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81 Cards in this Set
- Front
- Back
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CREATION OF PARTNERSHIPS
Define general partnership. |
CREATION OF PARTNERSHIPS
An association of two or more competent persons who agree to carry on as co-owners of business for profit. Each partner has unlimited personal liability for all debts of teh partnership. |
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CREATION OF PARTNERSHIPS
What formalities are required to form a general partnership? What governs in the absence of a writing? |
CREATION OF PARTNERSHIPS
None. However, in the absence of a formal writing, the partnership is goverened by the Revised Uniform Partnership Act. |
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CREATION OF PARTNERSHIPS
State difference between partnership and joint venture. |
CREATION OF PARTNERSHIPS
Jt. venture formed for the purpose of carrying out a single, specified transaction. A partnersip is a business organization that can exist indefinitely. |
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CREATION OF PARTNERSHIPS
(1) How is partnership by estoppel created? (2) Who is liable for the actions of the non-partner? |
CREATION OF PARTNERSHIPS
(1) When someone is represented as being a member of a partnership when in fact, that are not. (2) If the person holds himself out or knowingly allows himself to be held out, he will be personally liable to the third party on transactions he enters into or that he knows are being entered into in his name. If other partners are unaware of the holding out, they are not liable. Also, a partner who represents that the third-party is a non-partner is also personally liable. |
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CREATION OF PARTNERSHIPS
What steps must be take to admit a new member to a partnership? |
CREATION OF PARTNERSHIPS
The consent of all other partners. |
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CREATION OF PARTNERSHIPS
Articulate how a limited partnership is different from a general partnership? |
CREATION OF PARTNERSHIPS
General partner has unlimited liability for the debts of the partnership + substantially participates in the management of the business. Limited partners are liable only to the extent of their capital contribution and do not participate in the management of the business. |
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CREATION OF PARTNERSHIPS
What steps must be taken to form a limited partnership? |
CREATION OF PARTNERSHIPS
General partners sign and file a certificate with the Secretary of State. |
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CREATION OF PARTNERSHIPS
What are the legal consequences of fialing to file a properly executed certificate of limited partnership with the state? |
CREATION OF PARTNERSHIPS
Limited partners exposed to full personal liability if aware no certifcate filed and third party did business with the entity. If they did not know, they would not be liable beyond capital creation. |
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CREATION OF PARTNERSHIPS
What are the legal consequences of a limited partner taking part in the management of the business? |
CREATION OF PARTNERSHIPS
Liable to third parties to whom he represents - expressly or implicitly - that he is a general partner and who transact business based on that representation. |
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POWER AND LIABILITY OF PARTNERS
What determines the amount of voting power possessed by each partner? - In a general partnership? - In a limited partnership? |
POWER AND LIABILITY OF PARTNERS
- In a general partnership, each partner has one vote unless partners expressly agree otherwise in writing. - Same. |
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POWER AND LIABILITY OF PARTNERS
What is the content of limited partners vote? |
POWER AND LIABILITY OF PARTNERS
May not vote on day to day operations of the business, but limited partnership agreement may grant them the power to vote on limited matters. |
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POWER AND LIABILITY OF PARTNERS
To what extent is each general partner liable to third parties for breach of contract? |
POWER AND LIABILITY OF PARTNERS
Jointly liable - plaintiff must join all partners. |
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POWER AND LIABILITY OF PARTNERS
To what extent is each general partner liable for torts committed by the partnership? |
POWER AND LIABILITY OF PARTNERS
Jointly + severally liable - plaintiff may sue one or all of the partners. If one partner pays more than her share, she may seek contribution from the other partners. |
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POWER AND LIABILITY OF PARTNERS
(1) What is each general partner's tax liability for profits generated by the partnership? (2) What is the same for limited partners? |
POWER AND LIABILITY OF PARTNERS
(1) Tax liability on his share of the profits. (2) Same. |
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POWER AND LIABILITY OF PARTNERS
What criteria is used to determien whether property belongs to the partnership or to an individual partner? |
POWER AND LIABILITY OF PARTNERS
The intention of the party owning the property. This is relevant because intention will even orride the title of the property. |
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CREATION OF PARTNERSHIPS
Define general partnership. |
CREATION OF PARTNERSHIPS
