Flashcards in Formation Deck (8)
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.
Determining whether partnership exists
Courts look to 'intent of the parties.'
Presumption made if:
i. Sharing of profits
i. Title to property held in joint tenancy or in common
ii. Sharing of gross returns
iii. A venture that requires extensive activity
Liability of partner
If someone holds themselves out as a partner, they are liable to third parties that extend credit to partnership
Property or money contributed by each partner for purpose of carrying out partnership business
Everything a partnership owns, including capital and things acquired in partnership. Partner must use partnership property for benefit of partnership
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.
Partner's interest in partnership
1. Treated as personal property
2. Transferable w/o dissolving partnership or dissociation
(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.
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.