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193 Cards in this Set

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NATURE AND SCOPE OF THE AGENCY RELATIONSHIP

What is an agency?
An agency is a consenual fiduciary relationship wherein one person-the agent-agrees to act for and under the direction or control of another-the principal
What is the master-servant relationship?
The master-servant relationship is an employment relationship in which the master has the right to CONTROL the details of the physical conduct of the servant in the performance of service, not only as to the result but also as to the means to be used to achieve the result.
What is the significance of the doctrine of Respondeat superior?
Under the doctrine of respondeat superior, a master is generally liable for the torts of his servant committed within the scope of his employment.
What is the main difference between the master-servant relationship vs an employer-independent contractor relationship?
Unlike the master in a master-servant relationship, the employer in an employer-independent contractor relationship has NO RIGHT TO CONTROL THE DETAILS of the performance of the independent contractor.
Who is the agent retained by & who owes who a fiduciary duty?
The agent is retained by the principal and the principal has the right to control the agent in the performance of the business dealings. The relationship arises from a contractual agreement between the parties and gives rise to a fiduciary duty owed by the agent to the principal.
When is a principal disclosed to a third party?
A principal is disclosed if, at the time of the transaction, the third party has notice that the agent is acting for a principal and of the principal's identity.
What if the third party has no knowledge of the existence or identity of the principal?
The principal is undisclosed
What is a partially disclosed principal?
A partially disclosed principal is one whose existence but not identity is known to the third party
What are the Agent's liabilities to a third party when a principal is partially undisclosed?
An agent who enters into a contract for an undisclosed or partially disclosed principal is personally liable on the contract. An agent for a fully disclosed principal does not ordinarily incur personal liability.
What is the difference between a general agent and special agent?
A general agent is continuously employed to conduct a series of transactions, whereas a special agent is employed to conduct a single transaction or a small group of transactions
CREATION OF THE AGENCY RELATIONSHIP
Generally, no particular form is required to create an agency relationship. It need not be created by a writing, but may be accomplished orally or by the conduct of the parties.
Who can act as an agent?
Generally, anybody with minimum capacity may act as an agent. Accordingly, both minors and incompetents may act as agents. The agent will be endowed with the same capacity as the principal.
In a partnership, who is the agent?
Each partner is an agent for the partnership and for the other partners, and the act of a partner apparently carrying on the partnership business in the usual way binds the partnership, unless the partner does not have authority in the matter and the person with whom he is dealing knows he lack authority.
Can an individual be agent to two adverse parties?
One may not be an agent for two adverse parties to a transaction unless both parties are fully advised and give their consent.
Who has the capacity appoint an agent?
Any person who has the capacity to effect his own transactions has capacity to appoint an agent to act on his behalf.
How is an agency relationship proven in court?
The existence of an agency relationship is ordinarily a question of fact for the jury, and the burden of proof rests with the party asserting the relationship. Existence of an agency relationship may be established by circumstantial evidence.
Is the owner of a motor vehicle liable for the negligent use of the vehicle by another?
At common law, no. A number of states have enacted statutes which create a rebuttable presumption that the drive of a motor vehicle is operating as the agent of the owner.
POWER OF AGENT TO BIND PRINCIPAL
The general rule is that an agent, acting within the scope of his authority, may bind his principal in contract.
Is the agent's authority actual, apparent or both?
The agent's authority may be either actual or apparent.
How is actual authority granted?
Actual authority is granted by the principal to the agent and may be express or implied.
How is express authority conferred?
Express authority is conferred on the agent by the principal's communication to the agent. If the principal errs in his communication, the agent's actual authority includes that which was mistakenly communicated.
What does implied authority authorize?
Implied authority authorizes an agent to use all means reasonably necessary to accomplish acts which have been expressly authorized.
When does apparent authority occur?
Apparent authority occurs where the "principal" has held out the "agent" a third party as having the authority to act for him. The third party must reasonably rely to his detriment upon the authority of the purported agent. The principal is then estopped to deny the agent's authority.
How can a principal accomplish "holding out"?
A principal's holding out may be accomplished by words, conduct or by a failure to act.
Does a reasonable belief that an agent is authorized to act for a principal impose liability on a principal?
