Flashcards in Agency and Partnership Deck (91):
What is a general partnership under RUPA, and what are the requirements?
Under the Revised Uniform Partnership Act ("RUPA"), a partnership is an association of two or more persons to carry on as co-owners a business for profit. Although the partners need not intend to form a partnership, they must intend to carry on as co-owners of a business for profit. A writing is not required; a partnership can be formed by conduct (i.e., associating to form a business for profit). Partner contributions to partnership capital are not required to form a partnership
Each partner is an agent of the partnership for the purpose of its business
What factors raise the presumption that a partnership has been formed?
Under the Revised Uniform Partnership Act ("RUPA"), a person who receives a share of the profits of a business is presumed to be a partner.
Designation by the parties of the entity as a partnership, the sharing of gross returns, and joint or common tenancies of property are indicative of the intent to form a partnership, but they are not conclusive
When a partner transfers their interest to a transferee, what does the transferee get?
As against the other partners, in the absence of an agreement, a transfer of a partner’s transferable interest entitles the transferee to receive, in accordance with his contract, distributions to which the transferring partner would otherwise be entitled.
A transferee is not entitled to become involved in the management or administration of the partnership business or affairs, demand an accounting of partnership transactions, or to inspect the partnership books.
What are voting rights within a partnership
Decisions regarding matters within the ordinary course of partnership business may be controlled by a majority vote of all the partners, but matters outside the ordinary course of partnership business require the consent of all partners.
Is a partner entitled to remuneration?
Absent an agreement to the contrary, a partner is not entitled to remuneration except for reasonable compensation for services rendered in winding up the partnership’s business.
What is apparent authority?
Apparent authority is the authority that a third person would reasonably believe a partner has based on his being held out by the partnership as a partner. The act of any partner apparently carrying on in the ordinary course of the partnership business (or business of the kind carried out by the partnership) binds the partnership unless the partner had no authority to act for the partnership in the particular matter, and the person with whom the partner was dealing knew or had received notification that the partner lacked authority. Actual authority is the authority a partner reasonably believes he has based on the communications between the partnership and the partner.
Under RUPA, how long does a partnership continue to exist after dissolution?
Under RUPA, after an event of dissolution occurs, a partnership continues until the winding up of business is completed, at which time the partnership is terminated. A statement of dissolution does not end a partnership. The partnership will be bound by a partner’s post-dissolution acts where the party with whom the partner dealt did not have notice of the dissolution. If a partner files a statement of dissolution with the secretary of state, third parties will be deemed to have notice of the dissolution 90 days after it is filed.
When may general partners be held personally liable?
General partners may be personally liable for obligations of the partnership beyond their agreed-upon contributions. General partners are jointly and severally liable for all obligations of the limited partnership, unless the limited partnership is also a limited liability partnership. In that case, any liability incurred belongs to the partnership alone, and the general partners are not personally liable on the obligation.
Incoming general partners are not personally liable for any partnership obligations incurred before they became general partners.
General partners may be personally liable for obligations of the partnership beyond their agreed-upon contributions.
Under ULPA, what rights are exclusive to general partners?
ULPA’s grant of management rights is exclusive to general partners. However, as a matter of contract, the partnership agreement may allocate the right to manage or control the partnership to limited partners. Both general and limited partners are granted the right to information, although the right is not identical. Furthermore, both general and limited partners are granted the right to distributions and to assign the partner’s interest in the partnership.
Under ULLCA, how may an LLC be formed?
LC is formed by filing a certificate of organization with the secretary of state. An LLC can be formed with one member. An LLC may, but need not, adopt an operating agreement to control most aspects of the LLC’s business and management. Unless an LLC requests to be taxed as a corporation, it will receive partnership tax treatment. Thus, an LLC need not make a formal election to be taxed as a corporation or a partnership.
When may an LLC bring a derivative action on behalf of the corporation?
