GENERAL PARTNERSHIP Flashcards
(22 cards)
Characteristics of Partnership
- Unlimited Liability for Partners
- Ability to co-manage partnership
- Fiduciary duty exist between the partners and the partnership
- Partner share in profits
Who can be considered a “person”
- Individual
- Corporation
- Trust
- Estate
- Partnership
- Other Associates
Formation of Partnership
two or more persons who associate to carry on a business for profit
can be inferred from the conduct of the party
No agreement or consent required
Focus on the intent on the parties
Partnership v. Joint Venture
Joint Venture - Association contemplating a single transaction or a related series of transaction
Partnership - Carrying on of a business
Capacity
Any person with capacity to enter into K
Corporation is good as long as it doesnt violate articles and bylaws
What does the sharing of profits from a business indicate
It is prima facie evidence that your a partner
General Partnership
Association fo two or more persons to carry on as co-owners of a business for profit
Joint Venture
Association contemplating a single or mulltiple transactions
Dissociation
Withdrawl of a partner from the partnership
Winding up
Process of settling partnership affairs
Termination
Point at which all the partnership affairs are winded up
Mandatory Dissolution
Partnership must be dissolved and business must be wound up due to events or statutes
Permissive Dissolution
Partnership can be dissolved at any time by unanimous consent, regardless of duration specified in partnership agreement
Limited Liability Partnership
Partnership in which all the partners gain protection from liability for obligation of the partnership and protection from the conduct of other partners including omissions, neligence, wrongful acts, misconduct, malpractice.
They remain liable for their own neligence and negligence of those under their supervision
Limited Partnership
Partnership formed by two or more persons having atleast one general partner and one limited partner
General Partner
Partner who manages the business and is personally liable without limitation
RIGHTS:
Each general partner has an equal right to manage and conduct the partnership’s business
Each general partner is an agent of the partnership in the conduct of its business OR if taken outside ordinary course of business only if all general partners had consented to the action
Limited Partner
Partner who contributes capital and shares in profits, but takes no parti int the control or management of the business and whose liability is limited to his financial contributions to the business
Limited partners do not have right to co-manage the business along with the general parntners AND are not authorized agents of the partnership therefore lacking the ability to bind them into Ks.
Rights:
1. Seek information for a purpose reasonably related to their interest as a limited partner including:
inspect and copy the required partnership records and tax returns, and ont
Rules regarding partnership agreements
Rules regarding the relations between the partners is governed by partnership agreement or otherwise by the UPA
UPA provisions that cannot be waived:
- Reasonable access to books and records
- Aspect’s of partner’s duty of loyalty, duty of care, and right to dissociate are also non-waivable.
Duties within the Partnership
Duty of Care - General Partners must not engage in: grossly negligent or reckless, Intentional misconduct, or a knowing violation of the law
Duty of Loyalty - General Partners owes loyalty to partners and partnership.
Partner must not engage in dealings with partnership IF dealings are intended to be adverse to partnership interests
Partners must account for any benefit, and hold as trustee any profit derived from a transaction connected with partnership business or property.
Duty to Disclose -
GENERAL PARTNERS:
Partners and partnership have duty to furnish WITHOUT DEMAND information that is related to the partnership business and reasonably required for the exercise of partner duties.
WITH DEMAND there is a duty to furnish to a partner information that concerns the partnership business so long as demand is not unreasonable or improper in the circumstances
LIMITED PARTNERS:
Has a lesser obligation of GOOD FAITH AND FAIR DEALING
Profits, Losses and Contributions
Absent contrary agreement, each partner is entitled to share equally in the profits and losses generated in the partnership business.
Personal Property v. Partnership Property
A partner’s personal property includes:
- His financial interest in his share of the partnership’s profits and losses
- His right to receive distributions from the partnership
Unless otherwise note, partner may transfer his partnership interest to another. This only includes the financial interest and right to distributions. It DOES NOT include the right to participate in the management and control of the business or the ability to access partnership info, books or records.
Transfer does not result in automatic dissolvement of
Liability to Third-Parties
Partnership is liable for torts committed by partners when their conduct is committed in the ordinary course of business or with authority of partnership
General Partners are liable jointy and severally for all obligations of partnership arising under tort, contract, etc
When General partners pay more than their share, they can compel other partners to pay via contribution.
Incoming partner not personally liable for obligations incurred before his admission as a partner
Creditor of an individual partner is limited to seeking satisfaction from that partner’s personal property, which in the partnership context includes his share in the partnership’s profits and the right to receive distributions.
Limited Partner liability limited to his capital contribution UNLESS he begins to participate in management and control of the business