Generally, a mere reasonable belief that the agent is authorized does not impose liability on a principal.
Does the authority to conduct a transaction include authority to do acts which are incidental to the transaction?
YES!
Is the knowledge of an agent imputed to his principal?
YES!
RATIFICATION
A person may be liable for contracts made on his behalf by subsequently ratifying the conduct of the purported agent.
What does ratification require?
Ratification requires an intent by the party to ratify the act.
What can be ratified?
Any act which a person could have authorized or performed at the time the act was done may be ratified. The principal must ratify the entire act and take the burdens with the benefits
What are the requirements for a valid ratification?
3 Requirements
1) The principal must have knowledge of all material facts regarding the transaction at the time of affirmance.

2) The agent must have intended to represent the principal a the time of the act

3) The ratifying party must have been in existence at the time of the act.
Once a transaction is ratified.....
it is irrevocable unless voidable for fraud, duress, or lack of capacity or lack of knowledge
When will a ratification not be allowed?
A ratification will not be allowed even though all the requisites for a valid ratification are present if a ratification would prejudice the rights of the innocent third parties.
When does a ratification become effective?
Generally, a ratified transaction is given retroactive effect, but ratification by a principal who did not have capacity when the transaction took place is effective only from the date of the ratification.
VICARIOUS LIABILITY OF PRINCIPAL FOR ACTS OF AGENT, SERVENT OR EMPLOYEE
1) Under doctrine of respondeat superior, a master is liable for the torts of his servant commmitted while the servant is acting within the scope of his employment and while engaged in the master's business.

2) Independent of the respondeat superior theory of liability, an employer may be liable for a third party's injury due to the employer's negligence in failing to select an employee fit or competent to perfom the services of employment
Factors relevant in whether an employee is acting within the scope of his employment.
*Whether the act is one commonly done by servants
*The time, place and purpose of the act
*The previous relations between the master and servant
*The extent to which the business of the master is apportioned between different servants
*whether or not the act is outside the enterprise of the master or, if within the enterprise, has not been entrusted to any servant;
*whether or not the master has reason to expect that such an act will be done;
*the similarity in quality of the act done to that authorized
*the extent of departure from the normal method of accomplishing an authorized result; and
*whether the act is seriously criminal
When is an act not within the scope of employment?
If done for the employee's purposes only.
Can an employee still be acting within the scope of his employment even while disobeying his master's orders?
YES!
Will a master be liable if the employee has substantially deviated from the authorized route?
NO!
Will the master be liable if the deviation in the route is slight?
Yes. The extent of the deviation is a question of fact.
Will a master-servant relationship be found when a negligent employee is using his own automobile?
Yes!
How do you determine whether the relationship is one between master-servant or between employer-independent contractor?
Generally, if the right to control the details of the employee's actions rests with the employer, there is a master-servant relationship, but if the right to control rests with the employee, there is an employer-independent contractor relationship.
Can a person be a servant to one part of the undertaking and an independent contractor as to another?
Yes!
Can a master who loans a servant to another master be liable for the servants actions when he is acting on behalf of the other master?
A person who is generally the servant of one master may become the "borrowed" servant of another. IF the master who loaned the servant does not continue to exercise control of the servant, he will not be liable even though he continues to pay the servant.
Can a person be a servant for the commission of only one act?
Yes!
When is an employer not liable for the negligent actions of an independent contractor?
Generally, an employer who uses due care in the selection of an independent contractor is not liable, with the following exceptions.
1) INHERENTLY DANGEROUS SITUATIONS, such as blasting or demolition work. An employer is answerable for the failure of the independent contractor to take such precautions.
2)Where the nature of the work is such that a NUISANCE will be created unless guarded against, the employer will be liable
3)Where the employer's premises are in a state of DANGEROUS DISREPAIR and an independent contractor is employed to correct the situation, the risk of harm due to the disrepair cannot be delegated.
4)Certain relationships impose a duty of care which cannot be discharged, such as the duty of ordinary care owed by a landlord to a tenant for areas under the landord's exclusive control, even by the employment of a carefullly selected independent contractor.
When can a master be liable for the servants intentional torts?