Members of an LLC, whether member-managed or manager-managed, may bring a derivative action to enforce a right of the LLC. The member first must make a demand on the other members or the managers (depending on how the LLC is managed), unless demand would be futile. If the members or managers do not bring an action within a reasonable time, then the demanding member may bring the derivative action. A derivative action may be maintained only by a person who is a member of the LLC at the time the action is commenced and who remains a member while the action continues. If a member has been personally injured by her LLC, she may bring a direct action against the LLC to recover, not a derivative action.
Under RULLCA, when may a member of an LLC apply for judicial dissolution?
Under RULLCA, a member of an LLC may apply for judicial dissolution of the LLC if:
(i) the conduct of all or substantially all of the LLC’s activities is unlawful;
(ii) it is not reasonably practicable to carry on the LLC’s activities in conformity with the certificate of organization and the operating agreement; or
(iii) the managers or controlling members have acted or are acting in a manner that is illegal, fraudulent, or oppressive.
The secretary of state may administratively dissolve an LLC when it fails to submit a required fee or annual report.
Under RUPA, who can be sued within a partnership?
A partnership may sue or be sued in the partnership name or in the names of the individual partners, or both.
Under RUPA, what provisions may be waived in a partnership agreement?
Each partner is entitled to an equal share of the partnership profits and must contribute towards the partnership losses in proportion to his share of the profits, but this rule may be modified in a partnership agreement.
Under RUPA, partners are free to adopt a partnership agreement governing the relationships among themselves, and RUPA will govern only those issues not provided for in the agreement.
However, certain provisions of RUPA may not be waived in an agreement, including a partner’s right to access the books and records of the partnership, the power to dissociate as a partner, and a partner’s duties of care and loyalty.
What is the inference when there is no agreement to share losses?
While there is no requirement under RUPA that sharing losses is necessary to create a partnership, the absence of an agreement to share losses is evidence that the parties did not intend to form a partnership.
What is partnership by estoppel?
Partnership by estoppel arises when a person, by words or conduct:
(i) represents herself as a partner or consents to being represented by another as a partner, and a third party extends credit to the actual or apparent partnership in reliance on the representation; or
(ii) holds another person out to be her partner, making the alleged partner her agent with the power to bind her to third parties as if the other were, in fact, a partner.
A person held out by another as a partner is not liable as a partner unless she actually consents to the holding out; mere failure to deny a representation of partnership does not give rise to liability as a purported partner.
Thus, the mere fact that one fails to deny partnership status when named by another in a statement of authority, or a partner’s failure to file a statement of dissociation after leaving the partnership, does not alone give rise to liability as a purported partner.
When will property titled in the partners' name be deemed partnership property?
It is not enough for title to be in the name of one or more partners for the property to be deemed partnership property. Under the Revised Uniform Partnership Act, titled property is deemed to be partnership property if it is titled in the partnership name, or it is titled in the name of one or more partners and the instrument transferring title notes the titleholder’s capacity as a partner or the existence of a partnership.
Property is rebuttably presumed to be partnership property if it was purchased with partnership funds (i.e., cash and credit), regardless of in whose name title is held.
What are partners' transferable rights?
Each partner has a transferable interest in the partnership, which consists of a right to receive his share of the profits and losses and the right to receive distributions. A partner is not a co-owner of partnership property and has no interest in partnership property. As such, a partner cannot transfer his interest in individual items of partnership property or use partnership property for personal purposes. Furthermore, a partner may not transfer his interest in management.
Under a duty of loyalty, what are partners' duties?
Partners owe the partnership and other partners the duty of loyalty. This duty is threefold:
(i) to account for profits, property, opportunities, or other benefits derived by the partner in conjunction with the partnership business;
(ii) to refrain from dealing with the partnership as, or on behalf of, a party having an interest adverse to the partnership; and
(iii) to refrain from competing with the partnership.
What does the duty of care entail?
Partners have a duty to refrain from engaging in grossly negligent or reckless conduct, intentional misconduct, or knowing violation of the law, but this duty is part of the duty of care rather than the duty of loyalty.
