Partnerships & LLC's

Question 1

What is a partnership?

Answer 1

When two or more persons or entities intend to carry on a for-profit business as co-owners. Do NOT need intent to form a partnership.

Question 2

Do you need a written agreement to form a partnership?

Answer 2

No.

Question 3

What is the profit sharing test?

Answer 3

If there is profit sharing, there is a presumption that there is a partnership.

Question 4

What is a partner by estoppel

Answer 4

A person will be treated as a partner if: there is a representation that the person is a partner, the person makes or consents to the representation, a third party reasonably relies on the representation, and the third party sufferes damages as a result.

Question 5

Partners are ___ of the partnership

Answer 5

Agents

Question 6

Partners owe duties of ____ and ___

Answer 6

Loyalty; Care.

Question 7

A partner ___ transfer his or her rights in the partnership

Answer 7

Can. This does not cause dissolution or dissociation.

Question 8

Property acquired by partners or partnership is presumed to belong to the ____

Answer 8

Partnership.

Question 9

A new partner must get the consent of __ the existing partners.

Answer 9

All.

Question 10

A ____ of partners must approve ordinary business decisions while ___ partners must approve matters outside the ordinary course.

Answer 10

Majority; all.

Question 11

A partner ___ derive a personal benefit from the use or possession of partnership property.

Answer 11

Cannot.

Question 12

A partner is ___ to the partnership for damages caused by wrongful dissociation.

Answer 12

Liable. A dissociation is wrongful only if in breach of provision of the partnership agreement or before the completion of the undertaking.

Question 13

A partnership must indemnify a dissociated partner against all partnership liability incurred when?

Answer 13

Before or after the dissociation.

Question 14

A partnership is ____ for a partners torts in the course of the partnership business

Answer 14

Liable

Question 15

Partners are ____________ for all partnership obligations?

Answer 15

Jointly and severally liable. A judgment is first satisfied from the partnerhsips assets then the partners assets.

Question 16

A dissociation from a partnership at will causes?

Answer 16

The partnership to dissolve.

Question 17

Before winding up is complete, a partnership ____ resume carrying on its business as if dissolution had never occured.

Answer 17

May.

Question 18

At formation, a limited partnership must have

Answer 18

at least one general partner and one limited partner.

Question 19

Does the filing of a statement of qualification, which transforms a partnership into an LLP, create a new partnership?

Answer 19

It does not - the new llp assumes all prior obligations/assets etc

Question 20

Talk about transferees

Answer 20

partner may transfer the right to share in the profits and losses of the partnership and to receive distributions. The transfer of that partnership interest creates in the transferee a right to receive distributions to which the transferor would otherwise be entitled.

A transfer of a partner’s partnership interest does not make the transferee a partner unless the other partner or partners consent to making the transferee a partner.

Question 21

To form a limited partnership, what must be done?

Answer 21

a certificate of limited partnership must be filed with the state and must include the name and address of each general partner. In addition, all of the general partners must sign the certificate. The limited partnership comes into existence upon the filing of the certificate of limited partnership. If a certificate is not filed, the limited partnership is not formed.

Question 22

A person admitted as a partner into an existing partnership is?? is not?? personally liable for any prior partnership obligations.

Answer 22

is not (but contribution may be reached)