Profits and losses Flashcards
How is division of profits and losses determined?
Dictated by AGREEMENT
Does division of profits/losses need to be the same?
NO
Does capital contribution effect division of profits/losses?
NO, not necessarily
What is default for profits and losses if not in partnership agreement?
Profits divided EVENLY
Losses FOLLOW PROFITS
Distribution default rule + modifications
Default rule: partners DO NOT have right to distribution
Partners CAN agree in advance to allow distributions
Transfer of Partnership Interest default rule and modifications
Default rule: Partner does NOT have right to transfer interest
Modifications: partners can change default rule to require MAJORITY VOTE of partners
Old rule for transfer of partnership interests
NO LONGER VALID
Old rule: if a partner tries to convey interest, partnership DISSOLVES
New partner default rule
When a new partner is introduced, all existing partners must CONSENT
(in large partnerships, small committee/group of partners can be established to ratify)
Can a partner transfer right to distribution to third party?
YES, and still remains partner with rights and obligations
Third party is NOT partner
May a third party receiving distributions from partnership move to dissolve partnership?
YES, may seek judicial dissolution
Can a creditor of partner enforce judgment against partner’s financial interest in partnership?
YES
Can a partnership be a principal?
YES
Can a partner be an agent?
YES
May a judgment creditor of individual partner attach and execute on real estate?
no
In LLP, if limited partner removes general partner, does limited partner assume control/general partner status by default?
NO, only liable to third parties who reasonably believe limited partner is general partner