When will a partnership be bound by the acts of a partner?
A partnership will be bound by an act of a partner if the partner has actual authority. One way that actual authority can be granted is in the partnership agreement. If the agreement authorizes a partner to act, no further action is required for a partner to act.
Actual authority also can be granted by the consent of the partners. Generally, a majority vote of the partners is all that is needed to grant a partner actual authority. However, for acts outside the ordinary course of business, the unanimous vote of the partners is required.
A partner does not have actual authority to act on behalf of the partnership simply by virtue of being a partner (although a partner may have apparent authority to carry on business apparently within the scope of partnership business by virtue of being a partner).
When do partners share liability for the acts of their co-partners?
A partner is not CRIMINALLY responsible for crimes committed by a co-partner unless the partner participated in the commission of the crime as a principal or accessory.
A partner is liable for any TORTS committed by a copartner or by an employee of the partnership within the ordinary scope of partnership business or with authority of the partnership, including any fraud—even if the partner has no connection with, knowledge of, or participation in the fraud. Additionally, a partner is liable on contracts made by a co-partner within the scope of partnership business, as well as any other contracts expressly authorized by the partners.
When do outgoing partners retain/lose liability for partnership?
An outgoing partner remains liable on all obligations incurred by the partnership while a member of the partnership, unless there has been payment, release, or novation, or the creditor has agreed to a material alteration in the obligation without the partner’s consent.
All partners are jointly and severally liable for all obligations of the partnership, whether they arise in contract or tort. As such, an action may be brought against any one or more of the partners or the partnership.
Moreover, each partner is personally and individually liable for the entire amount of all partnership obligations.
When is an incoming partner liable?
An incoming partner is not personally liable for any partnership obligation incurred before her admission to the partnership, although the incoming partner’s contributions to the partnership may be used to satisfy existing partnership obligations.
What is dissociation, and what are the consequences of it?
Dissociation is a change in relationship of the partners caused by any partner ceasing to be associated in the carrying on of the business.
The dissociated partner generally remains liable for obligations incurred by the partnership before the partner’s dissociation, and also after the dissociation if the other party to the transaction:
(i) reasonably believed when entering the transaction that the dissociated partner was still a partner, and
(ii) did not have notice of the partner’s dissociation.
When a partner dissociates, the partner’s right to participate in management ceases. If the partnership business continues after a partner dissociates, the partnership must buy out the dissociated partner’s interest.
When will a dissociation be considered wrongful? When will it not be considered wrongful?
The decision of a court that the partner is incapable of performing a partner’s duties is an event of dissociation, but it is not necessarily a wrongful dissociation.
A partner will be deemed to have wrongfully dissociated if the dissociation is in breach of an express term of the partnership agreement; or the partnership is for a definite term or a particular undertaking and the partner withdraws, is expelled, or becomes bankrupt before the end of the term of completion of the undertaking.
What is the correct order of paying liabilities post-dissolution, under RUPA?
After a partnership is dissolved and its assets are reduced to cash, the cash must be used to pay its liabilities in the following order under RUPA: first to creditors (including partners who are creditors), then to partners in settlement of their accounts.
Can partners decide to continue the partnership after dissolution?
Any time after dissolution and before winding up is completed, the partners may decide to continue the partnership business, but they must do so by unanimous vote.
When will a partnership be bound by a partner's act after dissolution?
A partnership will be bound by a partner’s act after dissolution if the act is appropriate for winding up the partnership (e.g., settling claims, selling partnership assets, collecting debts, paying creditors),
Can a partner who wrongfully dissolves a partnership be responsible for wind-up?
No. A partner who wrongfully dissolves a partnership is not entitled to wind up the affairs of the partnership.
What are the requirements of forming an LLP?
