Study your flashcards anywhere!

Download the official Cram app for free >

  • Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off
Reading...
Front

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key

image

Play button

image

Play button

image

Progress

1/37

Click to flip

37 Cards in this Set

  • Front
  • Back
Define a Partnership
DRUPA 202-A: association of 2 or more persons to carry on biz as co-owners for profit (prima facie evidence of pship), whether or not the parties intend to form a pship, OR, to carry on any purpose or activity NOT for profit when the parties intend to form a pship.
Dissociation of a Partner
General Rule: P has the power to dissociate at any time, rightfully or wrongfully, by express will after providing notice to the pship. P is liable to the pship and to the other partners for damages caused by a wrongful dissociation.
Admission of New Partners
Need Consent. 1) No one can become a partner w/o the express or impled consent of all partners unless the partnership agreement provides otherwise. 2) A person may become a partner w/o making contribution to the pship. 3) A person can become a partner w/o acquiring an economic interest in the pship. 4) A partner under (2) or (3) is still liable for pship obligations.
Pship Contribution
Consists of cash, property or services rendered OR a promissory note or other obligation to contribute cash or property or to perform services.
Rights of Partners in Partnership property
Partner only has an economic interest in pship property. This interest is personal and transferable.
Transfer of P's Economic Interest
P can transfer his whole or partial economic interest to a 3rd person. Transfer does not, by itself, cause dissolution or dissociation and does not entitle transferee to:
1) participate in the management of the biz
2) require access to info. or
3) to inspect or copy the pship books or records.
Transferee Rights
Transferee of a P's economic interest has a right to:
1) receive distributions which P would otherwise have been entitled
2) recieve the net amountotherwise distributable to P on dissolution and winding up, and
3) Seek a judicial determination to wind up the Pship biz where equitable.
Rights & Duties of Ps to the Pship
All partners have equal rights in the management and conduct of Pship biz. No person can become a member of a pship w/o consent of all partners. Each partner is entitled to an equal share in the Pship profits & losses in proportion to his share or contribution. No partner is entitled to remuneration for acting in the partnership biz, except that a surviving partner is entitled to reasonable compensation for winding up the pship. P may use or possess Pship property only on behalf of the pship.
Fiduciary Duties
Loyalty & Care are only FD that Partner owes to pship.
FD of Loyalty
To refrain from dealing with the pship as, or on behalf of, a party w/ an adverse interest and to refrain from competing w/ pship in the conduct of the pship biz before dissolution, and in accounting to the pship for any property, profit, or benefit derived by the P, in the conduct or winding up of the pship biz, or derived from use by the P of pship property, including the appropriation of a pship opportunity. A partner does not violate a duty under DRUPA or the pship agreement solely becasue his conduct furhers his own interest. e.g. where P sells his own property to the pship he's entitled to the best price he can get.
FD of Care
Ltd. to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct or a knowing violation of the law.
FD of Good Faith & Fair Dealing
Partner SHALL exercise any rights or duties consistently w/ the obligation of good faith & fair dealing. Good Faith & Fair Dealing may be modified by the PA, but can't be eliminated.
Books and Information
1. General Rule
a. Each P and the Pship SHALL provide Partners, former partners (only re the time period they were partners), and the legal representative of a deceased P and their agents and attorneys,
1. Access to the Books and Records of the Pship and other information concerning the Pship’s Biz and Affairs
2. Upon Reasonable Demand,
3. for any purpose Reasonably Related to the P’s economic interest.
b. Access may be restricted by the original Pship Agreement or by subsequent amendment approved by all partners.
What is covered under the right of access to books & information?
c. Right of access includes:
1. True and full info re the status of the biz and financial condition of the Pship;
2. Copy of the Pship’s Federal, State, and Local Income Tax Returns for each year;
3. Current list of the name and last known address of each P;
4. Copy of any Statement and written Pship Agreement and all amendments, along with any executed copies of powers of attorney relevant to the Pship Agreement;
