3) Partnership Business Flashcards
(25 cards)
chs of a GP
1) right to co-manage business
2) fiduciary duties to other partners and to the partnership
3) sharing of profits and losses
4) unlimited liability of GPs for partnership debts
what rules govern partner rships? GP
1) the partnership agreemnt
2) if not, the defaults in CA’s Uniform Partnership Act
exception to GPs can make their own rules
1) no partnership agreement may unreasonably restrict a partner’s access to books + records of the partnership (policy: unlimited personal liability)
2) duty of loyalty
3) duty of care
4) right to disassociate
need consent of all GPs for
sell/lease/exchange/dispose of
(substantially) all
of GP’s property,
other than in usual and regular course of business
what can each GP do on partnership’s behalf?
default: each GP has equal right to manage + conduct partnership business
each GP is an agent of the partnership IN the scope of partnership business
but if OUTSIDE THE ORDINARY COURSE OF PARTNERSHIP BUSINESS, then partner’s action is on partnership’s behalf only if all GPs consent to the action
when partnership is sued
- -partnership itself is liable first
- -if not enough $, partners are jointly/severally liable to the outsiders
- -then can sue for contribution among each other ex. fraud or breach of duty
can GP lend $ to the partnership or do business w it?
yes
rights of GPs in a limited partnership or limited liability partnership
same right to
1) co-manage
2) bind
rights of LPs in a limited partnership
NO right to comanage or bind
duty of GP to the partnership
1) duty of CARE in conduct + winding up of business
2) duty of LOYALTY
GP’s duty of care: def
must not engage in grossly negligent or reckless conduct, or intentional misconduct, or knowing violation of law
GP’s duty of loyalty: def
1) must not compete w partnership or appropriate its opportunities
2) must not engage in dealings w partnership, if dealings intended to serve an interest adverse to the partnership’s interest
3) account for any benefit + hold as trustee any profit
GP’s duties in a limite dpartnership or LLP
same – care + loyalty
LP’s duties of care + loyalty?
no! only obligation is good faith + fair dealing
default – profit sharing GPs
- -can change in agreement
- -but if don’t, it’s equal shares
default – loss sharing GPs
- -can change in agreement
- -if don’t, it’s assumed to be same division as their profit sharing
GPs: loss sharing and contribution
if someone pays out more than their share, can seek contribution fro the others
liability to 3rd parties: GPs*
partnership (and the partners) have unlimited J+S liability in tort or contract for all obligations of the partnership
liability to 3rd parties: GPs in an LP or LLP
in an LP: same as in a GP
in an LLP: limited personal liability
liability to 3rd parties / GPs: when is a tort a liability of the partnership?
acts committed in ordinary course of business, or w the authority of the partnership
(application of agency law)
(can still sue that partner for contribution)
liability to 3rd parties / GPs: when is a tort NOT a liability of the partnership?
intentional torts if not in ordinary course of business and not w the authority of the partnership
liability of incoming GPs
not personally liable for parntership obligations arising BEFORE he entered the partnership
(tho any $ he gave to the partnership is a partnership asset now and avail for those obligations)
liability of LPs
NOT personally liable for the obligations of the partnership – just his capital contribution
role of LPs
NO right ot manage
NO power to bind partnership (usu)
