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65 Cards in this Set
- Front
- Back
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Does every partner have the pwr to dissociate from the p/s?
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Yes
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What's rule of notice?
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For p/s affairs, notice to any individual partner is imputed to all other partners. Also, any knowledge gained while working on p/s matters is imputed to all other members of the p/s.
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What's the rule of termination?
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Majority of partners may terminate the authority of a partner, or minority of partners, unless this action would be contrary to a previous agreement.
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What's the apparent authority rule?
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The actions of a partner which are apparently for the carrying on of the p/s bus in the usual way, but which are not actually authorized, still will bind the p/s if the 3rd party don't know of the partner's lack of actual authority.
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Explain basic p/s liab!
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Partner's are jointly & severally liable for contracts & all actions in tort or fraud against any p/s member where the p/s is not an LLP. The other partners are liable only when it relates to p/s bus. A person can sue any # of partners the want, losing partners can have right of contribution and right of indemnification.
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What's the rule of admission?
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An admission or representation made by any partner while the partner is acting within the scope of her/his authority is admissable as evidence against the p/s.
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Gen'l limitations to partners w/o p/s agreement are?
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1. Assign the prop of the p/s in trust for the benefit of creditors or on the assignee's promise to pay the debt's of the p/s.
2. Dispose of GW of the bus or do any other act that would make it impossible to carry on the ord bus of the p/s. 3. Confess a judgement 4. Submit a p/s claim or liab to arbitration |
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What's a statement of authority?
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The p/s may file a statement of authority outlining the authority that particular partner or partner's have.
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Who has the right & authority to wind up the business?
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Unless, otherwise agreed, any nonbankrupt partner who has not dissociated from the p/s wrongfully, or the legal rep's of the last surviving partner.
Remember though also: any partner, the partner's legal rep, or the partner's assignee may petition for winding up by the court. |
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Are remaining partners allowed to continue the business after dissolution?
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Yes! Only if ALL the partners, including the dissociating one's waive the right to have the business wound up and terminated.
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What is winding up the business?
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P/S continues after dissolution only for the purpose of winding up it's bus then it's terminated! To participate can't have dissociated wrongfully! Even after termination if a previously unknown liability is asserted, all of the partners are still liable.
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What are 2 things the courts view as evidence of a partners intent to discontinue?
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1) Assignment of partnership interests
2) Levy of changing order |
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What are 3 rights available when p/s is rescinded on the grounds of fraud or misrepresentation?
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1. Right to a lien on, or a right to retention of, the surplus of the p/s to secure her/his cap inv & any advances.
2. After all liab to 3rd persons have been satisfied, the right to stand in the place of creditors for her/his pymt made on p/s liab. 3. The right to be indemnified by the person who is guilty of fraud or misrep. |
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What's a filing statement of dissolution?
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Any partner who has not dissociated wrongfully may file a statement of dissolution on behalf of the p/s. After 90 days, this notice gives constructive notice to creditors that the apparent authority of the p/s is ended for all purposes except winding up.
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Are p/s allowed to be converted & merged by any manner?
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yes! By any manner provided by law. In the p/s less than unanimous consent is req'd.
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What 2 proc's are followed when a court decrees dissolution?
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1) Accting - determine the dr's and cr's of each prtner & court supervises the dist of p/s assets.
2) Dist Method - Usually the court orders a sale of all p/s assets & applies proceeds 1st to satisfy debts, & then to repay each partners cap acct. Any remaining proceeds still remaining gets paid to the partners as earnings in proportion to the share of the profits. |
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What doe capacity mean?
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Anyone basically!
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Can gen'l prtners have limited liab?
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NO!
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What's a limited prtner?
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One who contributes cap but don't have an authority or voice in manmgt of the bus. limited liab to creditors.
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Which p/s does not req a state filing?
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Gen'l. Everything else does req state filing.
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4 things in RUPA are?
