Rights and Liabilities Between General Partners

Question 1

General partners are _________ of each other and the partnership

Answer 1

fiduciaries

Question 2

General partners owe to each other and the partnership:

Answer 2

1) Duty of Loyalty - may never engage in self-dealing, may never usurp partnership opportunities, and may never make a secret profit at the partnership’s expense
2) Action for Accounting - the partnership may recover losses caused by the breach and also may disgorge profits made by the breaching partner as well

Question 3

Partners’ Rights in Partnership Property and Liquidity

Answer 3

1) Specific Partnership Assets
2) Share of Profits
3) Share in Management

Question 4

Specific Partnership Assets

Answer 4

Land, leases, equipment. These are owned only by the partnership itself and therefore may NOT be transferred to individual partners without partnership authority.

Question 5

Share of Profits

Answer 5

This is personal property owned by individual partners and therefore may be transferred by individual partners to third parties

Question 6

Share in Management

Answer 6

This is an asset owned only by the partnership itself and therefore it may not be transferred by individual partners to third parties

Question 7

Management

Answer 7

Absent an agreement, each partner is entitled to equal control.
Ordinary matters require a majority vote, but fundamental partnership matters require unanimous consent.

Question 8

Salary

Answer 8

Absent an agreement, partners get NO salary

Question 9

Partner’s Share of Profits and Losses

Answer 9

1) Absent an agreement, profits are shared equally

2) Absent an agreement, losses are shared like profits