Rules

Question 1

How is an at-will partnership created?

Answer 1

When there is no fixed term nor a specified undertaking

Question 2

Does one partner have the authority to bind the others without their consent?

Answer 2

Each partner has the actual authority to commit the partnership to usual and customary matters unless the partner has reason to know the other partners would not consent

If the decision is a matter outside the ordinary course of business, consent of all partners is required.

Question 3

Can a partnership agreement prevent a partner from withdrawing?

Answer 3

No. But it can require notice.

Question 4

Can wrongful dissociation lead to dissolution of the partnership?

Answer 4

Yes, if within 90 days of the dissociation, a majority of the partners agree to wind up the business

*if they decide to continue the business they must buy out the dissociated partner

Question 5

When is an at-will partnership dissolved?

Answer 5

When a partner dissociates

If not wrongful, he may participate in the winding up of the partnership.

Question 6

Does rightful dissociation lead to a termination of the partnership?

Answer 6

No, after dissolution, but before winding up is complete, the partnership may choose to continue carrying on business

If ALL partners (including the properly dissociated partners) agree to waive the right to terminate.

Question 7

Are withdrawn partners still liable for debts incurred during the winding up period?

Answer 7

Yes, for all acts that are appropriate for winding up the partnership.

Question 8

What is a partner’s liability in a general partnership?

Answer 8

Jointly and severally liable for all partnership obligations

Question 9

Is a general partnership liable for torts committed by a partner?

Answer 9

Yes, even fraud, if committed in the ordinary course of business or with authority of the partnership (actual or apparent)

Question 10

Is a new partner liable for prior partnership obligations?

Answer 10

No, but any capital contribution is at risk for satisfaction of such obligations

Question 11

Are partners in an LLP personally liable?

Answer 11

Not liable for any obligation of the LLP.

But can be personally liable for their own personal misconduct (including negligence)

Question 12

Is a partner entitled to reimbursement when he makes a loan?

Answer 12

Yes if the loan is in the furtherance of the ordinary course of business or to preserve the partnership’s business or property

Question 13

When will apparent authority bind the partnership to a contract?

Answer 13

1. Unauthorized act was performed in the ordinary course of business (or the kind of business carried on) of the partnership

And

2. The third party must not have known that the partner lacked authority

Question 14

Can a partner transfer an ownership interest in partnership property?

Answer 14

No, either voluntarily or involuntarily

Question 15

Can a creditor who has obtained a judgement against a partner enforce it against the partner’s partnership interest?

Answer 15

Yes, but only by obtaining a judicial charging order. Which is a lien on the partnership interest (right to share in the partnership’s profits and losses and receive distributions).

Question 16

What are the transferee’s rights when a partner transfers his property interest?

Answer 16

The transferee has the right to receive distributions that the transferor was entitled to

Cannot participate or manage the business, access records, or demand information.

To become a partner, consent of all partners is required

Can seek dissolution if it’s an at-will partnership