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1. Business
2. Co-ownership (not an agent) 3. Profit 4. Capacity |
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Can an infant be a partner?
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Yes! To extent of infants pwr to contract. An infant may withdraw at ANY time, unless & only to the extent the p/s is subject to creditor's claims.
Infant is liable only to their contribution. |
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What's an LLP?
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Liab protection to gen'l prtners.
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Does a sole prop need to register in each state to do bus nationwide?
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No! Corps and LLC's do however!
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What's a dormant partner?
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One who has a right to participate in mnmgt, but is undisclosed & generally inactive, once disclosed has same liab as any other gen'l prtner.
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In a limited partnership, who has the authority to bind?
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Gen'l one's!
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What form is partnership return?
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1065 & info only!
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What's a silent partner?
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Unlimited liab but don't share in mngmnt of partnership!
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What's a secret partner?
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One that participates in mngmt but is undisclosed, once disclosed unlimited liab.
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Explain entity status!
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The gen'l rule is that if an entity with 2 or more persons is formed under state law that is not a corp it is taxed as a p/s. A 1 person LLC is disregarded for fed tax purposes & no seperate return is req'd, yet it don't lose it's liab shield.
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Can a partner's int be assigned?
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Yes. Assignee is only entitled to receive profits & capital to which the partner would have been titled. However the assignor remains liable on all p/s debts. An assignment don't casue a dissociation.
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What's a certificate?
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When p/s is doing business under a fictitious name, it must file a cert w the SOS. Cert must list the names & addresses of the partners & the fictitious name of the business. Fines can occur if failure to comply.
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What happens to a p/s int when a partner dies?
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The partners int descends as personal prop regardless of the form in whick the firms assets exist.
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Explain fiduciary duty!
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The only fiduciary duties a partner owes to the p/s are duty of care & the duty of loyalty.
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What are the rights of an individual partners creditor to p/s assets?
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Can't execute on or attach p/s assets. Creditor's only remedy is to obtain a charging order against the debtor partners interest. The creditor is then entitled to all future distributions of assets or surplus due the partner until the judgement is satisfied.
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Can you assign rights in p/s property such as right to possess or use?
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No, unless all the partners assign their rights in the same propery.
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Will the act of partner committed within the scope of the partner's actual or apparent authority bind the p/s?
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Yes!
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2nd 3 of 9 things p/s agreement may not do are?
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1) Bargain away rule that every partner has the pwr to withdraw from the p/s at any time.
2) Vary the right of partners to have the p/s dissolved & it's bus wound up. 3) Vary the right of a court to expel a partner. |
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What's the principal remedy avail to a partner against her/his co-partners?
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A suit in equity for a dissolution & an accounting.
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Can widower get interest?
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Yes
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What's the 1st 3 of 9 things the p/s agreement may not do?
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1) Vary the req's for executing, filing, & recording p/s statements, except the duty to provide copies to all the partners.
2) Unreasonably restrict partners or former partners access rights to books 3) Entirely eliminate fiduciary duties or obligation of good faith & fair dealings. Can be modified to certain limits. |
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What happens when a partner says another person is part of the p/s but they really are not?
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They become an agent and what they do is binding with 3rd parties. Any liab resulting from the misrep extends only to the partners who consented to the misrep!
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What's the 3rd 3 of 9 things the p/s agreement may not do?
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1) Vary the req to wind up the p/s bus in certain cases.
2) Vary the law applicable to a LLP. 3) Restrict the rights of 3rd parties under RUPA. |
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Does a p/s agreement need to be in writing?
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No. Only needed if would be in violation of statute of frauds. ex. transfer of real property or bus will last longer than 1 yr.
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Explain limited partners repayment of cont?
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A limited partner may demand or receive $ in repayment of their contribution. However the partner may not do so until all p/s liab to creditors have been paid or the p/s has sufficient assets to pay them.
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What does an LLC file w / SOS & county clerk?
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Articles of organization.