5. Information re the amount of cash, a description and Statement of the agreed value of any other property or services contributed by each P, and what each P has agreed to contribute in the future, and date on which each P became a P;
6. Other Info re the affairs of the Pship as is Just and Reasonable
i. Catch-all
Right to Examine & Copy
a. Right of Access includes right to examine and copy info from the books and records.
b. Pship Agreement may provide reasonable standards re exercise of right to access.
3. Confidentiality
Confidentiality
a. Pship Agreement may provide that Pship SHALL have right to keep confidential info from partners for a reasonable period if the Pship reasonably believes it is a trade secret or not in the best interest of the Pship.
Form of Pship Records
May keep them in a non-written for so long as they can be converted into written form in a reasonable time
Demand Requirements
P must make demand in writing and state the purpose of the demand.
Enforcement of Rights to Information
a. Must be brought in Chancery.
If Pship does not permit access w/in 5 biz days after demand, P may apply to Chancery for an Order to Compel Disclosure
Legal Actions B/W Partners
Actions by Pship - May sue Partners for
1. breach of Pship Agreement,
2. breach of Duty, or
3. causing harm to the Pship.
Relations of Partners to 3rd Parties. General: Application of the Law of Agency
1. Every P is an Agent of the Pship
a. The act of every P for apparently carrying on in the course of the Pship Biz binds the Pship and the other P’s.
b. No Liability if a P has no authority to act for the Pship AND 3rd person has notice that the P lacks authority.
c. An act of a P that is not apparently for carrying on in the ordinary course of the Pship’s Biz binds the Pship ONLY IF the act was authorized by the other P’s.
Statement of Pship Existence
2. Pship MAY file a Statement of Pship Existence w/ Sec. of State. Must state
a. Names of the P’s authorized to execute an instrument transferring real property of the Pship and
b. The authority, or limitations on authority, of some or all of the P’s to enter into transactions on behalf of the Pship
3. Filing the Statement puts 3rd parties on notice of who’s authorized and who’s not.
4. Except for transfers of Real Property, a grant of authority in the Statement is conclusive in favor of a person who gives value w/out knowledge to the contrary.
a. Non-P’s are deemed to know of a limitation on authority to transfer real property held by the Pship IF a copy of the Statement is filed in the office for recording transfers of real property.
Apparent Authority
In the absence of Actual Authority, a P can bind the Pship b/c of his apparent authority.
Liability of Partners
a. Generally, all P’s are liable jointly and severally for all obligations of the Pship unless otherwise agreed by the claimant or provided by law.
b. However, no P can be liable for good faith reliance on the terms of the Pship Agreement.
1. Additionally, no P can be liable for good faith reliance on the records or the Pship, or Statements or reports from another P, employee or officer in the Pship which is reasonably relied upon to pay claims or obligations of the Pship.
Liability for P's own Negligence
P remains liable for his own negligence or willful misconduct.
Actions by and Against Pship & Partners
2. One or Separate Actions
a. An action may be brought against the Pship and any or all of the P’s in the same or separate actions.
Judgment Against Pship
a. Judgment against a Pship is not by itself a judgment against a P.
b. Judgment against a Pship may not be satisfied from the assets of a P liable for a Pship obligation UNLESS there is also a judgment against the P for the obligation.
Judgment Against Partners
a. Judgment Creditor of a P may not levy execution against the assets of the P to satisfy a judgment based on a claim against the Pship unless:
1. the claim is for an obligation of the Pship for which P is liable and EITHER:
i. a judgment based on the same claim has been obtained against the Pship and a writ of execution on the judgment has been returned unsatisfied;
ii. Pship is a debtor in bankruptcy;
iii. P has agreed that the creditor need not exhaust Pship assets; or
iv. Court grants permission to the judgment creditor to levy execution against the assets of a P based on a finding that:
1. Pship assets are clearly insufficient to satisfy the judgment,
2. that exhaustion of Pship assets is excessively burdensome, or
3. that the grant of permission is an appropriate exercise of the Court’s equitable powers; OR
2. Liability is imposed on the P by law or K independent of the existence of the Pship.
P's Dissociation
A. GENERAL RULE
1. DRUPA introduces the concept of the dissociation of a P from the Pship w/out mandating the dissolution of the Pship.
