Agency And Partnerships: Relations Among Partners; Between Partners And Third Parties

Front 1

Relations Among Partners

Statute supplies default rules, but partners may contract around them, so partnership agreement usually governs.

Back 1

*** Sharing Profits and Losses: UOA, equally, not in proportion to capital contributions. Losses follow profits UOA.

* Partnerships can't limit rights of third parties unless they consent

Hint 1

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Front 2

Compensation

Back 2

UOA, no right to compensation for services

Front 3

Management

On test, note 2 conflicting rules and move on!

Back 3

UOA, partners have equal management rights.

TX statute: UOA, matters of ordinary business are decided by majority in interest.

Front 4

Indemnification and Interest

Back 4

If pay money on a partnership debt, get paid back or indemnified with interest

Front 5

Partners owe fiduciary duties to partnership.

Can't eliminate duties, but may set applicable standards if not manifestly unreasonable (?!)- "reasonable tinkering"

Back 5

Care: ordinarily prudent person standard.

Loyalty: can't take advantage of partnership opportunity

Good Faith

Disclosure: partner must render full information about partnership on request to extent reasonable

Front 6

UOA, new partners require unanimous consent.

Back 6

New member not liable for pre-existing debts incurred. Can lose financial stake but nothing more.

Front 7

Relations Between Partners and Third Parties:

Apply agency principles (P= partnership; partner is A)

Back 7

Actual authority may be conferred on partner by:
1) Partnership agreeement
2) Vote of Partners in most matters; or
3) Statute (every partner a partnership agent for its business; can be negated by partners)

Apparent authority may be created by:
A partner's title;
Partnership's prior conduct; or
Conduct of similar firms in the area

Front 8

Between Partners and 3d Parties

If ratification or adoption, then no authority.

Conveying real property w/o authority: Partnership can get property back from initial transferee (who should've checked) but not a subsequent BFP

Back 8

Torts: partners are owners, so all that matters is whether tort was committed within ordinary course of partnership's obligations

Front 9

***Liability for partnership obligations

Partnership: liable on partnership obligations
Partners: joint and several liability (huge!)

Back 9

Can be liable for all damages if partner commits malpractice, so long as client serves you with process.

Client must exhaust partnership resources first. If client recovers from you, partnership must indemnify you (when it has money) and other partners must contribute for their share of loss.