A master may be held liable for his servant's intentional torts if the act was done in the course of doing the master's work, and for the purposes of accomplishing it.
*A master is even more likely to be held liable for the intentional torts of his servant in a public carrier cases.
What is a subservant and is a master liable for the subservant's acts?
A subservant is a servant of a servant who performs certain acts for the master. A master is liable only for the torts of a subservant engaged in his express or implied authority.
Is a principal liable for physical torts of his servant?
Generally, a principal is liable for the nonphysical torts of his agent such as deceit, defamation, and interference with contractual or advantageous relations.
*A principal will be liable for the physical torts of his agent if, at the time the tort was committed, the agent was also a servant.
What is the liability of a master under the doctrine of respondeat superior?
Liability of a master under the doctrine of respondeat superior is vicarious, and thus, the master and servant are not joint tortfeasors; however, both master and servant may be joined procedurally.
What is the master entitled to if the master is found vicariously liable for his servants actions?
Indemnification.
DUTIES, RIGHTS AND REMEDIES OF PRINCIPAL, AGENT AND THIRD PARTIES
The agent owes a fiduciary duty to the principal and is liable for any breach of that duty.
What happens when an agent acts for two adverse principals acting without their knowledge or consent?
The agent would not be entitled to compensation from either
What duties does the agent owe the principal?
The agent owes a duty of undivided loyalty and has a duty to disclose any information relevant to the agency relationship.
*The agent owes the principal a DUTY OF OBEDIENCE and DUTY OF REASONABLE CARE
What is the agent entitled to for his obediant and reasonable care?
An agent is entitled to REASONABLE COMPENSATION for his services, but he is not entitled to compensation if he breaches his fiduciary duty to the principal
*An agent is entitled to INDEMNIFICATION by the principal for liability incurred while performing lawful acts in good faith, upon the authority of the principal.
What are the liabilities of the agent who represents a disclosed principal?
There is generally no personal liablility
What are the liabilities of the agent who represents a partially disclosed or undisclosed principal?
The agent may be personally liable to third parties
Is a disclosed principal liable to third parties?
Yes! A disclosed principal is generally always liable to third parties on contracts entered into by an autorized agent.
What happens when a third party learns the identity of an undisclosed principal?
Upon learning of the identity and existence of an undisclosed principal, the third party may be required to elect to sue either the principal or the agent. To be binding, the election to sue must be made with knowledge of the fact of the undisclosed principal.
TERMINATION OF THE AGENCY RELATIONSHIP
An agency relationship is generally terminable at the will of either party.
When is an agency relationship not terminable?
An agenty relationship is not terminable at the will of either party if:
1) The agency is COUPLED WITH AN INTEREST; or
2) The agent has a power given for security

*If an agnecy is set up for a specific time, an agent's authority will automatically terminate at the end of that time.
Does the ability to terminate an agency at all preclude either party from institution of a breach of contract action?
NO!
Does death or loss of capacity terminate the agency?
Yes, the death or loss of capacity of either party.
Does notice have to be given to third parties when the agency relationship is terminated by death or loss of capacity?
NO!
Does notice have to be given when the agency relationship is terminated otherwise?
YES!
PARTNERSHIPS

(GENERALLY)

What is a partnership?
A partnership is an "association of two or more persons to carry on as co-owners a business for profit."
What is the definition of "person"?
The definition of "person" includes individuals, corporations, societies, associations and partnerships.
Is a partnership recognized as a separate entity?
No, generally a partnership is not recognized as a separate entity (as a corporation is), but rather as an aggregate of the partners.
What is the defnition of "business"?
"Business" includes "every trade, occupation, or profession".
What is a partnership based on?
A partnership is based on an agreement between the partners; there are no particular formalities or statutory requirements for formation. A partnership contract may be oral, and may be inferred from the conduct of the parties.
Who has the capacity to enter into a partnership?
Any person who has the capacity to enter into a contract can enter into a partnership agreement.
Can a minor enter into a partnership?
Yes, a minor can enter into a partnership, but he may void the partnership agreement on the basis of infancy. However, his investment in the business is subject to the claims of creditors.
