Flashcards in Partnerships Deck (30):
In an action between partners for settlement of the partnership account, when must the claim be brought?
within 5 years from cessation of the dealings in which they are interested together
What is the default in a partnership for how many partners must consent to allow a new partner to join?
All of the existing partners
What is required for a partnership?
no formalities required
sharing of profits (not services in exchange for wages)
Is each partner liable for the torts of the other partners?
Yes, if within the scope of partnership business
Is an incoming partner liable for prior debts?
no, but money paid into partnership may be used to satisfy debts
Does a dissociating partner remain liable for subsequent debts incurred by the partnership?
Yes, until actual notice of dissociation is given to creditors or 90 days after filing a notice of dissociation with the state
Is a party liable to third parties for the torts of another person, when the party alleges there is a partnership between the party and person?
Yes - partnership liability by estoppel.
May partnership property be transferred by one partner without the consent of the other partners?
No - cannot be transferred without partnership authority.
A, B, and C, agree to contribute money and share profits 60-30-10. How do they vote in the partnership?
What is an exception that a partner may receive a salary from a partnership in the absence of an agreement?
When winding up the business of the partnership.
In a partnership how are profits and losses shared?
Absence agreement, profits are shared equally and losses shared like profits.
What is the period between dissolution and termination of a partnership referred to as?
How are the partnership assets distributed upon termination?
1) pay all creditors, including partners who loaned money to the partnership
2) repay all capital contributions
3) profits are shared equally
- if deficiency, then individual partners may be liable
Does a new partnership that assumes the obligations of a dissolved partnership relief the partners of the dissolved partnership of personal liability?
No does not exculpate obligations as to outside creditor who have not consented to the assumption of obligation
Is a partner liable for another partner's act of embezzlement?
Yes, because it involves a breach of trust.
- normally no criminal liability for crimes committed by a copartner
Does the mere fact that two people purchase property as tenants in common establish a partnership?
No, even if they would split profits from property
What must a partner who breaches his duty to the partnership do?
make an accounting of profits received as a result of the breach of the duty of loyalty
Can a partnership be terminated by one partner?
Yes, unless stated otherwise, the partnership is at will and may be terminated by one partner
In a limited liability partnership how are ordinary business decisions made?
majority vote of all partners (general and limited)
In a limited liability partnership how are amendments to the partnership agreement that are substantial voted upon?
Unanimous vote of all partners, including limited liability partners
During winding up, may a wrongfully dissociated partner participate?
A partner who wrongfully dissociates is not entitled to wind up the affairs of the partnership.
How can a limited liability further avoid liability in a partnership?
Not participate in the control of the business.
What act do not constitute participation in the control of a partnership by a limited partner?
1) consulting/advising a general partner; 2) pursing a derivative action; 3) requesting to attend general partner meeting; 4) voting on changes to partnership or removal of general partner; 5) amendments to partnership agreement
Does withdrawal of a limited partner cause a dissolution of the limited partnership?
No. Only general partner withdrawal could cause a dissolution
How can a limited partner seek to dissolve a limited partnership?
Judicial dissolution - file in circuit court
Court may dissolve is it is no longer reasonably practicable to carry on the partnership agreement
Can a limited partner bind the partnership solely on the basis of a limited partner status?
No. Need to have actual or apparent authority based on conduct to be liable.
Can a limited partnership be liable the contracts from limited partners?
If limited partnership accepted the benefits of the contract (ratification)
What is the extent of a limited partner's liability on contracts entered into by the limited partnership?
unpaid capital contributions
May a creditor of a limited partnership enforce a limited partner's obligation to make a contribution to the partnership?
Yes. Limited partners are liable for unpaid contributions.