Relationships of parner with Partnership and Partners Flashcards
Can the a partner bind the partnership in contracts and to third parties?
yes
What fiduciary duties does a partner owe?
loyalty, care, good faith and fair dealing
What is the rule for the duty of loyalty?
no competing with P business, advancing an interest adverse to the partnership or usurping a P oppurtunity
What is the exception to the duty of loyalty?
A Partnership agreement can designate certain activities as not violating the duty (but cannot eliminate the duty altogether) and may provide a safe harbor allowing the other partners to authorize or ratify a transaction between a partner and the P after full disclosure of material facts
What is the duty of care?
duty to refrain from engaging in grossly negligent or reckless conduct, intentional conduct, or a knowing violation of the law
May a partnership agreement reduce the duty of care?
if may not unreasonably reduce the duty of care
If a partner dissociates or the P’s is dissolved, do duties apply?
do not apply unless the aprtner is engaged in winding up the P’s business
Can the PA eliminate the good faith and fair dealing obligation?
No, but can prescribe reasonable standards
If there is no PA or PA is silent, how much of the profits and losses does each Parent have?
entitled to an equal share of profits and losses
if PA specifies profits but not losses - losses allocated same as profit
Can a partner demand a profit distribution?
No, but is entitled to have her account credited with her share of profits
What is the rule for transfer of partnership interest to a 3rd party?
- can transfer all or part of P interest (absent restriction in PA)
- transferor retains all rights and duties of a partner
- transfer does not cause dissolution or dissociation
What rights does the transferee have and not have?
Has:
- right to receive distributions
- seek judicial order for dissolution
- an accounting upon dissolution
Does not have:
- right to participate in the management or conduct of business
- access the P’s records
- demand other information
Who does property acquired for the P belong too?
to the partnership even if in the name of one partner
When is ownership by P presumed?
- purchased with P assets
- P credit is used to get financing
If ownership of property is unclear, what factors are used?
- property’s use
- tax treatment of the property
- source of funds to maintain or improve property
- P’s credit used to get financing
- P’s assets used to purchase property
T/F: Majority of Partners needed to make ordinary P business decisions
True
Consent of what percent of partners is required for matters outside the ordinary course of business and for amendments to PA?
100%
If a partner makes a loan to the P in furtherance of P business what is required?
- reimbursement
- indemnification
Can partner derive a personal benefit from the use or possession of P property?
No, unless the partner compensates the P for such use or possession
Must a partnership permit its partners and agents to access all P records?
Yes
Can a P sue a partner?
Yes, for breach of the PA or violation of suty
Can a partner sue a P or another partner?
Yes, to enforce partner’s rights under the PA or RUPA
What events cause a dissociation?
- partners notice of withdrawal
- partners expulsion due to PA
- unanimous vote of the other partners
- the partner’s bankruptcy
- partners death
- appointment of a guardian for the partner or a judicial determination of the partner’s incapacity to perform duties under the PA
- termiantion of an entity partner
Is a partner liable to the P and the other partners for damages cause by wrongful dissociation?
Yes