What is the key test to determine if a partenrship is formed?
The key test of whether a partnership is formed is the intent of the parties.
Can a partnership agreement be oral or must it be in writing?
A partnership may exist despite the absence of a written agreement.
What evidence will the court consider in determining if a partnership exists?
The court may consider such evidence as:
*The sharing of profits
*the management practices of the entity.
*amount and type of services rendered by the parties, and
*the record title to any real or personal property used by the entity.
What happens if someone receives as share in the profits of the partnership?
The receipt by a person of a share of the profits of a business is PRIMA FACIE evidence that he is a partner in the business. However, no such inference may be drawn if the profits were received in payment:
*of a debt by installments or otherwise;
*as wages of an employee or rent to a landlord;
*an annuity to a surviving spouse or representative of a deceased partner;
*as interest on a loan, even though the amount of payment varies with the profits of the business; or
*as the consideration for the sale of the goodwill of the business or other property by installments or otherwise.
Is it stautorily required that there be a sharing of losses to create a partnership?
NO!
How do partners share in the losses of the partnership?
In the absence of a contrary agreement, the partners share losses in proportion to their share of the profits.
Does sharing of gross returns of itself establish a partnership?
NO!
How does partnership by estoppel occur?
Partnership by estoppel may occur when a voluntary partnership does not exist, but one has let it appear that he is in a partnership and a creditor is thereby misled.
How is one who is really not a part of a partnership but held himself out as being a part of a partnership held liable?
When a person, by words or conduct, represents himself to be a partner in an existing partnership or with one or more persons not actually partners, he is liable to anyone who has extended credit in reliance on the representation of partnership.
What if the "false" representation is made in private?
If the representation is privately made, it may be relied on only by those whom it was made.
What if the "false" representation was made publicly?
If a representation was publicly made (e.g. by newspaper) the "apparent partner" is liable to anyone who has knowledge of it and relied thereon.
POWER AND LIABILITY OF PARTNERS

(POWERS)
Every partner is an agent of the partnership for the purpose of its business.
How does a partner gain express authority?
A partner may have express authority to act by the terms of the partnership agreement or by the consent of the other partners.
How does a partner gain apparent authority?
A partner may have apparent authority based on the nature of and the course of business of the partnership or on the custom in similar partnerships in the same area.
What can't the partner authorize without aurhorized consent from all partners?
Unless authorized by all partners, a partner has no authority to:
*assign partnership property in trust to creditors or on the assignee's promise to pay the debts of the partnership;
*dispose of the goodwill of the business;
*do any act which makes it impossible to carry on the ordinary business of a partnership;
*confess a judgment; or
*submit a partnership claim to arbitration or reference.
How do partnership restrictions work with respect to partnership agreements?
Partnership agreements may include specific restrictions on authority; if a partner acts in contravention of such a restriction, and the third party has knowledge of the restriction, the partnership will not be bound. However, such a restriction is ineffective against a third party without knowledge of it.
(NOTICE TO PARTNER)
Generally, notice to any partner of any matter relating to partnership affairs constitutes to the partnership
What happens when a partner acquires knowledge while in his capacity as a partner?
If a partner acquired knowledge while a partner, that knowledge is imputed to the partnership. However, an exception to this rule of imputation of notice or knowledge is made if a fraud on the partnership is committed by or with the consent of that partner.
(LIABILITY)
All partners are liable jointly and severally by any tort or breach of trust committed by a partner acting in the ordinary course of business.
How are actions brought against partners and how are they bound?
An action may be brough against any one or more of the partners, but a partner will not be bound by a judgment unless he has been served with notice.
How are partners had liable for the debts and obligations of the partnership?
All partners are liable jointly for all other debts and obligations of the partnership.
How can the judgment be satifsied?
The judgment may be satisfied against any of them.
How can a partners liability be several?
A partner may enter into a separate obligation to perform a partnership contract (for example, a partner might endorse a partnership note); in this case, the partner's liability is several.
Are all partners required to be named in a lawsuit and served with process?
At common law, yes. However, many jurisdictions have "common name statutes", which allow a partnership to sue or be sued by its common name.
Can a partner be held criminally liable for the criminal acts of a copartner?
