Partnership Flashcards
Partnership
A partnership is the association of two or more person to carry on as co-owners whether or not they intended to form a partnership.
A person who receives a share of the profits from a business is presumed to be a partner
Profits & Losses
In the absence of an agreement, partners share profits equally, and losses are split in the same ratio as profits.
Management
Partners have equal right to manage the business of the partnership, absent an agreement otherwise.
A particular act within the ordinary course of a partnership business must be approved by majority of the partners.
Fiduciary Duties
A partner must account for profits, property, opportunities, or other benefits derived by him in conjunction with the partnership business and must not compete with the partnership.
Authority
A partnership can be bound on a contract entered into by a partner with actual or apparent authority.
Actual Authority (Partnerhsip)
Is authority that a partner reasonably believes he has based on his communications with the partnership. It can be express or implied through custom, necessity, or acquiescence.
Actual authority to enter into matters outside the ordinary course of business requires unanimous consent of all partners.
Apparent Authority (Parternship)
The act of any partner apparently carrying on in the ordinary course of the partnership business or business of the kind carried out by the partnership will bind the partnership unless the partner had no authority to act for the partnership and the third party with whom the partner deal knew that the partner lacked authority.
Liability
Each partner is jointly and severally liable for partnership obligations, which means that each partner is personally liable for the full amount.
When a partner enters a contract he had no authority to enter on behalf of the partnership, the partnership is not bound by the contract.
A judgment will not personally bind a partner who has not been served.
Contribution
When one partner pays the entire amount of a partnership debt, she may require the other partner to contribute his pro rata share of the payment.
Creditors
A judgment creditor must first seek satisfaction of any judgment from the partnership, and then from the partners personally to the extent not covered by partnership assets.
Dissociation
Dissociation is caused by a partner ceasing to be associated with the carrying on of the business.
A partner is dissociated from the partnership upon notice of his express will to withdraw as a partner.
Dissolution
Requires the business to be wound up.
If the dissociating partners and the remaining partners unanimously vote to continue the partnership business, then the dissolution is retroactively nullified.
If the partnership business continues after a partner dissociates, the partnership must buy out the dissociated partner’s interest.
Partnership-at-Will
A partnership at will is dissolved and its business must be wound up when a partner notifies the partnership of his intent to withdraw.
Post-Dissolution Acts
A partnership will be bound by a partner’s post-dissolution act if the act was appropriate for winding up the business.
A partnership will be bound by partner’s post-dissolution act even if it was not appropriate for winding up the business if the third party with whom the partner deal did not have notice of the dissolution.
