Nevada Partnership

Front 1

Formation of a General Partnership

Back 1

An association of two or more persons carrying on as co-owners of a business for profit. No writing is required.

NOTE: these persons need not intend to form a partnership, merely to carry on as co-owners of a business for profit.

Front 2

Who is a partner?

Back 2

Any person who receives a share of the profits of a business is presumed to be a partner.

Front 3

What results from a transfer of a partner's distribution rights?

Back 3

Such a transfer entitles the transferee to receive distributions to which the transferring partner would otherwise be entitled. A transferee is not entitled to become involved in the management or the administration of the partnership business or affairs.

Front 4

How are decisions made in a partnership?

Back 4

Decisions regarding matters within the ordinary course of partnership business may be controlled by a majority vote of all the partners, but matters outside the ordinary course of partnership business require the consent of all partners.

Front 5

Remuneration of Partners

Back 5

Absent an agreement to the contrary, a partner is not entitled to remuneration except for reasonable compensation for services rendered in winding up the partnership's business.

Front 6

Apparent Authority

Back 6

The authority that a third person would reasonably believe a partner has based on his being held out by the partnership as a partner. The act of any partner apparently carrying on in the ordinary course of partnership business binds the partnership.

Front 7

When does the partnership end?

Back 7

After an event of dissolution occurs, a partnership continues until the winding up of business is completed, at which time the partnership is terminated.

Front 8

Effects of a Statement of Dissolution

Back 8

If a partner files a statement of dissolution with the secretary of state, third parties will be deemed to have notice of the dissolution 90 days after it is filed.

Front 9

Liability of General Partners

Back 9

General partners are jointly and severally liable for all obligations of the limited partnership, unless the limited partnership is also a limited liability partnership. In that case, any liability incurred belongs to the partnership alone, and general partners are not personally liable on the obligation.

Front 10

Liability of Incoming General Partners

Back 10

Incoming general partners are not personally liable for any partnership obligations incurred before they became general partners.

Front 11

Management Rights in Limited Partnerships

Back 11

Management rights are exclusive to general partners. However, as a matter of contract, the partnership agreement may allocate the right to manage or control the partnership to limited partners.

Front 12

How do you form an LLC?

Back 12

By filing a certificate of organization with the secretary of state. There is no numerosity requirement, and an LLC may, but need not, adopt an operating agreement to control most aspects of the LLC's business and management.

Front 13

Who may bring a derivative action on behalf of an LLC?

Back 13

Members of an LLC, regardless of whether it is member-managed or manager-managed, may bring a derivative action to enforce a right of the LLC. A derivative action may be maintained only by a person who is a member of the LLC at the time the action is commenced, and who remains a member while the action continues.

Front 14

How does a member bring a derivative action on behalf of an LLC?

Back 14

1. Member must make a demand on the other members or the managers (unless a demand would be futile)

2. If the members/managers do not bring an action within a reasonable time, then the demanding member may bring the derivative action

Front 15

When may a member of an LLC apply for judicial dissolution?

Back 15

1. If the conduct of all or substantially all of the LLC's activities is unlawful;

2. It is not reasonably practicable to carry on the LLC's activities in conformity with the certificate of organization and operating agreement; or

3. The managers/controlling members act/ed in a manner that's illegal, fraudulent, or oppressive

Front 16

What is a partnership's amenability to suit?

Back 16

A partnership may sue or be sued in the partnership name or in the names of the individual partners, or both.

Front 17

What is the default rule for distribution of partnership profits?

Back 17

Each partner is entitled to an equal share of the partnership profits, unless modified in the partnership agreement.

Front 18

What is the default rule for contribution to partnership losses?

Back 18

Partnership losses are apportioned the same way partnership profits are divided, unless agreed otherwise in a partnership agreement.

Front 19

Partnership by Estoppel

Back 19

Arises when a person, by words or conduct:

1. represents herself as a partner or consents to being represented by another as a partner, and a third party extends credit to the apparent partnership in reliance on the representation; or

2. holds another person out to be her partner, making the alleged partner her agent with the power to bind her to third parties as if the other were, in fact, a partner.

Front 20

When is titled property deemed to be partnership property?