Financial rights and obligations of partners in an LLP, including profit/loss sharing and indemnity, are identical to those of general partners. To become an LLP, a partnership must file a statement of qualification with the secretary of state; general partnerships may, but need not, file a statement of partnership authority with the secretary of state. The major advantage of operating as an LLP is that the partners are not personally liable for the obligations of the partnership, whether arising in contract, tort, or otherwise; on the contrary, general partners are personally liable for such obligations. The LLP name must end with the words “Registered Limited Liability Partnership” or “Limited Liability Partnership,” or the abbreviation “R.L.L.P,” “L.L.P.,” “RLLP,” or “LLP"; a general partnership has no specific naming requirements.
What are the requirements for limited partnership membership, and who is liable?
A limited partnership is composed of at least one general partner and one limited partner. The general partners (including limited partners who also are general partners) are personally liable for partnership obligations, while the limited partners are not personally liable for partnership obligations solely by reason of being limited partners. This means that limited partners are not personally liable even if they participate in the management or control of the partnership.
What are appropriate ways for a limited partnership to be dissolved?
The consent of all general partners and of the limited partners holding a majority of the right to receive distributions (“majority in interest”) is required to dissolve a limited partnership.
A limited partnership may be judicially dissolved upon application of a partner if it is no longer reasonably practicable to carry on the limited partnership in conformity with the partnership agreement.
Additionally, a limited partnership may be administratively dissolved by the secretary of state for failure to pay fees or file an annual report. (Note, however, that the partnership may apply for reinstatement by curing the defect within two years of the dissolution.)
Upon the happening of an event specified in the partnership agreement, the limited partnership also will be dissolved.
Under Uniform Limited Partnership Act, what naming conventions are required for a limited partnership?
A limited partnership name may contain the name of any partner, whether general or limited, and must contain the words “limited partnership” or the abbreviation “L.P.” unless the limited partnership is a limited liability limited partnership, in which case that must be reflected in the name (e.g., “L.L.L.P.”).
What is presumed, w/r/t management of LLCs?
Under RULLCA, management of an LLC is presumed to be by all members. Other management arrangements can be made (e.g., management by only some of the members or by outside managers), but they must be specified in an operating agreement. Each member (or manager, if the LLC is manager-managed) has equal rights in the management and conduct of the LLC unless otherwise agreed.
When may courts pierce an LLC's corporate veil?
A court may piece an LLC's veil of limited liability under circumstances similar to those under which courts pierce the veil of a corporation: (i) where the LLC is the alter ego of the member(s) or manager(s); (ii) for inadequate capitalization at the inception of the LLC; or (iii) if the LLC was formed to perpetrate a fraud. Because LLCs can be run with fewer formalities than a corporation, the failure to observe formalities is not a ground for piercing an LLC.
What is the two-party test for vicarious liability between principal and agent?
The principal will be liable for the torts committed by its agent if:
1. There is a principal-agent relationship, and
2. The tort was committed by the agent within the scope of the relationship
What are the three requirements for the existence of a principal-agent relationship?
ABC (need all 3)
Assent - informal agreement/consent between principal, who has capacity, and the agent. (Note: anyone can be an agent, even if you lack capacity.)
Benefit (agent's conduct must be for the principal's benefit)
Control (principal must have right to control agent by having power to supervise the manner of agent performance
When will the principal be vicariously liable if its agent gets the help of a sub-agent, and a sub-agent commits a tort?
Liability only if there is ABC (assent, benefit, control) between the principal (defendant) and the sub-agent tortfeasor.
Typically, the principal does not assent to the sub-agent's help and doesn't have the right to control. Therefore, there usually isn't vicarious liability for sub-agent torts.
Will a principal who borrows another principal's agent be vicariously liable for the borrowed agent's tort?
Note: this isn't a sub-agent relationship because there are two separate principal-agent relationships.
The principal will be liable only if assent/benefit/control between the principal (defendant) and the borrowed agent.
Typically, although the borrowing principal may assent to and benefit from the borrowed agent, the borrowing principal doesn't assume any right to CONTROL the borrowed agent. Therefore, without all three, there will be no VL.