No. Generally a partner is not liable for the criminal acts of a copartner unless he possesses guilty knowledge of a criminal act of his copartner or is an accessory before or after the fact.
Are partners jointly and severally liable for breach of trust?
Yes. Partners are jointly and severally liable for breach of trust, as when:
*a partner, acting within the scope of the business, receives money or property of a third person and misapplies it; and
*the partnership in the course of its business receives money or property of a third person and it is misapplied by any partner while it is in the custody of the partnership.
Is a dormant partner held liable?
Yes. a dormant partner-i.e. one not active in managing partnership business and who is knot known to the world as a partner-is liable on pattnership obligations.
Is an incoming partner liable for pre-existing obligations?
Yes. An incoming partner-i.e., one admitted into an existing partnership-is liable for all the pre-existing obligations of the partnership arising before his admission. However, his liability for pre-existing obligations can be satisfied only out of partnership property, and thus is limited to his investment in the partnership.
RIGHTS OF PARTNERS AMONG THEMSELVES
(CONTRIBUTIONS, PROFITS AND LOSSES)
Every partner is entitled to be repaid his contributions, whether made by way of capital or advance to the partnership property, and to share equally in the profits and surplus remaining after all liabilities, including those to partners, are satisfied.
How are the responsbility with respect to losses handled in partnerships?
Each partner must contribute toward the losses, whether of capital or otherwise, sustained by the partnership, according to his share in the profits.
Can the partners agree to share profits other than equally?
Yes. Partners may agree to share the profits other than equally, and would then share the losses in the same ratio, unless specifically agreed otherwise.
Is each partner indemnfied for payments made and personal libabilities incurred in the ordinary course of business?
Yes!
Is a partner entitled to compensation for acting in the partnership business?
Generally no. Except for his services in winding up the partnershp affairs.
Can a partner's agreement provide for salaries to be paid?
Yes. The agreement should spell out the source of payments (i.e. from the partner's share of profits or from partnership income) and the work and time required in exchange.
(MANAGEMENT AND CONTROL)
All partners have equal rights in the management and conduct of the partnership business. This right may be changed by agreement.
How are ordinary matters handled?
Ordinary matters can be voted on by the partners and majority will prevail.
How are matters in contravention of any agreement between the partners handled?
All the partners must consent.
(DUTIES OF CARE AND LOYTALTY, ETC)
Each partner owes to the partnership a duty of care in the management of partnership property. A partner may be held accountable for negligent management.
Is there a fiduciary relationship between partners?
Yes. As partnership matters, partners stand in a fiduciary relation to one another and owe each other loyalty and the utmost good faith in all that pertains to their relationship.
Can a partner compete with the partnership within the scope of its business?
No. If he does so, he must account to the partnership for his profits.
Can a partner exploit a business opportunity for his own benefit?
Generally no. If he does, he must make full disclosure and receive the approval of the other partners.
Disclosure of full information.
Partners must render on demand true and full information of all things affecting the partnership to any partner, or to the legal representative of any deceased partner or partner under legal disability.
(RIGHT TO ACCOUNTING)
A partner has the right to a formal accounting of partnership affairs:
*if he is wronfully excluded from the partnership business or possession of its property by his copartners;
*if provided by the terms of any agreement;
*if a partner has improperly obtained secret profits in violation of his ficudiary duty; and
*whenever other circumstances render it just and reasonable.
Where should the partnershp books be kept?
The partnership books must be kept, subject to any agreement between the partners, at the principal place of business, and every partner shall at all times have access to any may inspect and copy any of them.
(NEW MEMBERS)
No person can become a member of a partnership without the consent of all partners.
(SUITS BETWEEN PARTNERS)
Generally, partners cannot sue each other at law, but must sue in equity for an accounting.
(PARTNERSHIP PROPERTY AND PROPERTY RIGHTS)

(Partnership Property)
All property originally brought into the partnership stock on account of the parnership is partnership property. This is the "capital" of the partnership.
Can real property be acquired under the partnership?
Yes. Real property may be acquired in the partnership name. If property is acquired with partnership funds, it is presumed to be partnership property even if held in one partner's name.
