Partnership Flashcards
(32 cards)
How do partnerships determine decisions regarding matters within the ordinary course of partnership?
Majority vote of all partners
How does a partnership make decisions regarding matters outside the course of partnership?
Consent of all partners
Under the Revised Uniform Partnership Act (RUPA) how long does a partnership continue to exist after dissolution?
Until winding up of the business is complete. Partnership is bound by partner’s post-dissolution acts where party who did deal with partner didn’t know about dissolution.
If partner files statement of dissolution with the secretary of state, third parties will presume to have notice 90 days after file
What is a general partner personally liable for?
- all debts of partnership and each co-partner’s torts
- incoming partner gen not liable for prior debts but any money paid in by new partner can help pay debt
- dissociating partner gen retains all liability on future debts until actual notice of dissociation given to creditors or 90 days after filing of dissociation with state
- NOT personally liable on partnership obligations if limited partnership is limited liability partnership (then any liability belongs to partnership alone)
- NOT personally liable for partnership obligations incurred before became general partners
ULPA
Uniform Limited Partnership Act
What right does ULPA grant that’s exclusive to general partners?
Right to manage limited partnership’s activities
RULLCA
Revised Uniform Limited Liability Company Act
Under RULLCA, when can member of LLC apply for judicial dissolution of the company
(1) conduct of all or substantially all of the LLC’s activities is unlawful
(2) it is not reasonably practicable to carry on the LLC’s activities in conformity with certificate of org and operating agreement; OR
(3) managers or controlling members have acted in a manner that is illegal, fraudulent, or oppressive
Administratively dissolve LLC
Secretary of State may do so when LLC fails to submit a required fee or annual report
Under Revised Uniform Partnership Act, who can you sue?
Partnership may sue or be sued in the names of individual partners or partnership name
Partnership by estoppel
A person, by words or conduct:
(1) represents herself as partner or consents to being represented by another as a partner, and the third party extends credit to actual or apparent partnershp in reliance on representation; OR
(2) holds out another person to be her partner, making making alleged person agent with teh power to bind her to third parties as if were partner
Partners’ duty of loyalty to other partners
(1) account for profits, property, opportunities, or other benefits derived by partner in conjunction with partnership business;
(2) refrain from dealing with partnership as, or on behalf of, a party having adverse interest to partnership;
(3) refrain from competing with partnership
When is partner liable for co-partner’s actions?
(1) Crimes committed by co-partner within scope of partnership business if principal or accessory
(2) Torts committed by copartner or employee of partnership within scope of partnershp business
(3) Fraud even if no connection, knowledge, or participation
(4) K made by co-partner in scope of business and other K expressly authorized by partners
When is outgoing partner liable for all obligations imposed by partnership?
Until payment, release, or novation unless creditor agreed to material alteration in obligation withotu partner’s consent
What liability does dissociating partner have?
Generally all obligations incurred in partnership before dissolution and even after if other party (1) reasonably believed that was still a partner when entered transaction, and (2) did not have notice of dissolution
When is a partner’s dissociation wrongful?
- Bankrupt before end of partnership term or completion of undertaking
- Breach of express term of partnership agreement
- partnership was for definite term & withdraws
How can limited partnership be dissolved?
- Judicial dissolution (if no longer reasonably practicable to carry on limited partnership in conformity of partnership agreement)
- Administrative dissolution
- Upon happening of even specified in partnership agreement
- Consent of all general and limited partners holding majority of right to recieve distribution (majority in interest)
Under the Uniform Limited Patnership Act, what are rules for naming?
Limited partnership name may contain the name of any partner, whether general or limited, and must contain words “limited partnership” or abbreviation “LP” unless limited liability limited partnership (LLLP)
When will court pierce of the veil of limited liability?
- LLC is alter ego of member(s) or manager(s)
- inadequate capitalization at inception of LLC
(3) LLC formed to perpetuate a fraud
General Partnership formation
- no formalities (default rule)
- association of 2 or more persons who are carrying on as co-owners of business for profit
- sharing of profits is key factor so contribution of $ or services in return for share of profits creates a presumption that general partnership exists
General partner liability
-liable for each partner’s torts in scope of partnership business an for each partner’s authorized K
General partners fiduciaries duty to each other and partnership
- owe to each other and partnership duty of loyalty (no self-dealing, usurp, secret profit)
- remedy = recover losses caused by breach and may disgorge profits made by breeching party
General partners’ rights in partnership property and liquidity
- Specific partner assets like land, leases, equipment, which are owned only by partnership itself may not be transferred by individual partners without partnership authority
- share of profits: personal property owned by individual partners may be transferred by individual partners to third party
- share in management: asset owned only by partnership itself so can only be transferred w/ partnership auth
- to determine whose property: who’s $ used to buy
Partner’s votes
- Absent agreement, each partner votes equally
- orindary matters require majority vote
- fundamental partnership matters require unanimous