2. DRUPA provides that a Pship will generally continue to exist upon the departure of a P.
B. EVENTS CAUSING DISSOLUTION
1. P is dissociated from a Pship upon the occurrence of any of the following events:
a. After Notice
1. P may dissociate from Pship upon giving Notice to the Pship
P's Power to Dissociate
1. General Rule
a. P has the power to dissociate at any time, rightfully or wrongfully, by express will after providing notice to the Pship
Winding up the Pship Biz
a. Pship continues after dissolution only for the purpose of winding up its biz. Pship is terminated when the winding up is completed.
b. All Partners may vote to waive the winding up and termination (except wrongfully dissociating Partners) of the Pship.
c. In the event of Waiver, Pship resumes its Biz as if dissolution had never occurred.
1. Any liability incurred by the Pship after dissolution and b/f waiver is determined as if dissolution had never occurred.
2. Rights of 3rd parties cannot be adversely affected.
Settlement of Accounts & Contribution Among Ps
a. Payment of Pship Obligations
1. Debts are paid first from any assets or the Pship, including P contributions
2. Surplus must be paid in cash to Partners in accord w/ their right to distribution.
b. P’s Entitlement
1. Each P’s entitled to a settlement of all Pship accounts.
2. profits and losses must be credited and charged to the P’s accounts.
3. Partners are responsible for any shortcomings excluding any amount for which the P is not personally liable.
c. Post Settlement of Accounts
1. After accounts are settled, each P SHALL contribute, in proportion to which the Partners share losses, the amounts necessary to pay Pship obligations that weren’t known at time of settlement and for which the P is personally liable
d. Failure to Contribute
1. all other Partners must contribute, in the proportion which they shared losses, the additional amount necessary.
2. The other Partners can then sue the non-paying P for contribution for the amount in excess of their share of the obligations.
3. Estate of a deceased P is liable for his obligation to contribute.
e. Assignee Rights
1. An assignee for the benefit of creditors of a Pship or a P may enforce a P’s obligation to contribute to the Pship.
Registered LLPs
A. A registered LLP is a GP formed under DRUPA that has filed a Statement of Qualification w/ the Sec. of State to become a Registered LLP.
1. Pship Agreement MUST state that it’s formed as a LLP.
2. If an existing Pship becoming a LLP, conversion must be approved by the number of Partners required to amend the Agreement.
3. Principal Feature of LLP – Partners not liable, directly or indirectly, for debts, obligations and liabilities of the Pship whether arising in K, Tort or otherwise.
4. A LLP Shall Not make a distribution to a P if it would cause the liabilities of the Pship to exceed the Fair Value of the assets. Distribution does not include: reasonable compensation for present or past services; or reasonable payments made in the Ordinary course of Biz pursuant o an organized retirement plan or other benefits program.
Registered LLPs Statement of Qualification
1. Pship becomes a LLP by filing a Statement of Qualification of a Domestic Pship containing the following:
a. Name of Pship;
b. Address of a registered office and name of a registered agent for service of process;
c. Number of Partners;
d. That the Pship elects to be a registered LLP; and
e. The future effective date if other than the filing date.
2. Terms and Conditions must be approved by the vote necessary to amend the Pship Agreement.
3. Status as an LLP is effective until canceled or revoked
4. Pship becomes a LLP if they have substantially complied w/ the filing requirements
a. Status as LLP not effected by errors in information required to be in the Statement.
b. Filing the Statement establishes that a Pship has satisfied all conditions precedent to the qualification of the Pship as a LLP
LLP Limitation on Liability
1. Pship is liable for Pship debt
2. Limited Liability shield to personal liability of Partners
Limited Partnership (LP)
1. Definition
a. LP is formed by 2 or more people under laws of DE AND having 1 or more GPs (management) and 1 or more Ltd. Ps (no management) –
1. includes a registered LLLP
b. Differs from a GP in 2 ways:
1. LP does not exist at Common Law and is a Specific Statutory Creation (6 Del. C. § 17-201; and
2. Liability of a Ltd. P for Pship debts is generally limited to the capital that she contributes to the Pship.
LP - Applicable Law
a. LP’s governed by Delaware Revised Uniform Limited Partnership Act (DRULPA).
b. For anything not provided for in DRULPA, DRUPA and the law of Equity apply.
c. In the event of conflict, DRULPA controls.