Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
51 Cards in this Set
- Front
- Back
|
Partnerships =
|
two or more persons carrying on as co-owners a business for profit
|
|
|
Factors to look at when determining who is a Partner?
|
1. Intent - (ct may find involuntary partnership to protect 3d party)
2. control - rt to control may be enough 3. capital investment - not reqd 4. profit - person entitled to receive share of firm's profits presumed a partner (NO PRESUMPTION if profits are wages, rent, repayment of debt or interest on loan OR share in gross receipts) |
|
|
Is oral partnership agreement valid?
|
-yes but subject to SOF (if K cannot be performed w/in one year)
-Principles of K law apply |
|
|
Does partnership have to file a registration statement?
|
not required - but can file with DOS
-PREREQUISITE to filing statements of authority, denial, dissociation or dissolution. |
|
|
Purported partners:
|
If no partnership formed, parties may still be liable as purported partners to protect 3d party reliance IF
-person holds out to be another's partner -3d party can sue either party -creditors can only get to purported partner if made stmt publicly |
|
|
What is partnership property?
|
1. property acquired in partnerships name.
2. property acquired in name of one or more partners if instrument transferring title indicates its being acquired for partnership. |
|
|
What is PRESUMED to be partnership property?
|
1. if acquired with partnership funds.
2. BUT property acquired in name of one or more P's w/o partnership funds is presumed to belong to the indiv. partners if the instrument transferring title does NOT indicate the property was for partnership |
|
|
What is a partner's only rt in partnership property?
|
The right to use for partnership purposes unless other partners consent
|
|
|
Can a partner transfer his rt in partnership property?
|
No - cannot sell it + creditors can't attach
Note: creditors of the partnership can attach. |
|
|
What is a partner's interest in the partnership? Is it transferrable?
|
-The rt to receive a share of the profits & get distributions
-Yes partners interest can be assigned, transferred or attached by creditors (doesn't give transferee partnership rts or obligations |
|
|
If the p's agree 1 partner will not bear any loss, is she free from liability to a 3d person?
|
NO
|
|
|
How are profits split? losses?
|
unless otherwise agreed, profits split equally; losses shared in same proportion as profits
|
|
|
Management rights
|
1 person, 1 vote
- decisions approved by a majority |
|
|
Are partners indemnified?
|
They get paid back w/ interest
|
|
|
What duties does a P have?
|
1. duty of care: refrain from grossly negligent or reckless & intentional misconduct
2. duty of loyalty: account for profit, can't compete unless consent 3. duty of good faith & fair dealing 4. information: provide w/o demand info. a partner needs to exercise his/her rts and reas. demand any other info. |
|
|
Inspection Rights of Partners
|
can inspect books and get formal accounting whenever court determines it is reasonable
|
|
|
Admission of New Partners
|
-requires unanimous consent of present partners (new partners liable for debts previously incurred BUT NOT personally liable only affects the investment)
|
|
|
Outgoing Partners - are they liable for outstanding debts?
|
Yes, unless creditor releases outgoing partner (express or implied)
|
|
|
What is apparent authority?
|
Principal leads 3d party to believe agent has authority to bind Principal even though has no actual authority
|
|
|
What is actual authority?
|
Principal tells agent to act on P's behalf
|
|
|
How do you destroy actual & apparent authority?
|
Actual - tell agent not to do it again
Apparent - tell 3d party that agent has no authority |
|
|
How is actual authority conferred on a partner?
|
1. Partnership agreement
2. Majority vote of partners in most matters 3. Statute - makes every partner an agent (can be negated by majority of P's) |
|
|
How is apparent authority created?
|
1. a Partner's title
2. the way partnership has conducted business in the past 3. the way similar firms in area conduct business |
|
|
What is statement of authority?
|
Partnership can expand or limit partner's authority by filing with the DOS
-real property: good only if also recorded at county recording office -other stuff: grants power? conclusive in favor of BFP; prohibits? effective if notice |
|
|
Ratification of Agent's authority to act?
|
Even if agent had no authority P can ratify it
Retroactive: to time of original K Must protect intervening rights of a BFP who would be hurt by ratification |
|
|
Partner's Liability:
|
-jointly and severally liable for partnership obligations BUT claimant must exhaust partnership resources before recovering from partners personally [partner has right to be indemnified by partnership & other partners]
|
|
|
Partnership liability
|
liable for tort, K, obligations of partnership
|
|
|
Statement of Denial:
|
partner listed in statement of authority may limit authority by filing statement of denial with DOS
|
|
|
Conversion/Merger
|
-allowed if ALL partners consent
liability for partners remains jointly and severally liable on obligations that arose BEFORE conversion/merger |
|
|
If partner lacks authority to sell property, can partnership recover it fro initial transferee?
