Rights and Liabilities Between General Partners Flashcards
General partners owe to each other and the partnership
a duty of loyalty
What is the duty of loyalty?
it means that GPs may never engage in self-dealing; may never usurp partnership opportunities; and may never make a secret profit.
What is an action for accounting?
In an action for accounting the partner is liable for losses caused by the breach and the partnership may disgorge profits made by the breaching general partner
Specific partnership assets may not be transferred by individual partners
without partnership authority.
A share of the partnership profits is owned by individual partners and therefore it may be
transferred by individual partners to third parties.
Can the right to share in management be transferred by individual partners to third parties?
NO. It is an asset owned by the partnership itself. Can’t sell your right to vote, can’t leave your right to vote in inheritance.
How do you determine if the property is owned by the partnership or the personal property of an individual partner?
Whose money was used to buy the property. If partnership money was used to buy it, it becomes partnership property. If by contrast, personal money was used to buy it it becomes personal property.
Absent an agreement, each partner is entitled to how much control (vote)?
Equal control.
Absent an agreement, what salary do partners get?
None.
When do partners get a salary?
For helping to wind-up the business.
Absent an agreement, how are profits shared?
Equally.
Absent an agreement, how are losses shared?
Like profits.
