Partnerships Flashcards
(30 cards)
Three types of partnerships
general
limited
limited liability
general partnership
any association of two or more ppl as co-owners of a for profit business
formation of a GP
no formal requirements, just co-owners + for profit
liability of GP
all partners are personally liable, jointly and severally
Partnership by Estoppel
where no P exists, parties may be liable to 3P if they “held themselves out” as partners
partners’ interests in partnership property
partners have no individual interest in partnership property (creditors of partner cannot come after partnership property to satisfy a debt)
Generally, in what two situations will property be deemed partnership property
titled in partnerships name
bought w partnerships funds
How do partners share profit
each partner’s share equally absent an agreement
How do partners share losses
in proportion to the partner’s share of profits (losses follow the profits)
Who has rights to manage the partnership
both partners have equal rights absent other agreement
what fiduciary duties do partners owe to the partnership and fellow partners?
loyalty
care
obedience
complete and accurate information
When would a partner breach their duty of loyalty
competing w partnership
self-dealing/adverse interests
when would a partner breach their duty of care
when they engage in actions that are:
- grossly negligent or reckless
- intentional misconduct
- knowing violations of the law
What does the duty of obedience require of a partner
to obey all reasonable directions from the partnership
Inspection rights of partners
all partners have a right to inspect and copy partnership information
When will partners be liable for Ks entered by other partners
if they gave express authorization to enter the k; or
partner made k in scope of the partnership
When are partners liable for the torts of their partners?
when the tort is committed in the ordinary course of business; or
tort is committed with authority of the partnership
Dissociation
any partner ceasing to be associated w the partnership
dissolution
termination of the partnership
winding up and distributing assets
creditors paid first, then partners individually
What happens if a partner dissociates but the partnership wants to continue
partnership must buy out the dissociating partner’s interest
What is an LLP
limited liability partnership were partners are not liable for partnerships obligations and actions
how does a partnership become a LLP
approval of partners by vote; and
filing a statement of qualification w the state
Explain liability of a partner in an LLP
liable for their own acts (or those they supervise/direct)
not liable for partnership liabilities
