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Business Organizations > Partnerships > Flashcards

Flashcards in Partnerships Deck (50):
1

What is a partnership?

An association of two or more persons to carry on a for-profit business as co-owners.

2

Who can enter a partnership?

Any person or entity with legal capacity.

3

Is specific intent needed to form a partnership?

No, just a general agreement to become business partners. Profit sharing establishes a presumption of a partnership relationship.

4

What is required for a partnership?

1. General intent
2. An agreement (can be conduct-based)
3. Extensive activity or profit sharing

5

What does profit sharing establish?

A presumption of a partnership

6

When is someone a partner by estoppel?

1. A representation as such
2. The person makes or consents to the representation,
3. A third party reasonably relied on the representation, and
4. A third party suffered damages on the reliance

7

What fiduciary duties do partners have?

The duties of loyalty and care

8

Can partners contract around fiduciary duties?

Yes, within reasonably bounds

9

Do fiduciary duties extend beyond dissolution?

Only to the extent the partner is involved in winding up the partnership's business

10

What is the default profit-sharing rule?

Profits are shared equally

11

What is the default loss-sharing rule?

Losses are shared in the same manner as profits

12

Can a partner demand a distribution?

No, but the profits can be credited to her account

13

Can a partner transfer their partnership interest?

Yes, in full or in part

14

Does transfer cause dissolution or disassociation?

No

15

What are the rights of the transferor partner?

The transferor partner retains all rights and duties of a partner

16

What are the rights of a transferee partner?

1. Receive distributions
2. See judicial order for dissolution
3. Get an accounting on dissolution

17

What are not the rights of a transferee partner?

No right to participate in the management or conduct of business, access to the partnership records, or demand other information

18

What property belongs to the partnership?

All property acquired by the partnership

19

When is property presumed to belong to the partnership?

When it was purchased with partnership assets or credit; other factors may include property's use, tax treatment, and the source of funding

20

When can someone become a new partner?

With the consent of all existing partners

21

What partners have management rights?

All partners

22

What is required for a partnership to make ordinary business decisions?

A majority vote of the partners

23

When must a partnership reimburse a partner?

When he takes loans made in furtherance of the partnership

24

When must a partnership indemnify a partner?

For personal liability incurred in the partnership's ordinary course of business

25

When may a partnership sue a partner?

1. Breach of PA
2. Fiduciary duty

26

When may a partner sue a partnership?

To enforce the partner's rights under the PA or statutory law

27

What causes disassociation?

1. Notice of withdrawal
2. Expulsion, unanimous vote, or bankruptcy
3. Death or a termination of an entity partner
4. Appointment of a guardian or judicial determination of incapacity

28

When is a partner's disassociation?

When it is breach of an express provision of the PA?

29

What are the effects of disassociation?

1. The partner cannot participate in the management or conduct of the business
2. The duty not to compete ends; other fiduciary duties continue with respect to post-disassociation events.
3. The partnership must buy out his interest

30

When can a partner bind the partnership?

When the partner acts with actual or apparent authority

31

When can a partner bind the partnership with apparent authority?

When they perform an unauthorized act in the ordinary course of the partnership's business, but a third party cannot hold the partnership liable if they knew or was notified the partner lacked authority

32

When does a partner have authority to transfer partnership property?

Transfer property held in the partnership's name or in the names of partner(s)

33

When can a partnership recover transferred property?

1. The transferee had reason to know it was the partnership's, and
2. The transferee knew the partner lacked authority to transfer

34

For what obligations is a partnership liable?

For all; partners are jointly and severally liable

35

Can a partnership be convicted of a crime?

Yes, and penalties may be levied on it

36

What is the effect of a judgment against a partnership?

Satisfied from partnership assets first, then partners'

37

When can a partnership convert to a limited partnership?

1. Unanimous approval
2. Articles of conversion filed with state

38

Are former general partners liable for obligations incurred before becoming an LP?

Yes

39

When can a limited partnership convert to a partnership?

1. Unanimous approval by general and limited partners
2. Cancel LP certificate

40

Does a conversion affect the partnership as an entity?

No, legal proceedings against it occur as though there were no change

41

When can a partnership merge with another?

1. Must set forth names of both entities
2. What type the surviving entity will be
3. T and C of merger
4. Manner of converting interests and obligations
5. Address of surviving entity

42

What approval is needed for a merger?

If general, all; if LP, as necessary

43

When can an at-will partnership be dissolved?

A disassociating partner gives notice of withdrawal

44

When can a partnership for a term or undertaking be dissolved?

1. Term expires or undertaking is completed; OR
2. All partners agree to dissolve, OR
3. Partner is disassociated and 1/2 of others agree to dissolve within 90 days

45

What is winding up?

The partnership disposes of and transfers property and may discharge liabilities

46

Who has priority over partnership assets, creditors or partners?

Creditors

47

Can a partnership continue carrying on business after dissolution?

Yes

48

What distinguishes an LLP?

An LLP partner is not personally liable, only for his own misconduct

49

What is required to form an LP?

1. One GP and LP; LP's liability limited to capital contribution
2. Must file certificate of limited P

50

What is the default rule for profits?

Based off partner contributions