If no principal-agent relationship, look to independent contractor
What is the key distinction between agents and independent contractors?
No right to control the independent contractor, because there is no power to supervise the manner of its performance.
What is the rule for vicarious liability between principals and independent contractors?
Generally there is no liability, due to lack of control.
1. Inherently dangerous activity (if IC commits tort while engaged in inherently dangerous activity, principal will be vicariously liable)
Ex. brake repair
2. Estoppel (if you hold out IC with appearance of agency, will be estopped from denying liability as well)
Ex. store that calls itself brake repair shop, the repairer is under liability
If a principal negligently selects an incompetent independent contractor, she will be liable to the injured third party for her own negligence in selection. A principal will be liable for the independent contractor’s negligence if the principal hired the incompetent contractor with knowledge of the contractor’s incompetence.
What is the three-part multifactorial test for the scope of a principal-agent relationship?
1. Was conduct of the kind the agent was hired to perform?
2. Did the conduct occur on the job? (frolic v. detour)
3. Did the agent intend to benefit principal?
If the agent even in party intended to benefit principal by its conduct, that is enough to be within scope.
What is the difference between frolic and detour for determining whether principal will be liable for agent's conduct (scope of job)?
Frolic: new, independent journey - outside scope, no liability
Detour: mere departure from an assigned task
Ex. Side errand on the way back from a job
When will a principal be vicariously liable for the intentional torts of their agents?
Rule: intentional torts are generally outside scope of liability
Exceptions: intentional torts are within the scope if the conduct was
1. Authorized by the principal, OR
2. Natural from the nature of employment, OR
3. Motivated by a desire to serve the principal
When will the principal be liable for the contracts entered into by its agents?
One test: Principal is liable to third parties for contracts entered into by agents ONLY if the principal authorized the agent to enter into the contract (but authority can be apparent or implied).
What are the four types of authority that could permit principal-agent contract liability?
1. Actual express authority
2. Actual implied authority
3. Apparent authority
What are the requirements for actual express authority?
Rule: can be oral and even private, but must have used words to express authority to the agent.
Exception: if the contract itself must be in writing, then the authority must be in writing as well (ex. conveyance of land must be in writing)
Actual express authority is narrowly limited to the actual words within it
When will express authority be revoked?
Unilateral act of either principal or agent, OR death/incapacity of the principal.
Exception: if the principal gives the agent a durable power of attorney
What is a durable power of attorney?
Power of attorney: written expression of authority to enter transaction
Durable: clearly survives death/lunacy, with words in the K to that effect.
What are the requirements for actual implied authority?
Implied actual authority is the authority that the agent reasonably believes she has as a result of the actions of the principal.Apparent authority results from a situation where a principal gives a secret limiting instruction, and the agent, when dealing with a third party, acts beyond the scope of the limitation. In such situations, the principal is bound by the agreement made.
Authority which the principal gives the agent through conduct or circumstance. Three types:
1. Necessity (all tasks necessary to accomplish an expressly authorized task)
2. Custom (all tasks which by custom are performed by persons with the agent's title or position)
3. Prior acquiescence by the principal (prior silence counts)
What are the requirements for apparent authority?
Apparent authority is created where a principal holds another out as his agent to a third party. Apparent authority makes the principal a party to the contract—with contractual rights and liabilities. Actual authority is created when the agent and principal agree that the agency shall exist
1. Principal "cloaked" agent with the appearance of authority, and
2. Third party reasonably relies on the appearance of authority
What is ratification, and what are its requirements?
After-the-fact authorization. Authority can be granted after the K has been entered into if:
1. Principal has knowledge of all material facts re: contract, AND
2. Principal accepts its benefits
Exception: ratification cannot alter the terms of the K. Principal must accept the entire contract as-is. Therefore, if alters, it is unauthorized K and P is not liable.
