Partnerships

Question 1

General Partnership

Answer 1

It is an association of two or more persons that carry on as co-owners as a business for profit.

Question 2

Association

Answer 2

Infers voluntarily getting together

Question 3

Persons

Answer 3

Can have both natural and other type of persons that are recognized as legal entities.

Question 4

Co-owners

Answer 4

Infers they are going to be working together with more than less equal rights

Question 5

For profit

Answer 5

the intention of making a profit

Question 6

Organizations that do not fall under Partnership

Answer 6

charity, scientific, political, and social organizations

Question 7

Why does co-ownership of (real) property not establish a partnership?

Answer 7

• there needs to be the management of the property

- depends on what they do after.. if they do maintenance, repair, reconstruction, acquire tenants, draft leases –> yes

Question 8

General Partnership Act

Answer 8

• The act does not have to be followed. Not a requirement
• It is a fallback position if partners have not discussed something
• very little they can agree to that can be considered to be illegal

Question 9

Can a partnership be in writing?

Answer 9

Yes, but they don’t have to be. It can be oral, but certain aspects of oral partnership might not be unenforceable

Question 10

General Partner

Answer 10

-have total personal liability
for the debt of the enterprise

• responsible for seed money
• manages business
• all general partners have the same status of liability. does not matter if one is more involved than the other

Question 11

Silent Partner

Answer 11

Do not engage in day to day tasks of the business, but still holds the same responsibility

Question 12

Partnership by estoppel

Answer 12

Person who is not technically a partner can be held liable as a general partner would be for ANY DEBTS AND DAMAGES OWED TO A THIRD PARTY (ex sales person for a partnership)

person who is important to the business( ex. employee with the partnership) will have positive benefits such as being valued and not being liable

Question 13

Most important aspect of the partnership status

Answer 13

The sharing of profit

Question 14

The sharing of profit

Answer 14

individual shares profit out of the business that is there. this can occur even if they never used the term partnership

Question 15

Joint ventures

Answer 15

• specialed partnerships
• created by entities such as: two businesses, two corporations, two entities) to engage in a specific type of business or event
  ex. building a building. put up office building

Question 16

Can partnerships be created orally?

Answer 16

Yes. it is not illegal. the establishment of the agreement of the partners themselves is the problem

Question 17

Why is it important to have a written partnership?

Answer 17

To record the agreement of what the individuals agreed to

Question 18

Statute of Frauds

Answer 18

Certain contracts need to be in writing in order to be enforced in a court of law

not self-executed

does not mean the contract is null and void if there is a dispute between individuals when there is a circumstance where it needs to be in writing

Question 19

Rules of Statute of Frauds

Answer 19

• the purchase or sell of real property must be in writing. okay if there was an oral contract as long as the agreement was fully consummated.
• contracts that are not capable of being completed within one year must be in writing

Question 20

Partnership for a period of time

Answer 20

• agree to make a business, at the end of 5 years see if they want to continued.

a partner can get a restraining order for them not to work for a competitor.

if it is greater than a year, must be in writing

Question 21

Partnership at will

Answer 21

no time limit

does not need to be in writing because they can be over it within a year

statue of fraud does not come in until something really happens

Question 22

contract for purchase and sell of items other than real property

Answer 22

for example a sale oover $400 you can a receipt from the store. that is your contract. if item is defective you can go to court

vary in all states (the value)

Question 23

prenuptial contracts

Answer 23

the intention of getting married. must be in writing

Question 24

marital settlement agreement

Answer 24

parties are breaking up in marriage - must be in writing

Question 25

capital

Answer 25

money, asset, and value

Question 26

What happens when the partnership is established?

Answer 26

Initial Accounting

-Partners make contributions of their capital

Each partner will have a capital account

Question 27

What can partners contribute to their capital account?

Answer 27

Cash money
property ( real or personal). such as equipment, fixtures
items of value (patent)
knowledge and experience that will make business succeed

everything is worth dollar value^

Question 28

Capital account

Answer 28

represents their investment in the partnership

value of the capital account may or may not relate to the particular percentage that each person has of the ownership in the partnership. Partnership agreement comes in here

each partner has a capital account. can be the same or offset

shared partnership does not need to be equal 50/50 partnership

Question 29

Property donated to partnership

Answer 29

property becomes owned by partnership

person who gave donated item does not personally own it anymore. they have TRANSFERRED ownership

no partner can personally utilize the property for personal purposes unless partners agree

Question 30

Joint tenancy

Answer 30

• joint ownership of property
• common between spouses
• relates to real property