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10 Cards in this Set
- Front
- Back
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Limited liability partnership is exactly like a general partnership except:
** Partner in a LLP is not vicariously liable on contracts or for torts of others unless he was directly involved in tort, supervising tortfeasor, or was aware of tort and did nothing to prevent it. |
LLP Partner liable for own torts
Firm itself may be vicariously liable under agency principles. |
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LLP Formation
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Register w/Secretary of State and pay $200/partner fee (annual renewal, fee required)
Include words "Registered Limited Liability Partnership" or "Limited Liability Partnership" or "L.L.P." or "LLP" as last words/letters of its name (as notice) Must carry $100,000 in liability insurance or segregate $100,000 |
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Limited partnership
Partnership with one or more general partners (generally liable) and one or more limited partners (liability limited to investment) |
File certificate of formation with Secretary of State and pay fee; must have written limited partnership agreement in place
Must include "Limited Partnership" "Limited," or an abbreviation General Partnership law governs except where LP statute is inconsistent |
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LP liability
***General: limited partners can only lose their capital contributions Exception: Limited partner takes part in control- statute doesn't define "control" but has list of "safe harbors" **** see outline*** |
Liability for participating in control: reliance test (reasonable belief that LP is a GP based on K) --> liability det. on creditor-by-creditor basis
If no certificate filed, all partners jointly and severally liable!! Exception: Limited partner can avoid future liability by filing certficate or withdrawing from LP and notifying Sec. of State of withdrawal within a reasonable time after she discovers no cert. filed |
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Limited Partners' Promise to Contribute
Enforceable only if signed writing. If so, may be enforced by LP or creditor who relied on the promise. |
Withdrawal only if LP agreement permits. Can always wrongfully withdraw, but liable in contract.
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If general partner in LP wants to remain a GP but wants to limit exposure to joint/several liability-- can register LP as LLLP (Limited Liability Limited Partnership). Shields general partners from liability like LLP.
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MEMORIZE:
L.P. [shields limited partners] + LLP [shields general partners] = LLLP |
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Priority for distributing assets on winding up
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1) Creditors
2) Return of Capital to Limited Partners 3) Profits: Distributed per terms of written LP agreement |
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Limited Liability Companies (LLCs)
Profits and losses split in proportion to capital contributions, UOA in company agreement. |
Must file cert of formation w/Secretary of State and pay a fee.
Name must include "Limited Liability Company," "Limited Company" or abbreviation "LLC," L.L.C.," "LC," or "L.C." Professionals (PLLC): Members and managers must be licensed to render professional services in TX or elsewhere. |
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LLC Benefits
** NO VICARIOUS LIABILITY FOR MEMBERS** (tho LLC may be liable) |
Flexible Management: can be structured like corp or partnership, but managers run LLC unless otherwise provided in certificate (TX default)
*Series LLC: LLC can partition assets/liabilities among diff series Pass-through taxation: Like a partnership, unless it chooses otherwise (prob won't- avoid double taxation) |
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Business forms of choice in TX are LLPs and LLCs...
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Couples flexible management, pass-through taxation, limited vicarious liability for owners.
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