Partnerships Flashcards
(25 cards)
What’s the def’n of a PARTNERSHIP?
An association of 2 OR MORE persons to OPERATE A BUSINESS FOR PROFIT AS CO-OWNERS
Are there any filing or formal agreements necessary to form a partnership?
No
What actions trigger a presumption of partnership?
PROFIT SHARING and other INDICIA OF PARTNERSHIP, including SHARING CONTROL and LOSSES
When is a partnership liable for the tort of a partner?
If partner was acting in the ORDINARY COURSE OF PARTNERSHIP BUSINESS
How is liability apportioned in a partnership?
Partners are JOINTLY AND SEVERALLY LIABLE for all debts of p’ship, including tort and contractual obligations
What events would cause a partner to dissociate from the p’ship?
- Partner’s EXPRESS WILL to w/d
- Happening of an AGREED EVENT
- EXPULSION of the partner pursuant to agreement or unanimous vote or jud’l decree
- partner’s BANKRUPTCY
- partner’s DEATH OR INCAPACITY to perform p’ship duties
- Appointment of RECEIVER
- TERMINATION OF BUSINESS ENTITY that is a partner
In a gen’l p’ship, what is each partner’s presumed profit proportion?
In proportion to their capital contribution
When a partner dissociates, what are they entitled to?
- Their share of the CAPITAL CONTRIBUTIONS and
2. Their share of the FIRM’S ASSETS.
When a partner dissociates, how is the value of the FIRM’S ASSETS determined?
Greater of
- amount of LIQUIDATED ASSETS, or
- value as a GOING CONCERN
After a partner dissociates from a firm, does he have rights to a share of income acquired after his w/d?
No
Does dissociated partner have obligation for liabilities incurred before he left but paid after?
Yes, still obligated for those liabilities incurred before dissociation.
When is p’ship liable for the torts of a partner?
When they’re committed in the ORDINARY COURSE OF P’SHIP BUSINESS.
What type of liability does each partner have in a gen’l p’ship?
Joint and several w/ right of contribution
Must a creditor try to recover from the p’ship first before going to the ind’l partners?
Yes
What is a limited partnership and what’s its effect?
Composed of at least 1 GENERAL partners and at least 1 LIMITED partner.
Partners are NOT PERSONALLY LIABLE for the debts of the business.
What is a limited liability partnership?
Means partner is NOT INDIVIDUALLY LIABLE for DEBTS/OBLIGATIONS/LIABILITIES of the partnership.
What is a professional LLP?
Professionals (doctors/lawyers) may form p’ship for purposes of providing professional services.
Ind’l limits their exposure to TORTS/MALPRACTICE OF OTHERS (but still liable for their own).
If 2 people share expenses, but not profits or control, is there a presumption of p’ship?
No. Sharing profits triggers presumption of p’ship. Other indicia of p’ship includes sharing control and losses.
What is a PURPORTED P’SHIP (or P’ship by Estoppel)?
Person who represents herself as a partner or consents to being represented by another as a partner is liable to 3rd parties who extend credit to the apparent p’ship in reliance on the rep’n.
Is an express agreement req’d to create a partnership?
No
Does sharing profits create a presumption of partnership?
Yes
Can a limited partner bind the p’ship?
Not on his role as LP
When is a limited partner personally liable for debts of p’ship?
When they have UNPAID CONTRIBUTION.
Can limited partner be personally liable when they participate in control of business?
Yes, if they PARTICIPATE IN CONTROL OF THE BUSINESS
