3) Partnership Business

Question 1

chs of a GP

Answer 1

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

Question 2

what rules govern partner rships? GP

Answer 2

1) the partnership agreemnt

2) if not, the defaults in CA’s Uniform Partnership Act

Question 3

exception to GPs can make their own rules

Answer 3

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

Question 4

need consent of all GPs for

Answer 4

sell/lease/exchange/dispose of
(substantially) all
of GP’s property,
other than in usual and regular course of business

Question 5

what can each GP do on partnership’s behalf?

Answer 5

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

Question 6

when partnership is sued

Answer 6

• -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

Question 7

can GP lend $ to the partnership or do business w it?

Answer 7

yes

Question 8

rights of GPs in a limited partnership or limited liability partnership

Answer 8

same right to

1) co-manage
2) bind

Question 9

rights of LPs in a limited partnership

Answer 9

NO right to comanage or bind

Question 10

duty of GP to the partnership

Answer 10

1) duty of CARE in conduct + winding up of business

2) duty of LOYALTY

Question 11

GP’s duty of care: def

Answer 11

must not engage in grossly negligent or reckless conduct, or intentional misconduct, or knowing violation of law

Question 12

GP’s duty of loyalty: def

Answer 12

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

Question 13

GP’s duties in a limite dpartnership or LLP

Answer 13

same – care + loyalty

Question 14

LP’s duties of care + loyalty?

Answer 14

no! only obligation is good faith + fair dealing

Question 15

default – profit sharing GPs

Answer 15

• -can change in agreement

- -but if don’t, it’s equal shares

Question 16

default – loss sharing GPs

Answer 16

• -can change in agreement

- -if don’t, it’s assumed to be same division as their profit sharing

Question 17

GPs: loss sharing and contribution

Answer 17

if someone pays out more than their share, can seek contribution fro the others

Question 18

liability to 3rd parties: GPs*

Answer 18

partnership (and the partners) have unlimited J+S liability in tort or contract for all obligations of the partnership

Question 19

liability to 3rd parties: GPs in an LP or LLP

Answer 19

in an LP: same as in a GP

in an LLP: limited personal liability

Question 20

liability to 3rd parties / GPs: when is a tort a liability of the partnership?

Answer 20

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)

Question 21

liability to 3rd parties / GPs: when is a tort NOT a liability of the partnership?

Answer 21

intentional torts if not in ordinary course of business and not w the authority of the partnership

Question 22

liability of incoming GPs

Answer 22

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)

Question 23

liability of LPs

Answer 23

NOT personally liable for the obligations of the partnership – just his capital contribution

Question 24

role of LPs

Answer 24

NO right ot manage

NO power to bind partnership (usu)

Question 25

when LP is peronally liable for partnership obligations

Answer 25

1) LP exercises more than his LP rights, and participates in management/control, AND
2) someone transacted business WITH the LP, AND
3) that person has actual knowledge of LP’s participation in control of business and a reasonable belief that LP was a GP at time of trnasiaction