An association of two or more competent persons who agree to carry on as co-owners of business for profit. Each partner has unlimited personal liability for all debts of teh partnership. |
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CREATION OF PARTNERSHIPS
What formalities are required to form a general partnership? |
CREATION OF PARTNERSHIPS
None. However, in the absence of a formal writing, the partnership is goverened by the Revised Uniform Partnership Act. |
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CREATION OF PARTNERSHIPS
State difference between partnership and joint venture. |
CREATION OF PARTNERSHIPS
Jt. venture formed for the purpose of carrying out a single, specified transaction. A partnersip is a business organization that can exist indefinitely. |
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CREATION OF PARTNERSHIPS
(1) How is partnership by estoppel created? (2) Who is liable for the actions of the non-partner? |
CREATION OF PARTNERSHIPS
(1) When someone is represented as being a member of a partnership when in fact, that are not. (2) If the person holds himself out or knowingly allows himself to be held out, he will be personally liable to the third party on transactions he enters into or that he knows are being entered into in his name. If other partners are unaware of the holding out, they are not liable. Also, a partner who represents that the third-party is a non-partner is also personally liable. |
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CREATION OF PARTNERSHIPS
What steps must be take to admit a new member to a partnership? |
CREATION OF PARTNERSHIPS
The consent of all other partners. |
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CREATION OF PARTNERSHIPS
Articulate how a limited partnership is different from a general partnership? |
CREATION OF PARTNERSHIPS
General partner has unlimited liability for the debts of the partnership + substantially participates in the management of the business. Limited partners are liable only to the extent of their capital contribution and do not participate in the management of the business. |
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CREATION OF PARTNERSHIPS
What steps must be taken to form a limited partnership? |
CREATION OF PARTNERSHIPS
General partners sign and file a certificate with the Secretary of State. |
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CREATION OF PARTNERSHIPS
What are the legal consequences of fialing to file a properly executed certificate of limited partnership with the state? |
CREATION OF PARTNERSHIPS
Limited partners exposed to full personal liability if aware no certifcate filed and third party did business with the entity. If they did not know, they would not be liable beyond capital creation. |
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CREATION OF PARTNERSHIPS
What are the legal consequences of a limited partner taking part in the management of the business? |
CREATION OF PARTNERSHIPS
Liable to third parties to whom he represents - expressly or implicitly - that he is a general partner and who transact business based on that representation. |
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POWER AND LIABILITY OF PARTNERS
What determines the amount of voting power possessed by each partner? - In a general partnership? - In a limited partnership? |
POWER AND LIABILITY OF PARTNERS
- In a general partnership, each partner has one vote unless partners expressly agree otherwise in writing. - Same. |
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POWER AND LIABILITY OF PARTNERS
What is the content of limited partners vote? |
POWER AND LIABILITY OF PARTNERS
May not vote on day to day operations of the business, but limited partnership agreement may grant them the power to vote on limited matters. |
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POWER AND LIABILITY OF PARTNERS
To what extent is each general partner liable to third parties for breach of contract? |
POWER AND LIABILITY OF PARTNERS
Jointly liable - plaintiff must join all partners. |
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POWER AND LIABILITY OF PARTNERS
To what extent is each general partner liable for torts committed by the partnership? |
POWER AND LIABILITY OF PARTNERS
Jointly + severally liable - plaintiff may sue one or all of the partners. If one partner pays more than her share, she may seek contribution from the other partners. |
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POWER AND LIABILITY OF PARTNERS
(1) What is each general partner's tax liability for profits generated by the partnership? (2) What is the same for limited partners? |
POWER AND LIABILITY OF PARTNERS
(1) Tax liability on his share of the profits. (2) Same. |
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POWER AND LIABILITY OF PARTNERS
What criteria is used to determien whether property belongs to the partnership or to an individual partner? |
POWER AND LIABILITY OF PARTNERS
The intention of the party owning the property. This is relevant because intention will even orride the title of the property. |
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POWER AND LIABILITY OF PARTNERS
What is the result where real estate is held in the name of the partnership, but an individual part transfers it to a third party without authorization? |
POWER AND LIABILITY OF PARTNERS
If the partner did not have apparent authority, the effect is that nothing is transferred to the third party. If the partner had apparent authority, the sale is final. |
