Test 1 Flashcards
Partnerships as a legal entity
Partnership having legal existence separate from their members. Ex. Opening a bank account under the business name not yours.
Types of partnerships for GP
Term - a partnership for only asp certain time
At Will- partner can end partnership at any time
Formation of a general partnership
Partnership agreement
Partnership capital
Partnership property
Partners interest in property
Partnership agreement for a GP
Preferable but not required to enter in a written agreement
Partnership capital
Total money contributed to be used by partnership
Partnership property
Sum of assets, including property acquired by the partnership
Partners interest in partnership
Profit of surplus owned by each individual partner, transferred as gift or sale.
Duties among partners
Fiduciary duty
Duty of obedience
Duty of care
Duties among partners
Fiduciary duty
Duty of loyalty, good faith , and honesty
Duties among partners
Duty of obedience
To obey partnership agreements and business decisions made by partners
Duties among partners
Duty of care
Manage partnership without negligence, reckless conduct(coming to work drunk), intentional misconduct(sexual harassment) and violation of law(lying for client).
Rights among partners
Rights In Partnership property
Transferable interest in partnership
Management
Rights in partnership property
Right to use partnership property for partnership purposes
Transferable interest in partnership
Right to share your surplus or profit. May be transferred Ex. Will
Management
Every partner has equal right in management, unless otherwise agreed.
Enforcing rights
The rights you have in the partnership
Information - right to demand information
Legal actions - right to sue partnership or partners
Contracts of partnership
Personal liability
Each partner has joint and several, unlimited personal liability
Contracts of partnership
Personal liability
Joint and several liability
The partnership may be sued joint as a group or individually to each person
Contracts of partnership
Personal liability
Unlimited personal liability
Can be sued for everything you own.
Summary equation of a general partnership
General partnership = unlimited power + unlimited liability
Contracts of partnership
Implied or apparent authorities
Actual express authority - partner was actually told orally or writing to enter contracts
Actual implied authority - deduced or concluded that the person can make decisions under companies name
Contracts of partnership
Partnership by estoppel
A non-partner presents himself as a partner, they are responsible for incurred debt. Ex. Taking out a loan for a company that you are not part of.
Tort
Partnership is responsible of any tort committed by partners during ordinary course of business
Crime
Partner is not considered criminally liable, for a crime committed unless participated or authorized.
Notice to a partner
When one partner is notified, the entire firm is
Liability of incoming partner
Antecedent debts
Subsequent debts
Liability of incoming partner
Antecedent debts
Responsible for debts incurred before coming to the partnership but only for your capital contribution
Liability of incoming partner
Subsequent debts
Has unlimited personal liability for debts incurred after being a partner.
Dissociation
When a partner leaves the partnership
Methods of dissociation for a general partnership (the ways a partner can leave the partnership)
Partner withdraws Partner is judicially expelled Partner becomes bankrupt Partner dissolved it self within the company Death of a partner
General rule of dissociation from a partnership
Dissociation may lead to dissolving unless the remaining partners agree to continue the business
Dissolution
When the Gp is no longer operating as a business
Winding up
Completing unfinished business
Tying up loose ends
Distribution of assets for GP
Money owed to creditors (banks, light ill,landlord, ect.
Loans made by partners (loan you took from your father)
Capital contribution
Amount owned to profit
Limited partnership
A partnership made under laws of state having one or more general partner and limited partner.
Formation of a LP
Filing of certificates
Name
Contribution
Filing of certificate
Two or more must file certificate signed with the state
Name of LP
Inclusion of partners surname leads to loss of the limited partners limited liability.
So only the name of the GP should be included in the name and must end with L.P
Contribution of formation for a LP
Cash, property, or services
Rights of a L.P
Profit loss and sharing
Profits and losses are included in the partnership agreement
If not theN It will be based on the capital contribution of each partner
Rights of a L.P
General partner
Unlimited power , unlimited personal liability
Rights of a L.P
Limited partnership
Limited power, limited personal liability (extent of capital contribution)
Dissolution of a LP
Expiration of time period
Withdrawal of general partner
A decree of judicial dissolution
Winding up of a LP(same as GP)
Distribution of assets
Creditors including partners (so everybody gets paid)
Partners and ex-partners for distribution
Capital contribution
Partners for extra profit
Limited liability companies equation
“The best of both worlds”
Unlimited power + limited liability
Limited liability company
A non-corporate business that provides limited liability and participation in management. Considered a member
Formation of a LLC
Filing - articles of organizations
Name must include LLC
Contribution - cash, property, services rendered
Operating agreement for a LLC
Contract governing affairs and stating various right and duties of each member,
Foreign limited liability company
An LLC is considered foreign other than in the state that where it was formed
Financial rights of a LLC
Profits and loss sharing
Based on the % contribution
Financial rights of a LLC
Distribution
Based on the % of members contribution
Financial rights of a LLC
Withdrawal
When a person withdraws they may demand their capital contribution back.
Dissolution of LLC
Will automatically dissolve upon
Dissociation of a member
Expiration
Written consent of all members
Decree of judicial dissolution
Winding up for LLC
Creditors - all members
Unpaid distribution
Return of capital
Extra profit
Limited liability partnership
General partnership that limits the liability of its partners
Limited liability limited partnership
Limited partnership in which the liability of a GP is limited the same as an LLP
Summary of partnership
Equations
GP = LLP
LP = LLLP
LLC
General partnership
Two or more persons as co-owners for profit.