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Explain assignment of limited partners interest & rights.
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A limited partner's interest is considered personal property & it's freely assignable. However right's are NOT assignable UNLESS it is to a substituted limited partner and all other partner's are in agreement & the certificate is amended.
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Which p/s formation must be in accordance with strict statutory requirements?
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LLP. Must also only be formed in jurisdictions that have enacted enabling statutes. Cert must be filed with SOS & county clerk.
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List 1st 5 items in Articles of P/S.
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1) Firm Name
2) Names & Addresses of prtnrs 3) Date p/s becomes effective & intended duration 4) nature, purpose, & scope of p/s activity 5) proc for admission of new partners |
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What happens to a right to property when a partner dies?
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Surviving partners have duty to account to the estate of the deceased for the value of the deceased partner's rights in the property.
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What are the partner's rights to participate in mngmt?
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All have rights in mngmnt & control of the business unless there is a specific agreement that says not.
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List 2nd 5 items in Articles of P/S.
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1) Computation of int on p/s cap
2) Computation of prfts & the proportionate share of profits & losses attributable to each partner 3) Powers & duties of the prtnrs 4) Dissolution proc's & rights 5) Proc for dist of surplus, including the disposition of the firm name & GW. |
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What's the order of dist for settling accts when an LLC is dissolved?
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1) Creditors
2) Capital 3) Profits |
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Can a limited partner's name appear in the p/s name?
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No! Unless it can be designated that they are a limited prtner.
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Once the p/s prop & the prop of the individual partners are in the hands of the court for distribution, what are the priorities?
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1) P/S creditors have priority is to p/s prop.
2) Individual creditor's generally have priority as to individual prop, except for a p/s bankruptcy, wherein the p/s creditor's shatre pro rata with partner's personal creditor's. 3) Rights of secured or lien creditor's. |
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Asset dist order when p/s is over?
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Applied in this order:
1) Those owing to creditor's including partners 2) Those owing to partner's other than for cap & profits 3) Those owing to the partner's for cap & profits. |
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Explain limited partner's share of profits or other comp?
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A limited partner may receive a share of the profits and other comp, however after the pymt assets much be greater than all liab to creditors.
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When is a p/s not bound by any partner's acts after dissociation?
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1) The p/s is dissolved because it's unlawful to carry out the business except when the act is appropriate to wind up p/s affairs.
2) The partner is bankrupt or has no authority to wind up p/s affairs. |
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What happens if an individual partner becomes bankrupt or insolvent?
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The claims against her/his property rank as follows:
1) Those owing to personal creditors 2) Those owing to p/s creditors 3) Those owing to partners who have made advances for the benefit of the p/s. |
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Are partners liable for the amount necessary to satisfy all the claims?
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Yes! If a partner is insolvent or beyond the reach of judicial process, the other partners are responsible for there liab's! Such contributing partners are liable in the proportion in which they share in the profits.
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What are the 3 things that allow a dissociated partner to have their liab's discharged?
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1. Agreement
2. Assumption 3. Deceased partners NONPARTNERSHIP Property |
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Does a manager of an LLC have to be a member?
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No!
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Explain dist of p/s assets as stated in RUPA!
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a. 1st to p/s creditors including any partners, except for unpaid "dist".
b. 2nd to partner's who have previously withdrawn from p/s, pymts to these ptners for "unpaid dist" + ret. of cap. unpaid dist's are any dist a ptner is entitled to upon withdrwl from firm. c. 3rd, to all ptners to the extent of their cap cont & profits. |
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Can a creditor obtain through court a charge against a limited partner's interest in the p/s?
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Yes
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What are "safe harbors" for limited partners to participate in mngmt provided by RUPA?
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1. Being a contractor for, or an agent or employee of the limited p/s or of a gen'l prtner.
2. Consulting with & advising a gen'l partner regarding the p/s. 3. Acting as a surety 4. Voting on p/s matters |
