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MEE - Agency and Partnerships > Power and liability of partners > Flashcards

Power and liability of partners Flashcards

1
Q

What is the general rule for sharing of profits and losses in a general partnership?

A

All partners share profits and losses equally, regardless of the amount each partner has contributed

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2
Q

Does a partner have a right to demand distributions?

A

No

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3
Q

What is required for decisions to be made in the ordinary course of business for a general partnership?

A

A majority vote of all partners

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4
Q

What is required for decisions that are not in the ordinary course of business for a general partnership?

A

Unanimous consent

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5
Q

What rights can a partner in a general partnership transfer?

A

Only her economic rights (unless the partnership agreement provides otherwise)

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6
Q

Can a partner in a general partnership transfer her governance rights?

A

No

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7
Q

When may a partner in a general partnership use or possess partnership property?

A

Only when it is on behalf of the partnership

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8
Q

What will a court use to determine whether property is partnership property or property owned by individual partners?

A

(1) Name on the title
(2) Assets used to purchase the property

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9
Q

What is the Right to Information in a general partnership?

A

The right to be informed about partnership business

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10
Q

What is the Right to Remuneration?

A

An exception to the general rule that partners are not entitled to compensation for services rendered to the partnership. Partners are entitled to compensation for services rendered when provided during the winding up period

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11
Q

What is the right to reimbursement and indemnification?

A

A partner is entitled to reimbursement for payments made, and to indemnification for liabilities incurred, in the ordinary course of partnership business

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12
Q

When does a partner in a general partnership have the authority to bind the partnership?

A

When it is in the ordinary course of business and the partner does not know that he lacks authority

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13
Q

When can a partner in a general partnership bind the partnership in acts outside the ordinary course of business?

A

When the partner has the appropriate authority

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14
Q

Do partners in a general partnership have the right to transfer partnership property?

A

Yes, but it is subject to any grant or statement of authority

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15
Q

What is the relationship between a partner and the partnership referred to as?

A

An agency relationship

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16
Q

When may improperly transferred partnership property be re-obtained?

A

So long as the property has not been transferred by the original transferee to a subsequent holder without notice

17
Q

What is a general partner’s liability to third parties?

A

Jointly and severally liable for all obligations of the partnership

18
Q

What is a newly admitted partner’s liability to third parties?

A

A newly admitted partner is not liable for obligations incurred prior to the partner’s admission, but the partner’s contributions to the partnership may be used to satisfy prior obligations

19
Q

What is a dissociated partner’s liability?

A

Liable for obligations incurred prior to dissociation, unless the obligation was materially changed without the dissociated partner’s consent

20
Q

What is the liability of a purported partner?

A

Same liability as a general partner if:
(1) A third party reasonably relied upon the purported partner’s representation when transacting
(2) The purported partner committed an affirmative act representing himself as a partner

21
Q

Can judgements against a partnership be enforced against individual partners?

A

No

22
Q

What is a charging order?

A

The ability of a creditor who has a judgment against an individual partner to enforce the judgment against the partner’s partnership interest by obtaining a lien against the interest

23
Q

How may a person become a limited partner?

A

Under the partnership agreement or with the consent of all partners

24
Q

How are profits and losses distributed in a limited partnership?

A

Based on each partner’s contributions. No contribution=no distribution

25
Q

What is a contribution?

A

Services, property, or some other benefit

26
Q

When is an LP prohibited from making a distribution?

A

(1) It is unable to pay its debts as they come due
(2) The LP is insolvent at the time of the proposed distribution

27
Q

When is unanimous consent required of all partners in an LP?

A

(1) Amend the LP agreement
(2) Amend the certificate of limited partnership to add or delete a statement that the LP is an LP
(3) Dispose of all or substantially all of the LP’s property (except in the usual course of business)
(4) Alter a partner’s obligation to make a contribution to the LP
(5) Admit a new limited or general partner to the LP

28
Q

What is a general partner in an LP’s right to information?

A

Same as a general partnership?

29
Q

What is a limited partner in an LP’s right to information?

A

Broad rights to inspect and copy any LP information required to be maintained and may, upon reasonable demand, attain from the LP any information related to the limited partner’s interest as well as the overall LP’s financial condition

30
Q

What duties do general partners owe to the LP?

A

(1) duty of loyalty
(2) duty of care

31
Q

To what extent is a limited partner liable for an LP’s obligations?

A

Only to the extent of its capital contributions

32
Q

Under the ULPA, is a limited partner personally liable if they engage in management and control of the LP?

A

No. Only personally liable if the limited partner deals with a third party who believes the limited partner is a general partner

33
Q

Does a limited partner owe the LP any duties?

A

No, unless the LP agreement provides otherwise

34
Q

When may a limited partner file suit to enforce a right of the LP?

A

Only after making a demand upon the general partners, unless doing so would be futile

35
Q

Is a partner of a limited liability partnership personally liable for debts of the LLP?

A

No, but they may be directly liable for obligations they incur

36
Q

What is the duty of loyalty?

A

Partner must not do any of the following:
(1) Appropriate partnership opportunities or otherwise improperly benefit from the partnership business
(2) Use or possess the partnership property improperly
(3) Engage in self-dealing or deals in which the partner has a conflict of interest
(4) Compete with the partnership

37
Q

The personal use of partnership property violates which fiduciary duty?

A

Duty of loyalty

38
Q

What is the duty of care?

A

Partner must refrain from engaging in:
(1) grossly negligent conduct
(2) reckless conduct
(3) willful misconduct
(4) intentional misconduct
(5) knowingly violation of the law while conducting partnership business

MEE - Agency and Partnerships (6 decks)

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