Partnerships Flashcards
Formation
(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
Duties
Loyalty
Care
Obligation of Good Faith and Fair Dealing
Duty of Loyalty
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
Duty of Care
act as rsnbl partner
no grossly negligent/ reckless conduct
Profits and Losses:
Default: Profits Equally; losses follow profits
Transfer of Financial Interest
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
Property Ownership:
property acquired must be for benefit of ptnship.
Management Rights
each P = rights to mngmt; majority= make decisions for ordinary business; All P’s for matter outside ordinary course
Access to Records
P allowed access to records during normal business hours
Liability to 3rd Party
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.
Ptnship Tort Liability
liable for P’s tort acts, fraud, committed in ordinary course of ptnship authority
Partner’s liability
judgment creditor of an individual partner CANNOT attach and execute upon ptnship real estate
Dissolution
Any P can choose to disassociate w/ notice
Winding Up
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.
Partner Obligations
A partner is jointly and severally liable for all partnership obligations
LLP Effective Date
effective on the date that the statement of qualification is filed
LLP (Limited Liability Partnerships)
No P’s personal liability
Individual Ps are liable for their own torts
Formation
Filing statement w/ state
** failure to form LLP= general ptnship
LLP Partners
Partners are agents of LLP
NOT personally liable for LLP obligations
Liability re: Transition from GP to LLP
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
LP (Limited Partnerships)
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.
LP Formation
File w/ state
At least 1 General Partner and 1 Limited Partner
LP Access to Records
LP have right to inspect
LP Liability
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