What are the rules governing agency liability on the principal's authorized contracts?
General rule: principal is liable on its authorized contracts, and therefore the authorized agent is not liable (only principal is).
Exception: The undisclosed principal
If principal is partially disclosed (only the identity of the principal is concealed) or undisclosed (fact of principal is concealed), the authorized agent may nonetheless be liable at the election of the third party. Where the third party knows of the principal’s existence but does not know his identity, both the authorized agent and the principal are liable on the contract.
If a principal negligently selects an incompetent independent contractor, she will be liable to the injured third party for her own negligence in selection. A principal will be liable for the independent contractor’s negligence if the principal hired the incompetent contractor with knowledge of the contractor’s incompetence.
Note: third party cannot recover twice
What are the duties owned to principals, in return for reasonable compensation and reimbursement of expenses?
1. Duty of care
2. Duty to obey instructions that are reasonable (not lie, not break law, be reasonable)
3. Duty of loyalty (cannot self-deal, usurp principal's opportunity, or make secret profits)
Self dealing means receiving a benefit to the detriment of the principal.
Remedies for breach: P may seek indemnity, and recover losses caused by the breach. P may disgorge profits.
What are the formalities required in creating a general partnership?
There are no formalities to becoming a general partnership (filing, writing, formalities). Mere conduct alone creates a general partnership.
What is the definition of a general partnership?
An association of 2+ persons carrying on as co-owners of a business for profit
What is the key factor to a true general partnership?
Sharing profits. Therefore, the contribution (paying-in) of money or services in return for a share of the profits will create a strong presumption that a general partnership exists.
Note: not salary, wages, benefits. It's the contribution for profits that counts.
When are general partners liable to third parties for tort and contract breaches, generally?
Agency principles apply. Partners are agents of the partnership for apparently carrying on usual partnership business. Therefore, the general partnership is liable for
1. each partner's torts in the scope of the partnership business, and
2. for each partner's authorized contracts.
When are general partners personally liable, within a general partnership?
Liable for all debts of the partnership and for each co-partner's torts.
When is an incoming partner liable for pre-existing debts of a general partnership?
A brand new, incoming partner is generally not liable for prior debts. But any capital paid into the partnership by that brand new partner CAN be used by partnership to satisfy prior debts (but no personal, out-of-pocket liability).
When does a dissociating/withdrawing partner retain liability for subsequent debts of the partnership?
A leaving partner retains liability for future debts until actual notice of their dissociation is given to creditors, or until 90 days after filing notice of dissociation with the state (under RUPA).
What is liability by estoppel, within a general partnership?
One who represents to a third party that a general partnership exists will be liable as if a general partnership exists.
Who are general partners fiduciaries to?
General partners are fiduciaries of each other and the partnership.
What duties do general partners owe to each other and the partnership?
1. Duty of loyalty (no self-dealing, usurpation, secret profit)
What is the remedy for a breach of the general partner's duty of loyalty?
Action for accounting. Partnership can recover losses that are caused by the breach, and may also need to pay to disgorge profits.
What are the general partner's rights to specific partnership assets?
Assets like land, leases, equipment - owned by the partnership itself.
May not be transferred by individual partners without partnership authority.
What are the general partners' rights to share of profits? Transferable/liquid?
Personal property owned by individual partners may be transferred by individual partners to third parties.
It is their own share. Transferable, liquid, personal.
What are general partners' rights to share in management? Transferable/liquid?
An asset owned only by the partnership itself, and therefore may not be transferred by individual partners to third parties. It is not theirs, and is therefore illiquid to third parties.
Ex. share to vote
General partnership is thus generally illiquid. Only the share of profit is liquid/transferable.
How can one determine whether a fact pattern involves the partnership property or personal property owned by individual partner?
- whose money was used to buy the property
- if partnership money used, becomes partnership property
- if personal money used, becomes personal property
What are the gap-filling rules regarding management in a general partnership?
