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40 Cards in this Set
- Front
- Back
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GP |
Association of 2 or more persons: -to carry on a business as co-owners for profit whether or not the parties intend to form the partnership OR -to carry on any purpose/activity not-for-profit, where the parties intend to form a partnership |
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GP Liability |
All partners are jointly & severally liable unless agree otherwise -Safe harbor - good faith reliance on agreement -Not liable for obligations of partnerships before admission. Partner liable for acts of partners in ordinary course of business. Partner not liable for criminal acts of other partner committed in scope of partnership (unless participated) |
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GP |
Unless agreement states otherwise, need consent of ALL partners |
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GP Partnership Proeprty |
Unless agreement states otherwise, a partner is not a co-owner of partnership property. Partners only have economic (personal property) interest in the partnership. |
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GP Transfers |
Permitted unless prohibited by agreement. Ineffective if violative of restriction. Transferee- does not become partner, has only economic interest of transferor (partner) unless voted in by the agreement (if not in agreement then by all partners) Tranferor - remains partner (unless agreement states otherwise) but stripped of economic rights |
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GP Creditors/Charging Orders |
Charging order - judgment creditor can get lien on partnership's economic interest in partnership but not property of partnership |
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GP Profits |
If agreement silent, partners have equal share in profits and shares of losses in proportion to share of profits |
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GP Indemnity |
If agreement silent, partnership can indemnify partners for payments/liabilities incurred in ordinary course of business |
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GP Management |
If agreement silent, each partner has equal rights in management and conduct of business. Majority rules if ordinary course of business. Unanimity if outside of ordinary course. Delegation to manage allowed. |
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GP Fiduciary Duty |
Loyalty -Accounting for property/profit/benefit derived from partnership/business/use of partnership property, including appropriation of partnership opportuntiy -Not deal with partnership on behalf of a party with adverse interest (conflict of interest) -Not compete with partnership business before its dissolution
-no gross negligence or wanton/reckless conduct |
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GP Good Faith/Fair Dealing |
Implied but not express in DRUPA. Cannot be eliminated entirely by agreement but can be modified. Safe harbor - if reasonably rely on partnership documents then not liable |
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GP Books/Records |
Access upon reasonable written demand for any purpose reasonably related to partner's interest as partner in partnership (ex. list of partners and their econ interest, partnerships FMV, status of business, financial condition, tax returns) If denied, order to compel in chancery Safe harbor per agreement - confidentiality (ex. trade secret) |
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GP Legal Actions Partnership v. Partner |
For breach of agreement/violation of duty |
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GP Legal Actions Partners |
May sue partnership or other partners |
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GP Legal Actions Derivative Action |
If partner by operation of law or per agreement at time of transaction. Complaint must state with particularity effort to have the partnership initiate the action, or reason for not making effort. Unlike corporate or LP law - merely demand needed and can proceed with action upon refusal (in corp must show refusal was not wrongful) |
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GP Knowledge/Notice |
Knowledge/notice to partner=knowledge/notice to partnership Knowledge=actual knowledge Knowledge=know or received notification |
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GP Dissociation/Withdrawl How? |
Upon notice -Wrongful breach of agreement (then liable to partnership & partners for damages) |
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GP Dissociation/Withdrawal Effect |
No right to participate in management. Only duty of loyalty re competition terminates (other duties remain re occurrences before dissocation) |
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GP Dissociation/Withdrawal Occurs if |
Expulsion (per agreement or unanimous consent), bankruptcy, death |
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GP Dissociation/Withdrawal Rights |
Partner has right for partnership to purchase his interest (offset by damages for wrongful dissociation) |
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GP Dissociation/Withdrawal Ability to Bind Partnership |
1 year after dissociation if: 3rd party w/o notice (filing enough) reasonably believed & reasonably relied on dissociated partner to be partner |
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GP Dissociation/Withdrawal Liability |
Partner not liable for partnership obligations occurring after dissociation (except if partner is otherwise liable at time of transaction & one year rule) |
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GP Disolution |
Per agreement, if illegal to continue, per court order if not reasonably practicable to carry on business Partner can bind post dissolution by act that is consistent with winding up or would bind partnership per agency with the 3rd party having no knowledge of dissolution. |
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GP Winding Up |
Creditors paid first. If partnership has insufficient funds - partners are personally liable to creditors. If partner has insufficient funds, then other partners pay for him and then sue him |
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LP Definition |
Formed by 2 or more persons and having at least 1 general partner and at least one limited partner (if reqs not met then it's a GP) |
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LP Liability |
GP's - jointly & severally liable for actions in ordinary course LP's liable only up to their contribution (if participate in management then may be liable as GP) |
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LP Admission |
LP - if all partners consent GP - if other GP's consent |
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LP Partnership Property |
Same as GP |
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LP Transfers |
If LP assigns - ceases to be LP. Assignee has no liability as partner purely as result of assignment, but liable for capital contributions of assignor known to assignee/ascertainable from agreement |
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LP Creditors |
Same as GP |
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LP Profits |
Same as GP |
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LP Indemnity |
Same as GP |
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LP Management |
Same as GP |
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LP Fiduciary Duties |
LP - no fiduciary duty owed to partnership except if LP has authority to act for partnership, she has duty to exercise those rights in best interest of partnership and other LP's GP - Duty of good faith and fair dealing. No liability for decisions made in good faith and in exercise of reasonable & informed business judgment. Due care, loyalty , good faith Safe harbor - good faith reliance on agreement (breach of unambiguous provision not an excuse). Duties can be modified by agreement |
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LP Books/Records |
Access upon reasonable written demand for any purpose reasonably related to partner's interest as partner in partnership. However agreement may limit scope (no statutory right to names/addresses of all LP's) Confidentiality safe harbor |
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LP Legal Action |
Derivative - for GP need only request that partnership sue, if partnership refuses, GP can sue. For LP same test demand/futility test as for corporation |
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LP Knowledge/Notice |
Same as GP |
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LP Dissociation/Withdrawal |
LP - Unless agreement states otherwise, LP may not withdraw prior to dissolution. If agreement allows, then LP must be paid for her interest. Removal of GP - per contract or under common law if breach of fiduciary duty GP withdrawal per agreement, transfer, bankruptcy, death, removal, termination if an entity |
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LP Dissolution Winding Up Termination |
Per agreement written consent of all GP's, withdrawal of GP if no other GP & within 90 days majority of LP's do not agree to continue partnership & appoint new GP, judicial dissolution No LP's left if within 90 days GP's and LP's personal rep do not agree to continue partnership and admit personal rep as LP GP's are responsible for winding up |
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LP Distribtuion |
Same as GP If LP liable for wrongful distribution only if actually knew it was unlawful, but after 3 years, no more liability even if knew. |