(Property Rights of a Partner)
The property rights of a partner are:
*his rights in specfic partnership property;
*his interest in the partnership; and
*his right to participate in the management.
what type of ownership does a partner share with is co-partners?
A partner is a co-owner with is partners of specfic partnership property, holding it as a tenant in partnership. The incidents of this tenancy are:
*an equal right with partners to possess specific partnership property for partnership purposes, but no right to possess it for any other purpose without consent;
*this right is not assignable except in connection with the assignment of rights of all the partners in the same property;
*this right is not subject to attachment or execution, except on a claim against the partnership;
*on the death of a partner, this right vests in the surviving partner(s); on the death of the last partner, this right vests in his legal representative;
*this right is not subject to dower, curtesy, or allowances to widows, heirs or next of kin.
What are the partner's interests in the property and how are they handled?
A partner's interest in the partnership is his share of the profits and surplus, and it is treated as personalty regardless of the character of the partnership property.
Are the partner's interest in the partnership assignable?
Yes. but such an assignment does not dissolve the partnership. Nor does it entitle the assignee, in the absence of a contrary agreement, to interfere in the management or administration of the partnership business or affairs." The assignee is merely entitled to receive the profits to which his assignor would have been entitled.
What happens to the partner's interest at death?
A partner's interest in the partnership vests at death in his exceutor, who may require an accounting.
(Conveyance of Real Property)
If title to real property is in the partnership name, any partner may convey title by a conveyance executed in the partnership name.
What may the partnership do if the partner did not have the authority to convey the property?
The partnership may recover the property from the grantee, unless the grantee has reconveyed to a BFP.
What happens if title to real property is in the name of one or more but all the partners, and the record does not disclose the right of partnership?
The partners in whose name the title stands may convey title to the property.
What happens if the title to realty is in the name of all the partners?
A conveyance executed by all the partners passes all their rights in the property.
DISSOLUTION AND WINDING UP

(Generally)
The dissolution of a partnership is the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on (as distinguished from the winding up) of the business
What is winding up?
Winding up is the process of settling partnership affairs.
What is termination?
Termination is the point when all the partnership affairs are wound up.
(Causes of Dissolution)
1) The termination of a particular term or undertaking specified in the partnership agreement results in dissolution. Continuance of the business after the termination date or event operates as an implied agreement for a partnership at will under the applicable terms of the original agreement.
What happens if there is no definite term or particular undertaking specified?
the partnership is a partnership at will and may be dissolved by any partner who gives notice to the other partners of his desire to terminate it.
Can a partnershp be dissolved at any time?
Yes!
If so, how?
by unanimous consent, regardless of any duration specified in the partnership agreement.
Expelling of partner from partnership
A partnership is deemed dissolved if any partner is expelled from the partnership in accordance with the partnership agreement.
What other grounds can a partnership be resolved?
If circumstances do not permit a dissolution on any other grounds, the partnership may be dissolved by the express will of any partner at any time in convtravention of the parternship agreement.
Does a parter lose his rights in the accrued profits by reason of his breach, whether or not in bad faith?
No!
Is a partner who wrongfully causes dissolution liable for damages to any partners injured thereby?
Yes!
Does the death of any partner dissolve a partnerhip?
Yes!
Does bankruptcy dissolve the partnership?
Yes! The bankruptcy either of the partnerhsip or of any of the partners dissolves the partnership.
On what grounds can a partner bring an action in equity for a decree of dissolution?
1) Insanity and incapacity of a partner
2) Conduct of a partner prejudicial to business
3) breach of agreement of impracticability
4) if the business of the partnership can only be carried on at a loss
5) when "other circumstances render a dissolution equitable"
(Effect of Dissolution On Authority of Partner)
Generally, after dissolution, a partner has the authority to bind his copartners, only with respect to winding up partnership affairs and completing unfinished transactions.
Is a partner acting for the partnership who creates a liability after dissolution entitled to contribution from his copartners?
Yes!
Are there any exceptions and if so what are they?
Yes,
1) Dissolution was by the act of a partner and the partner acting for the partnership had knowledge of the dissolution; or
2) dissolution was by the death or bankruptcy of a partner and the acting partner had knowledge or notice of the death or bankruptcy.