If they agree, their agreement controls. If not, gap filling rules:
- Each partner entitled to equal control (vote)
- One partner, one vote
- Majority vote governs ordinary matters
- Fundamental/out of ordinary course matters require unanimous consent
What are general provisions re: general partner's salary, absent agreement?
Absent agreement, partners get no salary.
Exception: partners receive compensation for helping to wind up a business.
Absent an agreement, how are general partners' profits and losses shared?
Absent agreement, profits are shared equally. Losses are shared like profits (ex. if agreement states profits shared 60/40 but silent on losses, losses will be 60/40).
When will a general partnership dissolve, and what is dissolution?
In the absence of an agreement that sets forth events of dissolution, a general partnership dissolves upon notice of express will of any general partner to dissociate.
It dissolves by default upon these conditions.
What is winding up?
The period between dissolution and termination (real end of partnership), in which the remaining partners liquidate the partnership's assets to satisfy the partnership's creditors.
What are general partners' liability to old business during winding up
The partnership (and therefore its individual general partners) retain liability on all transactions entered into to wind up old business by satisfying creditors who existed before winding up began. Individual general partners are liable.
What are general partners' liability to new business during winding up?
Partnership and individual general partners retain liability on brand new transaction during winding up until actual notice of dissolution is given to creditors OR until 90 days after the filing of a statement of dissolution with a state
What is the priority of distribution of a general partnership?
1. Partnership must pay all creditors (outside plus all insiders who loaned money to partnership and became creditors thereby)
2. Repay all capital contributions paid into the partnership by partners
3. Partners share in leftover profit equally without agreement.
Rule: each partner must be repaid his/her loans and capital contributions, PLUS that partner's share of any profits, or MINUS the partner's share of any losses
What is a limited partnership?
Partnership with at least one general partner and at least one limited partner.
How is a limited partnership formed?
Formalities - must file with the state a Limited Partnership Certificate, including the names of all general partners
When are general partners liable within a limited partnership, and what do they control?
General partners are still personally liable for all limited partnership obligations. They also have control (right to manage)
What are limited partners' liabilities and privileges in a limited partnership?
They have limited liability and are not personally liable on the obligations of the limited partnership itself.
Control - the law in most states is still that a limited partner may not control/manage the business.
However, under the newly revised Uniform Limited Partnership Act, limited partners now may manage without forfeiting their limited liability status.
What is a Registered Limited Liability Partnership?
Formation: register with state (statement of qualification + annual reports)
Liabilities: No partner is liable for the obligations, not even general partners. But you can always sue a partner for their own individual torts, just not for underlying debts/obligations.
What is the definition of a Limited Liability Company (LLC)?
Hhybrid between a corporation and a partnership, in which the owners who are called members have the same rights and limited liabilities as shareholders in a corporation, plus the benefits of partnership tax treatment (corporate tax is very bad, but partnership tax is good). Thus, you get the best of both worlds.
What are the formation requirements for an LLC?
Must file articles of organization
May (not must) adopt operating agreement
Who controls an LLC?
Owners (members) may manage, or may delegate to a team of managers. Just like a board of directors in a corp.
What is limited liquidity, within an LLC?
Full membership interest may not be transferred without unanimous consent of members, or as provided otherwise in the operating agreement.
What is limited life within LLC?
Company dissolves upon unanimous consent of members, or as provided otherwise in operating agreement.
What are the requirements for an agent to be able to transfer good title without principal's authority?
For the possessor of goods to be able to transfer good title without authority, she must either have: (i) some indicia of ownership (e.g., title), or (ii) be a dealer in the goods. Although a dealer in goods will be a merchant, one may be a “merchant” without being a dealer in the goods at issue.
When may a principal NOT unilaterally revoke a principal-agent relationship?
There are two types of agency relationships that may not be unilaterally terminated by the principal (and that generally are not terminated by operation of law):
(i) the agent has an interest in the subject matter of the agency, or
(ii) a power is given for security.