Partnerships & LLCs

Question 1

Can a profit sharing relationship be characterized as a partnership even though the parties expressly stated they were not partners?

Answer 1

Yes.

there doesn’t have to be a mutual intention to be partners.

Inadvertent partnerships typically result from an effort to create an independent contractor or creditor relationship in order to avoid partnership liability.

Question 2

General Partnership Liability

Answer 2

• each partner is personally and individually liable for the entire amount of the partnership’s obligations.

Question 3

Can a minor enter into a partnership?

Answer 3

• anyone who is capable of entering into a binding contract can enter into a partnership
• a minor lacks capacity to be a partner and is not personally liable for partnership debts.
• minor IS liable though to the extent of his capital contributions

Question 4

RUPA?

Answer 4

The Revised Uniform Partnership Act – has been adopted by Florida.

Question 5

Under the RUPA, what creates a rebuttable presumption that a person is a partner in the business?

Answer 5

Sharing of profits.

No such inference is drawn if the profits constitute wages, rent, interest or other payments deemed exceptions to the general rule.

Question 6

What happens if a person consents to being held out as a partner, even if he is not?

Answer 6

Under the RUPA, he is liable to any third party who enters into a transaction in reliance on that representation.