Back 20

1. When it is titled in the partnership name;

2. Titled in the name of 1+ partners and the instrument transferring title notes the titleholder's capacity as a partner or the existence of a partnership; or

3. If it was purchased with partnership funds.

Front 21

Duty of Loyalty

Back 21

Partners owe the partnership and other partners a duty to:

1. account for profits, property, opportunities, or other benefits derived by the partner in conjunction with the partnership;

2. refrain from dealing with the partnership with an adverse interest

3. refrain from competing with the partnership

Front 22

Actual Authority

Back 22

A partnership is bound by the act of a partner if he has actual authority, which can be authorized by:

1. the partnership agreement, or

2. the consent of the partners by a majority vote (or a unanimous vote for acts outside the ordinary course of business)

Front 23

For what co-partner acts will a partner be liable for?

Back 23

1. Torts committed within the ordinary scope of partnership business or with authority of the partnership, including fraud;

2. Contracts made by a co-partner within the scope of partnership business; and

3. Contracts expressly authorized by the partners.

Front 24

What is an dissociating partner's liability for old partnership debts?

Back 24

An outgoing partner remains liable on all obligations incurred by the partnership while a member of the partnership, unless there has been a payment, release, or novation, or the creditor has agreed to a material alteration in the obligation without the partner's consent.

Front 25

What is a dissociating partner's liability for future partnership debts?

Back 25

The dissociated partner remains liable for obligations incurred after dissociation if the other party to the transaction:

1. reasonably believed when entering the transaction that the dissociated partner was still a partner, and

2. did not have notice of the partner's dissociation.

Front 26

Dissociation

Back 26

A change in relationship of the partners caused by any partner ceasing to be associated in the carrying on of the business. If the partnership continues after a partner dissociates, the partnership must buy out the dissociated partner's interest.

Front 27

When will a partner be deemed to have wrongfully dissociated?

Back 27

1. If the dissociation is in breach of an express term of the partnership agreement; or

2. The partnership is for a definite term or undertaking and the partner withdraws, is expelled, or becomes bankrupt before the end of the term of completion or the undertaking.

Front 28

After dissociation, how must the liquid assets of a partnership be distributed?

Back 28

First, to creditors, including partner-creditors.

Second, to compensate partners for their capital contributions.

If there are any assets remaining, those are divided equally among the partners unless otherwise stated in the partnership agreement.

If there are insufficient assets to settle the accounts of creditors and partners, the partners must contribute their own money to make up for the deficiency.

Front 29

When may partners decide to continue the partnership after dissolution?

Back 29

Any time after dissolution and before winding up is completed. This must be agreed to by a unanimous vote.

Front 30

How does one form an LLP (limited liability partnership)?

Back 30

A partnership must file a statement of qualification with the secretary of state.

Front 31

What are the naming requirements for an LLP?

Back 31

The LLP name must end with the words "Registered Limited Liability Partnership" or "Limited Liability Partnership" or the abbreviations RLLP or LLP.

Front 32

What are the composition requirements of a limited partnership?

Back 32

There must be at least one general partner and one limited partner.

Front 33

What is the liability of a limited partnership?

Back 33

The general partners (including limited partners who are also general partners) are personally liable for partnership obligations, while limited partners are not personally liable for partnership obligations.

Front 34

What is required to dissolve a limited partnership?

Back 34

The consent of all general partners and of the limited partners holding a majority of the right to receive distributions ("majority in interest").

It may also be dissolved upon the happening of an event specified in the partnership agreement.

Front 35

Administrative Dissolution

Back 35

A limited partnership may be administratively dissolved by the secretary of state for failing to pay fees or file an annual report.

Note: the partnership may apply for reinstatement by curing the defect within 2 years of dissolution.

Front 36

How is an LLC managed?

Back 36

Management of an LLC is presumed to be by all members. Other management arrangements can be made, but must be specified in the operating agreement. Each member (or manager) has equal rights in the management and conduct of the LLC unless otherwise agreed.

Front 37

When may a court pierce an LLC's veil of limited liability?

Back 37

1. Where the LLC is the alter ego of the members or managers;

2. For inadequate capitalization at the inception of the LLC; or

3. If the LLC was formed to perpetuate a fraud.