Relationships with 3P

Question 1

Relationship with 3P - Power of Partner to Bind

Answer 1

General - partner is an angent of the partnership for the prupose of its business and can contractually bind the partnership where the partner has actual or apparaent authority

Actual Authority - acted with authotiy that was either express or implied from the partner’sreasonble belief that the act was necessary

Apparent Authority - third part reasonbly believed taht the partner’s act was authorized because it was:

1. in the ordinary course of apparentlycarryingon either the partnership business or business of a kind carried on by the partnership or
2. 3P did nt know or have notice that partner lacked authority

Question 2

Relationship with 3P - Managing Partner Authority

Answer 2

Partnerships can file statements of authority with the state to clarify the existence andscope of apartner authority and partner can file statement of denial with state that denies status as a partner or grant of authority

Question 3

Relationship with 3P - Liability of Partners

Answer 3

Partnership may be sued and each partner in a general partnership is jointly and severally liable for obligations of the partnership

New Partners? - not liable for any partnership obligation incurred before the person’s admission as a partner

Dissociated Partner? - still liable for oblgiations inccured while he was a partner until he notifies known/potential creditors otherwise

How to Sue - suing party must exhaust assets of partnership first then may pursue partners individually unless partnership is in bankruptcy, partner has consented, or partner is liable independent of partnership

Question 4

Relationship with 3P - Property Ownership

Answer 4

General - property acquired by the partnership belongs to the partnership and not to the individual partners

Rebuttable presumption that property belongs to partner if property is acquired in the name of the partner and the instrument of title does not indicate the person’s capacity as as partner and partnership assets were not used to acquire it.

If no idea how paid for, look to use of property

Question 5

Relationship with 3P - Transfer of Titled Partnership Property

Answer 5

Parter can transfer property in the name of the partnership

Partnership may be able to recover partnership property that was transferred if the partnership interest in property was indicated on the transfer instrument, if the transferee knew the propery was partnership property and that the transferor lacked authority.

Question 6

Partnership Changes + Termination - List

Answer 6

Merger

Coversion

Termination

Question 7

Partnership Changers + Termination - Merger

Answer 7

Rule - partnership may be merged into other partnership, limited partnership, LLC, and corps and the new entity assumes all assts and liabilities

Question 8

Partnership Changers + Termination - Conversion

Answer 8

Partnership to Limited Partnership - requires

1. approval from all partners and
2. filing of statement with state

General partner who becomes a limited partner as a reasult of the conversion remains liabile for any preconversion obligatiosn and may be liable for oblgiations incurred by the limited partenership for 90 days after conversion

Limited Partnership to Partnership - requires

1. approval by the partners and
2. a cancellation of the certificate of limtied partnership

Limited partner who becomes a general partner remains liabile only as a limited partner for any preconversion oblgiations; general partners are liable for any obligation for the partnership incurred after the conversion

Question 9

Partnership Changers + Termination - Termination

Answer 9

Two Step Process - dissolution then winding up

Dissolution - these results in dissolution

1. in a partnership at will, a partner gives notice of his will to withdraw as a partner
2. in a partnership for a definite term, the completion of the term
3. in a partnership for a particular undertaking, the completion of the undertaking
4. a specific dissolution event set for in the partnership agreement
5. judicial determination
6. business purpose becomes illegal

Company is now considered dissolved but is not terminated until winding up complete

WInding Up - dissolved partnership continues until existing work completed, accounts collected, bills paids, partner accounts settled,

Distribution of Funds:

i) partnership creditors then
ii) partners as determined by the partner capital accounts