Partnerships

Question 1

Formation

Answer 1

(1) 2 more ppl/ for profit business as co-owners
(2) sharing of profits

no intent req’d
no formal agreement
no writing req’d

Question 2

Duties

Answer 2

Loyalty
Care
Obligation of Good Faith and Fair Dealing

Question 3

Duty of Loyalty

Answer 3

Dont compete w/ ptnshp,
Do not advance interest adverse to ptnshp
Do not usurp a ptnship opportunity

*Can present opportunity, if ptnship declines= OK to take

Question 4

Duty of Care

Answer 4

act as rsnbl partner

no grossly negligent/ reckless conduct

Question 5

Profits and Losses:

Answer 5

Default: Profits Equally; losses follow profits

Question 6

Transfer of Financial Interest

Answer 6

Partner CAN transfer profit to 3rd Party, Partner still has rights/ obligations,
3rd Party is NOT a partner, (but can seek judicial dissolution of ptnship)
Creditor of P can enforce judgment against P financial interest

Question 7

Property Ownership:

Answer 7

property acquired must be for benefit of ptnship.

Question 8

Management Rights

Answer 8

each P = rights to mngmt; majority= make decisions for ordinary business; All P’s for matter outside ordinary course

Question 9

Access to Records

Answer 9

P allowed access to records during normal business hours

Question 10

Liability to 3rd Party

Answer 10

Depends on Actual, Apparent authority

Ps are jointly and severally liable for all ptnship obligations;
Partner is subject to a lawsuit for its obligations

Ptnship creditor must exhaust the ptnship assets BEFORE taking P indvdl assets.

Question 11

Ptnship Tort Liability

Answer 11

liable for P’s tort acts, fraud, committed in ordinary course of ptnship authority

Question 12

Partner’s liability

Answer 12

judgment creditor of an individual partner CANNOT attach and execute upon ptnship real estate

Question 13

Dissolution

Answer 13

Any P can choose to disassociate w/ notice

Question 14

Winding Up

Answer 14

A ptnship that is dissolved exists ONLY to “wind up” business

(a) assets- creditors have priority over Ps to ptnship asset
(b) obligations- ptnship assets are 1st applied to pay obligations to creditors before distribution to Ps.

Question 15

Partner Obligations

Answer 15

A partner is jointly and severally liable for all partnership obligations

Question 16

LLP Effective Date

Answer 16

effective on the date that the statement of qualification is filed

Question 17

LLP (Limited Liability Partnerships)

Answer 17

No P’s personal liability

Individual Ps are liable for their own torts

Question 18

Formation

Answer 18

Filing statement w/ state

** failure to form LLP= general ptnship

Question 19

LLP Partners

Answer 19

Partners are agents of LLP

NOT personally liable for LLP obligations

Question 20

Liability re: Transition from GP to LLP

Answer 20

If GP incurs liability and then becomes LLP, LLP is liable for those obligations

If individual Partner in GP is liable, and then LLP is formed the Partner is still liable for that obligations

A new Partner admitted to the LLP is NOT liable for pre-transition obligations

Question 21

LP (Limited Partnerships)

Answer 21

Formed by 2 more people
at least 1 General Partner and 1 Limited Partner
LP liability limited by amount contributed

removing of GP= not control; only liable to 3P who rsbly believes that the LP is a GP.

Question 22

LP Formation

Answer 22

File w/ state

At least 1 General Partner and 1 Limited Partner

Question 23

LP Access to Records

Answer 23

LP have right to inspect

Question 24

LP Liability

Answer 24

LP not liable for ptnship obligations BUT CAN be liable if LP participates in control of the ptnship

Liable to 3P who rsbly believes that the LP is a GP