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POWER AND LIABILITY OF PARTNERS
Describe tenants in partnership. |
POWER AND LIABILITY OF PARTNERS
Legally, partners are tenants in partnership with respect to partnership property. When one partner dies, his interest in partnership property is extinguished. |
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POWER AND LIABILITY OF PARTNERS
What is the result where property is purchased with partnership funds but held in the name of an individual prtner, but that that partner transfers it to a third party without authorization? |
POWER AND LIABILITY OF PARTNERS
If the buyer did not know of the partnership's interest in the property, the buyer will have good title ot the property since the buyer is a BFP. The paternship will have a cause of action against the partner that sold the property for breach of duty of care, duty of loyalty, + conversion. |
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POWER AND LIABILITY OF PARTNERS
What interest does a third party have in partnership property that is ASSIGNED to her by a partner? |
POWER AND LIABILITY OF PARTNERS
None. Assignment will have no effect. |
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POWER AND LIABILITY OF PARTNERS
When will partnership not be bound on a contract entered into by a partner? |
POWER AND LIABILITY OF PARTNERS
-Contract has nothing to do with the business; or - Third partner knew partner had no ability to bind the partnership w/ regard to the transaction at issue. |
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POWER AND LIABILITY OF PARTNERS
Is an incoming partner liable for any debts of the partnership he joins? |
POWER AND LIABILITY OF PARTNERS
Yes. he is also liable for debts that pre-date his admission, but only up to the amount of his capital contribution. |
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POWER AND LIABILITY OF PARTNERS
When will an incoming partner become fully (beyond his capital contribution), personally liable for the debts of the partnership that pre-date his admission to the partnership? |
POWER AND LIABILITY OF PARTNERS
Executes a novation on a particular debt. |
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POWER AND LIABILITY OF PARTNERS
Is a retired partner liable for debts of the partnership that arose while he was a partner but which had not been paid at the time he retires? Exceptions? |
POWER AND LIABILITY OF PARTNERS
Yes. Exceptions are: (1) novation or some other release by a creditor; (2) creditor alters material term of an obligation. |
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POWER AND LIABILITY OF PARTNERS
Is a retired partner liable for debts that arise after he retires from partnership? |
POWER AND LIABILITY OF PARTNERS
Yes, if: - other party beleived the retired partner still a member + other party did not have actual or constructive notice the partner retired. OR - Within 90 day period after constructive notice filed. |
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POWER AND LIABILITY OF PARTNERS
What constitutes a partner's cosntructive notice? |
POWER AND LIABILITY OF PARTNERS
A notice of dissociation, filed with the state. This gives constructive notes to the world 90 days thereafter. |
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POWER AND LIABILITY OF PARTNERS
If a partner incurs tremendous personal debts, can his creditors seek to be satisfied out of the partnership property? |
POWER AND LIABILITY OF PARTNERS
No. But may get judgment entitling them to the partner's profits from the partnership. |
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POWER AND LIABILITY OF PARTNERS
What is the liability of the partnership for the torts of an individual partner? |
POWER AND LIABILITY OF PARTNERS
POWER AND LIABILITY OF PARTNERS If tort was committed in the scope of the person's duty as a partner, then the partnserhip, and each other partner is personally liable. |
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POWER AND LIABILITY OF PARTNERS
What is a partner's warranty of authority? What is the remedy if this warranty is breached? |
POWER AND LIABILITY OF PARTNERS
Partner warrants he is in fact a member of the partnership + is authorized to enter into a binding transaction on its behalf. If this is breached, the partner is personally liable to the person who relied on this misrepresentation. |
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RIGHTS OF PARTNERS AMONG THEMSELVES
What fiduciary dties do general partners owe each other? |
RIGHTS OF PARTNERS AMONG THEMSELVES
Duty of care + duty of loyalty. |
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RIGHTS OF PARTNERS AMONG THEMSELVES
How can a partner violate his duty of care? |
RIGHTS OF PARTNERS AMONG THEMSELVES
- Grossly negligent - Intentional misconduct -Illegal activities |
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RIGHTS OF PARTNERS AMONG THEMSELVES
Describe three ways a parter can violate her duty of loyalty? |
RIGHTS OF PARTNERS AMONG THEMSELVES
(1) Failing to accoutn for profits,property opportunities and other benefitis that arise in the course of the person's service to the corporation. (2) Entering into business ventures that compete with the partnership. (3) Dealing with the partnership on behalf of a person who has interests adverse to the partnership. |
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RIGHTS OF PARTNERS AMONG THEMSELVES