|
Yes IF:
-the partnership's interest was apparent (title had its name on it), can recover bc transferee should have checked up -if not apparent, cannot recover if transferee was BFP CANNOT RECOVER FROM SUBSEQUENT BFP'S!!!!**** |
|
|
Notice or Knowledge of Partner
|
-imputed to partnership unless partner commits fraud on partnership
|
|
|
Dissociation occurs when partner ceases to be associated w/ partnership by:
|
1. P's express will to withdraw
2. occurrence of agreed upon even (partner turns 65) 3. A P's expulsion, bankruptcy, death or incapacity 4. Termination of Partner that is business entity 5. Appointment of receiver for a partner 6. distribution of a P's interest |
|
|
Wrongful dissociation - in breach of partnership agreement
|
-when K to be partners for specific amount of time
-or when partnership formed to accomplish a particular undertaking -- IF LEAVE EARLY, LIABLE FOR BREACH OF K! |
|
|
Partnership at Will
|
-any partner can dissociate at any time w/o liability for breach of K, most are partnerships at will
|
|
|
Consequences for Dissociating Partner:
|
-Management rights & fiduciary duties terminate
-if partnership stays in business, buy him out based on liquidation or going concern value, whichever is greater -if wrongful dissociation, not paid until undertaking is accomplished or term ends |
|
|
Apparent authority of dissociating partner
|
for 1 year after dissociation - BUT partnership can protect itself by
1. notifying creditors OR 2. filing stmt of dissociation |
|
|
Liability of Dissociating Partner
|
1. existing creditors unless released [express or implied]
2. to subsequent creditors who reas. believe she was then a partner & unaware of dissociation [liability for 1 year TOPS] 3. to partners for breach if dissociation was wrongful |
|
|
Events Requiring Dissolution
|
1. occurrence of event in partnership agreement requiring winding up
2. occurrence making it unlawful to continue 3. issuance of judicial decree 4. notification by partner in partnership at will of an intent to withdraw 5. partnership w/ definite term (w/in 90 days of partner's death, incapacity, bankruptcy or wrongful dissociation if 1/2 partners want to wind up) |
|
|
Distribution of Partnership Assets after dissolution?
|
1. to creditors including partners who are creditors
2. to partners for what is in their accounts [capital + share of profits] - {share of losses) |
|
|
What is partnership assets insufficient to cover liabilities
|
same priorities; if not enough to go around, creditors share pro-rata
-rest of debts & capital are partnership losses |
|
|
If partners and partnership both insolvent, which creditors take priority??
|
partnership creditors have priority on partnership assets
-both have equal claims on partner's separate assets RATIONALE: partnership creditors relied on partner's assets as well as partnerships assets in deciding whether to loan to partnership |
|
|
What is liability of partner in LLP?
Liability of LLP? |
Partner = not personally liable for any LLP obligations except torts of another partner or employee she was directly supervising [BROAD SHIELD STATUTE]
-always liable for own torts LLP = liable for torts committed w/in scope of business + K's executed by an agent w/ authority |
|
|
What is LP?
|
limited partnership: partnership w/ one or more general partners & one or more limited partnes
|
|
|
Liability of Limited Partners in LP?
|
Limited Liability partners = not personally liable for debts of LP even if she participates in control -- VERY UNUSUAL BUT EXISTS IN FLORIDA!!
|
|
|
Liability of General Partners in LP?
|
General Liability partners = joint & several liability; if he doesn't want to be personally liable can become an LLLP
|
|
|
What is benefit of LLLP?
|
Can exercise control as general partner w/o risking personal assets
|
|
|
Taxation of LLC?
|
taxed like a partnership (income passed through to owners)
-UNLESS elect to be taxed like a corporation (double taxation) |
|
|
Liability of Members of an LLC?
|
limited liability, except for their own torts or torts of someone under member's direct control
|
|
|
Liability of the LLC?
|
liable for torts committed w/in scope of its business & k's executed by an agent acting with authority
|
|
|
LLP's & LLC's offer same protection against vicarious liability
|
TRUE
|
|
|
LLC = best features of partnership w/ best features of corporation
|
limited liability for debts and obligations of a firm + taxed like a partnership unless chooses to be taxed as a corporation + flexible management structure
|