Can the partnership bound for new obligations after dissolution? And if so, for what reasons.
Yes! Generally, after dissolution a partnership is bound for new obligatgions incurred by a partner acting within the apparent scope of the business if the third party had extended credit to the partnership prior to dissolution without knowledge or notice of the dissolution.
What acts done by a partner would not bound the partnership after dissolution?
The partnership is not bound by any act of a partner after dissolution if:
1) the partnership business was unlawful, unless the act was incident to winding up; or
2) if the partner was bankrupt; or
3)if the partner had no authority to wind up the business, unless the third party had extended credit prior to dissolution and had no knowledge or notice, or if he had extended credit and he had no knowledge or notice and the partner's lack of authority had not been advertised
(Effect of Dissolution on Existing Liabilities)
Generally, the dissoultion of a partnership does not of itself discharge the existing liablity of any partner.
Is a retiring partner liable on all obligations incurred before his retirement?
Usually, yes. However, a retiring partner can be discharged from liablity by an agreement with the continuing partners and the partnership creditor. The remaning partners may agree to assume the obligations of the retiring partner, who will then become a surety.
Is a deceased partner's individual property liable for all partnership obligations incurred while he was a partner?
Yes. However, his individual creditors have priority over partnership creditors.
(Winding Up)
Generally, all the partners who have not wrongfully dissolved the partnership have an equal right to wind up the firm's affairs.
What must a partner who is winding up a partnership do?
A partner winding up a partnership must pay it debts and complete its unfinished transactions and contracts.
What powers does the winding up partner have?
He has the power to:
1) Dispose of any or all of its real or personal property
2) To close up the business
3) Can collect, pay and compromise firm debts
What powers does the winding up partner not have?
He cannot make new contracts or create new liablitities except to the extent necessary and incident to the settling of affairs.
(Continuance After Dissolution)
The remaining partners have the right to continue the business after the dissolution if the dissolution was wrongful. They may continue in the same name, either by themselves or with others, during the agreed term for the partnership and may possess the partnership property.
Can a partnership continue after a partner is expelled?
Yes, if the partnership agreement provides.
Can a partnership continue after a partner retires or dies?
Yes, if the retiring partner or the representatives of the deceased partner consents to a continuation.
When a partnership is continued after dissolution, do the creditors of the original partnership become the creditors of the continuing partnership?
Yes.
Is an incoming partner liable to the old creditors and if so to what extent.
Yes, but only to the extent of his interest in the partnership property.
(Distribution of Assets)
If the business is not continued, the partners must wind it up by liquidating assets and settling its obligations, and then must distribute the remaining assets to the partners.
In what order must the liabilities be paid in the absence of a contrary agreement?
1) Those owing to creditors other than partners
2) Those owing to partners other than for capital and profits (e.g., loans, and for liquidation services);
3) those owing to partners in respect of capital; and
4) those owing to partners in respect of profits.
Can the partners change the creditors' priorities or their own liabilities to the firm's creditors?
Although they may vary the rules by agreement, they cannot change the creditors' priorities or their own liablities to the firm's creditors.
How are liabilities satisfied?
Liabilities are satisfied first out of partnership property, if this is insufficient, the partners must contribute the amount necessary to satisfy the liabilties.
What happens if a partner is insolvent?
If a partner is insolvent, the others must contribute their share of the liabilities and, in proportion equivalent to their share in the profits, the additional amount necessary to pay the liabilities. Any partner who pays more than his share can obtain contribution from the other partners.
What happens if a partner is insolvent or bankrupt?
His individual creditors have priority as to his separate property.
LIMITED PARTNERSHIPS

(Creation)
A limited partnership consists of:
1)General partners, who manage the business and are personally liable for partnership obligations; and
2) limited partners, who contribute capital and share in profits, but take no part in the control or management of the business; the limited partners' liability is limited to their contribution.
How is a limited partnership formed?
A limited partnership is formed by filing with the state a signed certificate, detailing;
1) the incidents and composition of the business;
2) the name of the entity, including the words "limited partnership;" and
3) the identity of the partners and their shares.
What must a limited partnership do to continue to stay viable?