What can a partnership do if it finds that one partner has obtained benefits in violation of their fiduciary duties? |
RIGHTS OF PARTNERS AMONG THEMSELVES
Seek to have the benefits placed in a constructive trust. |
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RIGHTS OF PARTNERS AMONG THEMSELVES
How do partners share losses in the absence of an express agreement? |
RIGHTS OF PARTNERS AMONG THEMSELVES
Same way profits are shared. If no express agreement on how profits are shared, then losses are share equally. |
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RIGHTS OF PARTNERS AMONG THEMSELVES
Is the absence of an express agreement to the contrary, must each general partner contribute their labor to the business? |
RIGHTS OF PARTNERS AMONG THEMSELVES
Yes -- otherwise, other partners may recover damages to cover the expenses they incurred. |
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RIGHTS OF PARTNERS AMONG THEMSELVES
Is a partner entitled to compensation if she contributes more labor to the business than other partners? |
RIGHTS OF PARTNERS AMONG THEMSELVES
No. |
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RIGHTS OF PARTNERS AMONG THEMSELVES
How much voting power belongs to each partner? |
RIGHTS OF PARTNERS AMONG THEMSELVES
Equal voting power, irrespective of his or her capital contribution. |
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RIGHTS OF PARTNERS AMONG THEMSELVES
When is parnter legally entitled to be paid a salary? |
RIGHTS OF PARTNERS AMONG THEMSELVES
Winding up partner - amount must be reasonable. |
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RIGHTS OF PARTNERS AMONG THEMSELVES
When will an individual partner's knowledge be imputed to the partnership? |
RIGHTS OF PARTNERS AMONG THEMSELVES
The same way an agent's partnership is imputed to his master. |
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RIGHTS OF PARTNERS AMONG THEMSELVES
Can a partnership be sued in its own name? Sue in its own name? How is judgment satisfied? |
RIGHTS OF PARTNERS AMONG THEMSELVES
Yes + can bring suit in its own name. If a judgment is recovered against the partnership, it can only be satisfied out of partnership property. |
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RIGHTS OF PARTNERS AMONG THEMSELVES
Can a partner sue the partnership? |
RIGHTS OF PARTNERS AMONG THEMSELVES
Yes. |
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RIGHTS OF PARTNERS AMONG THEMSELVES
Can one partner sue another? |
RIGHTS OF PARTNERS AMONG THEMSELVES
Yes - for breach of fid duty, to enforce rts under the partnership agreement, or to enforce power to see books + records. |
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RIGHTS OF PARTNERS AMONG THEMSELVES
Can a partnership sue a partner? |
RIGHTS OF PARTNERS AMONG THEMSELVES
Yes -- for breach of fid duty or breach of partnership agreement. |
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DISSOCIATION, DISSOLUTION + WINDING UP
What is dissociation? When will it occur? |
DISSOCIATION, DISSOLUTION + WINDING UP
A partner leaves the partnership, usually triggers dissolution unless all partners agree in writing. |
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DISSOCIATION, DISSOLUTION + WINDING UP
What effect does dissociation have on the dissociated partner's liabilies? |
DISSOCIATION, DISSOLUTION + WINDING UP
No longer owes duties of care + loyalty. |
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DISSOCIATION, DISSOLUTION + WINDING UP
Aritculate the difference between dissolution + winding up. |
DISSOCIATION, DISSOLUTION + WINDING UP
Dissolution occurs when one or more partners terminates her membership in the partnership. Other partners may vote to continue the partnership -- if do so within 90 days, partnership can continue. Winding up means there has been a decision to terminate the existence of the partnership. The affairs of the business are closed and assets distributed. Person who winds up affairs is winding up partner, who receives compensation. |
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DISSOCIATION, DISSOLUTION + WINDING UP
How may a paernship avoid winding up after dissolution? |
DISSOCIATION, DISSOLUTION + WINDING UP
Agreement can have a clause allowing suriving partners the right to contineu the business. Without the clause, the partnership MUST be wound up. |
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DISSOCIATION, DISSOLUTION + WINDING UP
What cause of action may be brought against a partner who causes a winding up in contravention of the partnership agreement? |
DISSOCIATION, DISSOLUTION + WINDING UP
He may be sued for breach fo contract. |
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DISSOCIATION, DISSOLUTION + WINDING UP
If a partnership goes through dissolution, but does not wind up, may the creditors of the former partnership make claims against the new partnership? |
DISSOCIATION, DISSOLUTION + WINDING UP
Under the common law, no. On MEE, yes. |
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DISSOCIATION, DISSOLUTION + WINDING UP
What kind of notice must be given to creditors of the partnership upon dissolution? |
DISSOCIATION, DISSOLUTION + WINDING UP
Personal notice. General notice - such as publication - is insufficient. |
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DISSOCIATION, DISSOLUTION + WINDING UP
In what order are assets distributed upon dissolution of the partnership? |
DISSOCIATION, DISSOLUTION + WINDING UP
