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Ravi - Partnerships and LLCs > Formation > Flashcards

Flashcards in Formation Deck (8)
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1

Agreement

No formal agreement is required to form a partnership. It's formed as soon as two or more people associate to carry on as co-owners a business.

2

Determining whether partnership exists

Courts look to 'intent of the parties.'
Presumption made if:
i. Sharing of profits

Non-presumption:
i. Title to property held in joint tenancy or in common
ii. Sharing of gross returns
iii. A venture that requires extensive activity

3

Liability of partner

If someone holds themselves out as a partner, they are liable to third parties that extend credit to partnership

4

Partnership capital

Property or money contributed by each partner for purpose of carrying out partnership business

5

Partnership property

Everything a partnership owns, including capital and things acquired in partnership. Partner must use partnership property for benefit of partnership

Note:
Partner is not a 'co-owner' of partnership property and has no transferable interest in it. Creditors can't go after partnership property to satisfy someone's personal obligations.

6

Partner's interest in partnership

1. Treated as personal property
2. Transferable w/o dissolving partnership or dissociation
3. Attachable
(transferring only entitles someone to receive profits that the transferor partner would have been entitled. They have no rights in operation of partnership).

Can't make someone a partner w/o unanimous consent of other partner's.

7

Fiduciary Duties

1. Duty of loyalty
Req's partner to:
i. Account for profits/benefits derived from partnership
ii. Not have adverse interest to the partnership
iii. Not compete with partnership

2. Duty of care
-Refrain from reckless, negligent, or unlawful conduct.

8

Transfer of Partnership property

Any partner may transfer property held in name of the partnership.