A limited partnership must continuously maintain an office and a resident agent for the service of process in the state where it is organized.
What types of businesses may a limited partnership carry on?
Any type of business that a partnership can.
How are profits and losses handled in a limited partnership?
Profits and losses and distributions of assets are allocated among the parties in accordance with the partnership agreement, or, absent such a provision, on the basis of the value of each partner's contribution.
(Limited Partners)
Limited partners must refrain from any participation in the management or control of the business, including control over any of the managing partners.
What happens if a limited partner knowingly allows parternship to use his name in the firm name?
He is liable to creditors who extend credit to the partnership without actual knowledge.
Is a limited partner liable for partnership obligations beyond his contribution?
Generally no. Unless he takes part in the control of the business. He does not participate in the control of the business solely by doing one or more of the following:
1)Being a contractor for or an agent or employee of the limited partnership or of a general partner;
2) consuliting with and advising a general partner with respect to the partnership's business;
3) acting as surety for the partnership;
4) approving or dissapproving an amendment to the partnership agreement; or
5) voting on dissolution, sale, exchange or mortgage of all or substantially all assets; incurring of indebtedness other than in the ordinary course of business; change in the nature of the business; or removal of a general partner.
6) proposing, approving or disapproving matters related to the business of the limited partnership which the partnership agreement states in writing may be subject to the approval or disapproval of limited partners.
IS a person who erroneously, but in good faith believes himself a limited partner laible as a general partner?
No, if on learning of the mistake, he causes an amended certificate to be executed and filed, and withdraws from future equity participation in the enterprise.
Does a limited partner still have the obligation to contribute cash or property as promised even if unable because of death or disability?
Yes!
Does a limited partner have the right to inspect and copy the required partnership records and tax returns and to obtain the complete information as to the financial condition and state of the business.
Yes!
Can the partnership agreement grant voting powers to all or some of the limited partners upon any matter?
Yes!
Can a new limited partner be admitted after the filing of the original certificate of limited partnership?
Yes
1) If the properly acquires his parntership interest directly from the partnership; or
2) if he is an assignee of a partner entitled to grant an assignee the right to become a limited partner.
(General Partners)
A general partner in a limited partnership has most of the same rights and powers and is subject to the same restrictions and liabilities as a partner in a general partnership.
How does voting work with respect to general partners?
The partnership agreement may grant to all or to specfied general partners the right to vote, separately or with all or any class of the limited partners, on any matter.
Can new general partners be admitted after filing the original certificate?
Yes, provided that they receive the specific written consent of each partner.
Can a partner be both a limited and general partner?
Yes, simultaneously, with the rights, powers and restrictions of a general partner but, with respect to his contribution, the rights of a limited partner.
(Assignment of Partnership Interests)
A partnership interest is personalty and is generally assignable.
(Distributions and Withdrawal)
Regardless of the nature of his contribution, a partner has no right to receive his distribution in any form other than cash.
What title does a partner receive when he is entitled to receive a distribution?
The status of a creditor.
Can a partner who is entitled to a distribution receive one when after the distribution the liabilities of the partnership exceed the fair value of the assets?
No
When can a limited partner withdraw?
At the time, or upon the happening of the events specfied in the certificate, in accordance with the procedures provided in the partnership agreement.
When can a general partner withdraw?
A general partner can withdraw at any time by giving written notice to the other partners. If his withdrawal violates the partnership agreement, the partnership can recover damages for the breach.
(Dissolution)
A limited partnership is dissolved at the time or upon the happening of the events specified in the certificate, or upon the written consent of all partners.
Can a partner dissolve by application of decree?
Yes. A court may decree dissolution whenever it is not reasonably practicable to carry on the business in conformity with the partnership agreement.
How are liabilities paid after winding up?
Liabilities are paid in the following order:

1) Those to creditors;
2) Those to partners and ex-partners in satisfaction of accrued but unpaid interim distribution and distributions due upon withdrawal;
3)those to partners for return of their contributions;
4) those to partners for payment of partnership interests.
Are general partners subordinated to limited parters upon liquidation.
No. However, the dissolution distribution provisions, other than to creditors, may be varied in the partnership agreement.