VA Partnerships

Question 1

If a partner dissociates from the partnership but the partnership is not dissolved, the dissociated partner can enter into a transaction with a third party that binds not only the dissociated partner as a partner, but also the partnership. The partnership is bound when, at the time of the transaction, the other party to the transaction

Answer 1

(i) reasonably believes that the dissociated partner is a partner,
(ii) does not have notice of the partner’s dissociation, and
(iii) is not deemed to have knowledge of the dissociated partner’s lack of authority.

Liability is limited to transactions entered into within one year of the partner’s dissociation or 90 days after the filing of a statement of dissociation w/ the state.

Question 2

Distribution of assets: Upon winding up, the partnership’s assets are distributed to the following in order:

Answer 2

(1) creditors
(2) unpaid accrued distributions
(3) return contributions
(4) share of distributions

Question 3

When can a partnership recover property that was transferred without authority?

Answer 3

i) Partnership’s interest indicated in the transfer document:

the partnership may recover the property from any initial transferee

ii) Partnership property in which partnership interest is not indicated—notification requirement

partnership may recover property, but only from a transferee who was aware that the property belonged to the partnership and that the partner executing the transfer did so without authority. Va. Code Ann. §50-73.92.

Question 4

Under the duty of care, a partner is required to

Answer 4

refrain from engaging in (i) grossly negligent or reckless conduct, (ii) intentional misconduct, or (iii) a knowing violation of the law.