Review Flashcards
What is a partnership?
An association a) of two or more persons b) to carry on as co-owners c) a business for profit (whether or not they intended to form the partnership)
Describe the presumption of profit sharing
Profit sharing creates a presumption that a person is a partner, unless the profits were received in payment of a debt, rent to a landlord, wages, etc.
When is a vote required?
For extraordinary matters, like selling land or admitting a new partner
Explain liability in a general partnership
In a general partnership, partners are jointly and severally liable for partnership debts
Liability of incoming partners
Incoming partners are not personally liable for prior debts of the partnership
Liability of outgoing partners
Outgoing partners are personally liable for debts incurred during their time at the partnership
What duties do partnerships owe to one another?
Loyalty
Care
Account for profits
What are the three steps of ending a partnership?
- Dissociation
- Winding up
- Termination
What is dissociation and who is given notice?
The dissolution - change in relation of the partners.
Prior creditors: personal notice
Others: newspaper notice
Winding Up
Partnership assets are liquidated and creditors are paid
Termination
The true end of the partnership
If a creditor has a claim against a partner, what can they obtain?
An interest in the partnership, including profits. NOT management or voting rights.
If a creditor has a claim against the partnership, what can they obtain?
They may try to collect from individual partners, but should first attempt to collect from the partnership
What is an LLP?
No partner is personally liable for the obligations of the partnership (but partners are liable for personal torts)
What is an LP?
At least one general partner is listed on a certificate filed with the state.
General partnership = liable for all partnership obligations
LP = limited liability