(1) Outside credtiors (non-partners) (2) Inside creditors (non-monetary contributions by partners) (3) Capital conditbution by partners (4) Profits generated by partnership |
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DISSOCIATION, DISSOLUTION + WINDING UP
If a partner dies, does his or her spouse, receive any specific partnership property? Why? |
DISSOCIATION, DISSOLUTION + WINDING UP
No. The surviving partners have right of survivorship in the partnership property. |
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DISSOCIATION, DISSOLUTION + WINDING UP
What is the partnership dissolves upon the death of partner - what is the interest of his or her spouse or suriving children |
DISSOCIATION, DISSOLUTION + WINDING UP
Applies where 2 partners. Suriviving partner recieves partnership property, and then distribution of asset rules apply. The widow of the deceased partner will be personaly liable for debts, though. |
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DISSOCIATION, DISSOLUTION + WINDING UP
Can the winding up partner bind the partnership to new business? |
DISSOCIATION, DISSOLUTION + WINDING UP
Yes, if the third party did not know the partnership had been dissolved. In this case, all partners will be liable on the transaction and may sue the partner who bound them to the transaction. |
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SPECIAL RULES RE LIMITED PARTNERSHIP
What formal steps must be taken to form a limited partnership? |
SPECIAL RULES RE LIMITED PARTNERSHIP
All general partners must sign + file certifcate of limited parrtnership with secretary of state. |
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SPECIAL RULES RE LIMITED PARTNERSHIP
Can a general partner also be a limited partner? |
SPECIAL RULES RE LIMITED PARTNERSHIP
Yes. A limited partner is someone who contributes capital to the business and is entitled to profits if there are any. A general partner is someone personally liable for debts of the partnership. |
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SPECIAL RULES RE LIMITED PARTNERSHIP
Can the business use the name of a limited partner in the name of the business? |
SPECIAL RULES RE LIMITED PARTNERSHIP
Yes, but limited partner will be personally liable to anyone who transacts business in the belief the limited partner is a general partner. |
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SPECIAL RULES RE LIMITED PARTNERSHIP
How can a limited partner formally become a general partner? |
SPECIAL RULES RE LIMITED PARTNERSHIP
All general partners + majority of the limited partners approve. Once admitted, she is liable for all debts of the partnership. |
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SPECIAL RULES RE LIMITED PARTNERSHIP
What partnership documents may a limited partner see without the permission of general partners? |
SPECIAL RULES RE LIMITED PARTNERSHIP
Limited partnership agreement + documents relating to the financial condition of the business. |
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SPECIAL RULES RE LIMITED PARTNERSHIP
Must a limited partnership have an office in the jurisdiction in which it operates? |
SPECIAL RULES RE LIMITED PARTNERSHIP
Yes. An office in the state and an agent who can accept service of process on behalf of the limited partnership. |
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SPECIAL RULES RE LIMITED PARTNERSHIP
What is the legal effect of the death of a limited partner? |
SPECIAL RULES RE LIMITED PARTNERSHIP
No legal effect. Recall, death of a general partner results in dissolution. |
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SPECIAL RULES RE LIMITED PARTNERSHIP
What is the proper procedure to withdraw from a limited partnership? |
SPECIAL RULES RE LIMITED PARTNERSHIP
Manner set froth in partnership agreement or upon dissolution. |
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SPECIAL RULES RE LIMITED PARTNERSHIP
When may a general partner without from a limited partnership? |
SPECIAL RULES RE LIMITED PARTNERSHIP
Anytime - provided it does not violate the partnership agreement. |
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SPECIAL RULES RE LIMITED PARTNERSHIP
If a limited partnership is wound up + dissolved, in what order are assets distributed? |
SPECIAL RULES RE LIMITED PARTNERSHIP
(1) creditors of the limited partnership (including general partners). (2) distributions (profits) owed to general + limited partners. (3) Return of the capital contributions of the limited + general partners. (4) Any remaining profits in proporiton to their capital contribution. |
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SPECIAL RULES RE LIMITED PARTNERSHIP
What is a foreign limited partnership? |
SPECIAL RULES RE LIMITED PARTNERSHIP
Any limited partnership not organized under the laws of the jurisdiction in which it seeks to do business. |
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SPECIAL RULES RE LIMITED PARTNERSHIP
What are the legal consequences if a foreign limited partnership fails to register to do business in a jursdiction in which it seeks to do business? |
SPECIAL RULES RE LIMITED PARTNERSHIP
It will be unabel to sue, until it registers and pays a fine. Also, this will be a misdemeanor. |
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SPECIAL RULES RE LIMITED PARTNERSHIP
Define limited liability partnership. |
SPECIAL RULES RE LIMITED PARTNERSHIP
Just like a limited partnership, except there is no general partner, all partners enjoy limited liability, and each member's liability is limited to his or her capital contribution. |
