General Partnerships

Question 1

What are the three requirements to form a general partnership?

Answer 1

1) 2 or more persons
2) Carrying on a business
3) With a view to make a profit

Question 2

If it’s unclear whether the parties have formed a partnership, what would generally constitute prima facie evidence that there is a partnership?

Answer 2

Sharing of profits

Question 3

Every partner is an _____ of the partnership and can bind the partnership in contract when they act with ______ or _______ authority

Answer 3

agent, actual, apparent

Question 4

In what 3 situations would a partner have actual authority granted to them?

Answer 4

1. Expressly in the partnership agreement
2. Expressly from a vote of the partners
3. Impliedly from the partners to allow a partner to regularly do an act

Question 5

A partner has apparent authority to carry on in the usual way ________ __ ____ ____ carried out by the partnership. This is an ________ test

Apparent authority is the authority of an agent as it appears to ______

Answer 5

business of the kind, objective, others

Question 6

What are 3 circumstances in which apparent authority will not apply?

Answer 6

1. Partner had no actual authority to act; or
2. Third party knew the partner lacked actual authority or
3. Third party didn’t know they were dealing with a partner

Question 7

If a contract is outside the ______ of partnership business, the partnership generally will ___ __ _____ unless the partner has ________ authority

Answer 7

scope, not be bound, actual

Question 8

What type of liability do partners have for the debts of the partnership if it lacks the sufficient funds to pay?

Answer 8

Unlimited liability

Question 9

Is a new partner personally liable for obligations of the partnership incurred before they were admitted?

Answer 9

No

Question 10

Does an outgoing partner remain liable on all obligations the partnership incurred before the partner retired from the firm?

Answer 10

Yes

Question 11

When will an outgoing partner be liable for obligations incurred after they retire for:
1. Existing suppliers
2. New/unfamiliar suppliers
(2 requirements)

Answer 11

If they don’t give:
1. Actual notice to existing creditors/suppliers; and
2. Publication notice in the London Gazette to new/unfamiliar suppliers

Question 12

If a person holds themselves out as a partner even when they’re not, they may be ______ as if they were a partner to any _____ ____ who has given ______ to the partnership on the strength of holding out

Answer 12

liable, third party, credit

Question 13

What three things constitute partnership property?

Answer 13

1. Property/money intentionally contributed to the firm by a partner
2. Money the partnership has earned
3. Items purchased with partnership money

Question 14

Partners have no right to use partnership property for ______ ___

Answer 14

personal use

Question 15

A personal creditor of an individual partner has no right to _____ partnership property to satisfy the individual partner’s debt

Answer 15

attach

Question 16

Does a partner’s property which they allow the partnership to use remain their own separate property?

Answer 16

Yes

Question 17

Property owned by one of the partners before the partnership was formed will be treated as their individual property unless what?

Answer 17

Unless the parties agree otherwise

Question 18

Is a partner entitled to be paid for work done for the partnership?

Answer 18

No - unless partners agree otherwise

Question 19

Is a partner entitled to be indemnified by the partnership for payments made on behalf of the business?

Answer 19

Yes

Question 20

In the absence of an agreement otherwise, each partner has an _____ ____ in decision making

Answer 20

equal vote

Question 21

Which 4 management decisions require unanimous consent from all partners?

Answer 21

1. Admission of a new partner
2. Expulsion of a partner (if stated in PA)
3. Change in the nature of business
4. Altering the partnership agreement

Question 22

No majority of the partners in a general partnership can expel a partner unless such power has been…

Answer 22

conferred to the partners via the partnership agreement

Question 23

What three fiduciary duties do partners owe each other?

Answer 23

1. Disclose information relevant to the firm
2. Not compete with firm’s business
3. Account to the firm for any benefit/profit from any transaction concerning the partnership

Question 24

What 5 things will cause a partnership to dissolve?

Answer 24

1. Expiry of term/accomplishment of goal in p’ship agreement
2. Partner giving notice to withdraw in a partnership at will
3. Death/bankruptcy of a partner
4. Partnership becomes unlawful
5. Court order

Question 25

What is a partnership at will?

Answer 25

A type of general partnership in which no fixed duration has been agreed

Question 26

Does a general partnership at will have perpetual succession? What does this mean in terms of a partner who wishes to withdraw?

Answer 26

No - GPs don't have perpetual succession A partner can withdraw from a GP at any time without the other partners consent (although in theory, it means that the partnership will dissolve)

Question 27

What must happen if a partner wishes to leave a fixed term partnership?

Answer 27

The remaining partners must agree to amend the p'ship agreement to allow the partner to leave

Question 28

Do partners continue to have authority to bind the partnership after dissolution?

Answer 28

Yes - to wind up the partnership's business

Question 29

Will a partnership be bound for other contracts made by a partner during dissolution?

Answer 29

Yes - unless notice was given of the dissolution

Question 30

In which order must 3 x assets be distributed when a partnership is dissolved?

Answer 30

1. Outside creditors 2. Loans made by partners 3. Return of partner's contributions