Unincorporated BAs Flashcards
P’SHIP PROPERTY
Title, funds
Partnership’s name»_space;> Partnership property
- OR acquired in a partner’s name but it’s clearly on BEHALF of the p’ship
- Source of funds doesn’t matter
Partnership funds»_space;> PRESUMED partnership property
Personal funds»_space;> PRESUMED personal property
P’SHIP PROPERTY
Partners can only use p’ship property for:
Partners can only use p’ship property for p’ship purposes
- UNLESS all partners consent
PARTNER RIGHTS / DUTIES
DUTY of loyalty
DUTY of good faith, care
^ Which can be eliminated?
DUTY of loyalty
(1) Account to the p’ship any benefits received
(2) Don’t deal in ways ADVERSE to the p’ship
(3) Don’t compete with the p’ship
* CANNOT eliminate this duty
DUTY of good faith, care
- CAN eliminate
New partners:
- How many partners have to vote for bringing in the new partner?
- Liability for
- PRE-existing p’ship debts:
- FUTURE p’ship debts:
New partners:
- Default rule—requires UNANIMOUS consent of all partners
- Liability for
- PRE-existing p’ship debts: New partner is liable, but only to the extent of his cap contribution
- FUTURE p’ship debts: New partner is liable via cap contribution AND personally liable
Assignment/transfer of membership interests
- Includes what?
Assignment/transfer of membership interests
- Includes right to income
- Includes right to inspect books for PROPER PURPOSE
- Does NOT include right to participate in mgmt
CONTRACT LIABILITY
TEST: P’ship bound if:
Actual
Apparent
CONTRACT LIABILITY
TEST: P’ship bound if partner had AUTHORITY
Actual
- DEFAULT: all partners have authority to carry on ordinary business
- P’ship agreement, vote of partners
Apparent
- Partner’s title
- Prior consent, prior dealings with the TP
PARTNER SALE OF REAL ESTATE:
- If P didn’t have authority …
REAL ESTATE:
- If P didn’t have authority, P’ship can GET THE PROP BACK—but only from the INITIAL buyer, not a subsequent BFP.
TORT LIABILITY
TEST:
TORT LIABILITY
TEST:
- P’ship liable for PARTNERS’ torts if committed in the ORDINARY COURSE of p’ship business
- P’ship liable for EMPLOYEES’ torts if SERVANT and SOE
WITHDRAWAL
How to withdraw:
WITHDRAWAL
How to withdraw:
- Notice of withdrawal
- An agreed-upon event
- Expulsion (wrongful behavior)
- Death, bankruptcy, incapacity
WITHDRAWAL
Apparent authority lingers for how long?
ONE YEAR lingering apparent authority
- Bind p’ship to TP for one year after withdrawal
- P’ship can protect itself by notifying creditors
WITHDRAWAL
LIABILITY of the withdrawn partner
- EXISTING debts:
- SUBSEQUENT debts:
- To OTHER PARTNERS:
LIABILITY of the withdrawn partner
- EXISTING debts:
- Still liable, unless released
- SUBSEQUENT debts:
- Liable if TP unaware of the withdrawal
- Withdrawn P can notify to avoid this
- To OTHER PARTNERS:
- Has to pay other partners damages if she wrongfully withdrew (e.g. before the term was up or the goal was accomplished)
WINDING UP
How many partners have to consent to the windup?
WINDING UP
Only need a majority in interest, if p’ship at WILL
Need consent of ALL partners to wind up a term/goal p’ship
WINDING UP
Distribution of p’ship assets after winding up
- What’s the order of priority b/w CR’s, partner CR’s, and the partners’ accounts?
Distribution of p’ship assets after winding up
(1) Creditors (including P creditors)
- CR’s split pro rata if there’s not enough to pay them all off
(2) Partners’ capital accounts (contributions + profits - losses)
WINDING UP
Creditors’ rights to:
- P’ship property
- Partners’ individual property
WINDING UP
Creditors’ rights to:
- P’ship property
- CR’s of the p’ship itself have priority over CR’s of the individual partners in this property.
- Partners’ individual property
- CR’s of the p’ship can pursue the personal property (partners are individually liable for p’ship debts).
- But the partners’ individual CR’s are on par with the p’ship creditors in this property.
WINDING UP
Extending the winding up date
Extending the winding up date
- IF p’ship for term, goal
- UNANIMOUS consent needed
- Implied consent if p’ship continues for 90 days past end date
