general liability); limited partners (limited liability)

99
Q

To form a limited partnership, must file a _____________ with the Department of State.

A

Certificate of limited partnership

100
Q

For a limited partnership must have a _________ including value of each partner’s contribution; when contributions will be made; and the events of dissolution.

A

Written agreement

101
Q

A limited partner is not ____________ for debts of the limited partnership [even if she participates in control].

A

Personally liable

102
Q

Chef Tom forms an L.P. to run a club. Padma invests $50,000 as a limited partner. The cub flops; all its money, including her $50,000 is gone. Is Padma personally liable for its debts?

A

No! That’s the benefit of being a limited partner. Liability is limited to her contribution (no personal liability).

103
Q

Chef Tom forms an LP to run a club. Padma invests $50,000 as a limited partner. Padma signs a bank loan for the LP. Bank mistakenly believes she is a general partner (since general partners often sign loan documents for an LP). Is Padma personally liable on the loan?

A

No! FL law - limited partner that exercises control is NOT liable.

104
Q

Heidi Klum and Tim Gunn are the general partners of Trump, Ltd. Donald Trump is a limited partner who owns 55% of the partnership. Trump has veto power over what investments the firm will make. On these facts, is Trump personally liable to the partnership’s creditors?

(A) Yes, because Trump owns more than 50% of the partnership.
(B) Yes, because Trump’s name is in the name of the partnership.
(C) Yes, because Trump is involved in the control of the partnership.
(D) No, because a limited partner is not personally liable for the partnership’s debts.

A

(D) No, because a limited partner is not personally liable for the partnership’s debts.

Doesn’t matter what his stake is, if his name is in the business, or if he exercises control!

105
Q

Chef Tom forgot to file a certificate of LP. Is there any way Padma can shield herself against future liability?

A

[She can’t avoid liability that’s already arisen]

Yes! File certificate herself or can withdraw from LP within reasonable time after discovery of failure to file.

106
Q

If there is failure to file certificate of LP: All partners are ______________ liable.

A

Jointly & severally liable

Because it’s a general partnership!

107
Q

Unless otherwise provided in the limited partnership agreement, profits, losses, and distributions are allocated on the value of ______________.

A

Capital contributions

108
Q

Does transfer of interest in a limited partnership cause dissociation or dissolution?

A

No

109
Q

Chef Tom is a general partner of the LP. Is he personally liable for the LP’s obligations?

A

Yes! Jointly and severally, just like partner in a general partnership.

110
Q

A Limited Liability Limited Partnership is just like a limited partnership except in one respect:

A

Liability

111
Q

Chef Tom wants to insulate his personal assets, but remain a general partner. How can he do that?

A

Register LP as an LLLP (combines the 2 business forms)

112
Q

LP (limited partners safe) + LLP (general partners safe) =

A

LLLP (all partners safe)

113
Q

A new partner may be added to an existing LP if the LP agreement allows it or:

A

All the partners consent in writing

114
Q

Dissociation (of either a general or limited partner) in LLLP

A

Like a general partnership

115
Q

After dissociation in LLLP, a general partner’s apparent authority continues for ________ after dissociation.

A

2 years (not one year as in a general partnership)

116
Q

Conversion/Merger of LLLP must be approved by _____ general partners and limited partners who own a _______ of the right to receive distributions when the consent is effective.

A

All; majority

117
Q

Duties of LLC:

A

Whoever manages owes duties of care, loyalty and good faith

118
Q

Taxing of LLC

A

Taxed like a partnership (income is passed through to the owners) unless it elects to be taxed like a corporation (firm income is subject to “double taxation”).

119
Q

Members of LLC get ___________, except for their own torts (and, in a PL, the torts of someone under the member’s direct control). Managers, too!

A

Limited liability

120
Q

The LLC is liable for ________ committed within the scope of its business and __________ executed by an agent acting with authority.

A

Torts; contracts

121
Q

This time, you use a PL for your firm. Who’s liable to Justin if a member commits malpractice?

A

Only the firm and the tortfeasor - NOT other members unless tortfeasor was under direct control.

122
Q

A member, acting with authority, contracts for the PL with Justin. Who is liable on the contract?

A

Only the firm as the entity on the contract.

123
Q

LLP and LLC offer the same protection against ___________ in Florida.

A

Vicarious liability

124
Q

Vicarious Liability of a Partner/Member in General Partnership:

A

Joint & Several

Worst aspect of GP

125
Q

Vicarious Liability of a Partner/Member in LLP

A

Tort: None (unless directly supervising)
Contract: None

Like a corporation

126
Q

Vicarious Liability of a Partner/Member in LP

A

Joint & several for general partners (unless LLLP)

None for limited partners

127
Q

Vicarious Liability of a Partner/Member in LLC

A

Tort: None (unless under direct control of the tortfeasor in PL)
Contract: None

Like a corporation

128
Q

A partner or member is ALWAYS liable for

A

His/her own malpractice

129
Q

The firm itself is liable if:

A

The act was within the scope of its business

130
Q

Any type of business entity can be converted/merged into another if:

A

The owners consent and appropriate documents are filed with the Department of State

131
Q

An association of two or more persons to carry on as co-owners a business for profit, whether they intended to form this or not.

A

Partnership

FL Bar Review (12 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions