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;
70 Cards in this Set
- Front
- Back
|
[General P'ship - Definition]
Definition of a partnership 1 |
Association of 2 or more persons to carry on as co-owners of busi. for profit
|
|
|
[General P'ship - Formation]
What are the two main ways a p-ship can be formed? 1 |
-Expressly in a s-hip agreement
-Impliedly |
|
|
[General P'ship - Formation]
What factors to take into account in determining an implied p-ship (2) 1 |
-shared profits and losses
-Mutual right to control |
|
|
[General P'ship - Formation]
What serves as prima facia evidence of being a partner? 2 |
Sharing in profits
|
|
|
[General P'ship - P'ship Property: Generally]
For what purpose is a p-ship treated like an entity? 3 |
Generally a p-ship is NOT an entity, HOWEVER, it can hold property
|
|
|
[General P'ship - P'ship Property: Generally]
Under what circumstances is property considered property of the p-ship? 3 |
If the property is purchased in the pship name
|
|
|
[General P'ship - P'ship Property: Generally]
When will property NOT in the pship's name still be considered pship property? (1 test, and 4 examples where property is PRESUMED prop of the pship] 3 |
TEST: Intent prop be held for the pship
PRESUMPTION prop of pship: -Bought for the pship business -Bought w pship funds -Property listed in pship books -Prop on which the pship covers expenses for like taxes, repairs or insurance premiums |
|
|
[General P'ship - P'ship Property: Partner's Rights]
What is the term for a partner's pship interest in property? 4 |
TENANT IN PSHIP
(Equity type of interest) |
|
|
[General P'ship - P'ship Property: Partner's Rights]
What is a partner's right to possession as a tenant is pship (i.e. - pship PROPERTY)? 4 |
May NOT possess for personal use w/o consent
|
|
|
[General P'ship - P'ship Property: Partner's Rights]
What is a partner's right to attachment as a tenant is pship (i.e. - pship PROPERTY)? 4 |
Partner's interest as tenant in pship may NOT be attached except as a claim against WHOLE pship
|
|
|
[General P'ship - P'ship Property: Partner's Rights]
What is a partner's right to assignment as a tenant is pship (i.e. - pship PROPERTY)? 4 |
Partner may NOT assign except when done in connection w/ assignment of rights by agreement of ALL PARTNERS
|
|
|
[General P'ship - P'ship Property: Partner's Rights]
What is a partner family's right to pship PROPERTY at death? 4 |
Right to pship property does NOT go to family, it goes to the other surviving partners
|
|
|
[General P'ship - P'ship Property: Partner's Interest]
What interest IS the personal property of a partner? 5 |
Right to pship profits/surplus
|
|
|
[General P'ship - P'ship Property: Partner's Interest]
What MAY a a partner do with his pship interest in surplus? 5 |
MAY assign
NOTE: assignment does NOT dissolve the pship, and the partner REMAINS a partner |
|
|
[General P'ship - P'ship Property: Partner's Interest]
What does assignment entitle the assignee to? What rights does the assignee NOT get? 5 |
GET get right to profits
CANNOT: -interfere -control -pship information/book inspection -accounting |
|
|
[General P'ship - P'ship Property: Partner's Interest]
How can a creditor leech off a partner's pship interest in surplus? 5 |
CANNOT get a direct assignment
Instead must: -Get court charging order -Court appoints receiver to collect |
|
|
[General P'ship - Relations b/w Partners: Obligations]
What 3 rights/obligation categories are UNWAIVABLE in the pship agreement? 7 |
-Fiduciary duties of loyalty and care
-Liability to 3rd parties -Right to accounting/inspect books |
|
|
[General P'ship - Relations b/w Partners: Share]
Absent agreement otherwise, what is the default rule for splitting pship profits? 7 |
-Share equally
|
|
|
[General P'ship - Relations b/w Partners: Management]
What is the default rule for rights to management? 8 |
Equal right to manage and control
|
|
|
[General P'ship - Relations b/w Partners: Management]
What are the 2 voting requirements for pship changes? 8 |
-General business = majority vote
-Important matters = unanimous |
|
|
[General P'ship - Relations b/w Partners: Management]
What action is ALWAYS considered an important decision that requires unanimous consent? 8 |
Admitting a new partner
|
|
|
[General P'ship - Relations b/w Partners: "Internal Actions"]
What is the ONLY type of action may a partner bring against co-partners? 9 |
An accounting action in EQUITY
|
|
|
[General P'ship - Relations b/w Partners: "Internal Actions"]
What would be the result of an accounting action? 8 |
BASED on the accounting action, a partner may have a LEGAL claim after
|
|
|
[General P'ship - Relations b/w Partners: "Internal Actions"]
When is there an AUTOMATIC action for an accounting? 8 |
UPON DISSOLUTION - for final settlement
|
|
|
[General P'ship - Relations b/w Partners: "Internal Actions"]
When may a a partner bring an accounting action in equity? 9 |
-When partner is wrongfully excluded
-When there is a breach of fiduciary duty -If pship agreement provides for an action under the circumstances |
|
|
[General P'ship - Relations b/w Partners: Duties]
What duties does every partner owe to each other? (2 types of duties, one duty has 2 sub-parts) 9-10 |
Fiduciaries duties of:
-Loyalty (good faith, and fair dealing) -Trust and confidence Duty to indemnify for losses cause by misconduct |
|
|
[General P'ship - Relations b/w Partners: Duties]
What are 2 examples of breach of fiduciary duties? 10-11 |
-Self-dealing
-Taking partnership opportunity |
|
|
[General P'ship - Relations b/w Partners: Indemnification/Contribution]
What is must partner indemnify each other for? 11 |
For payments/expenses reasonably incurred in connection w/ business
|
|
|
[General P'ship - Relations b/w Partners: Indemnification/Contribution]
What does the duty of contribution require? 11 |
Partners must contribute amounts needed to meet pship obligations/liabilities
|
|
|
[General P'ship - Relations b/w Partners: $ Rights]
What 1 $ rights DO partners have and what 2 $ rights do partners NOT automatically have? 11-12 |
RIGHT TO:
-Inspect books NO AUTOMATIC RIGHT TO: -Draws (unless majority vote of partners) -Compensation (salary) for services NOTE: in PA, in extraordinary circumstances, can get compensation |
|
|
[General P'ship - Relations w/ 3rd Parties: Authority]
What are the THREE types of authority? 12-13 |
EXPRESS Actual Authority
IMPLIED Actual Authority APPARENT Authority |
|
|
[General P'ship - Relations w/ 3rd Parties: Authority]
NO MATTER WHAT, unanimous consent is required for these actions 13 |
-Assignment of partnership PROPERTY
-Disposing good will of business -Submitting a claim to arbitration |
|
|
[General P'ship - Relations w/ 3rd Parties: Authority]
What's the difference b/w IMPLIED actual authority and apparent authority? 13 |
Implied ACTUAL authority focuses on authority to act incident to express authority (hiring and firing)
Apparent authority focuses on what a THIRD PARTY REASONABLY BELIEVED |
|
|
[General P'ship - Relations w/ 3rd Parties: Authority]
What is the term for when partners will be liable for actions of other partners who act outside their authority because of a lapse in time 14 |
Ratification, AKA Aquisience
|
|
|
[General P'ship - Relations w/ 3rd Parties: Authority]
What is the term for when partners will be liable for actions of a NON-PARTNER? And what are the elements needed to show this? 14 |
Partnership by estoppel shown by:
-Extention of credit to the pship b/c of actions of NON-PARTNER -Partners of the pship fail to act to notify the creditor of the error |
|
|
[General P'ship - Relations w/ 3rd Parties: Partner Liability]
What's the rule for liability b/w partners for WRONGFUL ACTS/TORTS acts w/i ordinary course of business? 15 |
Joint and several liability
NOTE: Liability attaches even no actual knowledge of other partner's action |
|
|
[General P'ship - Relations w/ 3rd Parties: Partner Liability]
What's the rule for liability b/w partners for MISAPPROPRIATION of funds w/i ordinary course of business? 16 |
Joint and several liability
NOTE: Liability attaches even no actual knowledge of other partner's action |
|
|
[General P'ship - Relations w/ 3rd Parties: Partner Liability]
What's the rule for liability b/w partners for OTHER CONTRACTUAL DEBT OBLIGATIONS of funds w/i ordinary course of business? 16 |
ONLY jointly liable (not severally)
Difference: P must join ALL partners to the action (can't just sue the one partner with deep pockets) |
|
|
[General P'ship - Relations w/ 3rd Parties: Partner Liability]
What's the rule for the extent of liability for NEW/INCOMING partners? 16 |
-Liable for obligations arising after joining
-ONLY liable for obligations arising before joining to the extent of the partnership PROPERTY (not out of his partnership interest) |
|
|
[General P'ship - Relations w/ 3rd Parties: Partner Liability]
What's the rule for the extent of liability for RETIRED/OUTGOING partners? 15 |
REMAINS liable to 3rd parties that extended cried while partner was member
|
|
|
[General P'ship - Relations w/ 3rd Parties: Real Property Transfers]
What is the rule regarding transfer of partnership property? 17 |
Must convery property in the partnership's name
(ie - name on the title and name on the conveyance must match) |
|
|
[General P'ship - Dissolution: Terms]
What's a dissolution, timewise, and what triggers it? (1 triggering event, with 3 sub-parts) 17 |
It's a FIXED POINT in time
Triggered by any partner ceasing to be associated with the partnership Exs: -Withdrawal -Death of P -Bankruptcy of P |
|
|
[General P'ship - Dissolution: Terms]
What's a termination, timewise, and what triggers it? 18 |
It's a FIXED POINT in time
Triggered by the finishing of the winding-up |
|
|
[General P'ship - Dissolution: Terms]
What is winding up, timewise, and what triggers it? 18 |
Winding up is a PROCESS
Occurs after dissolution |
|
|
[General P'ship - Dissolution: Causes]
What are 5 "rightful" causes of dissolution? 18 |
-End of pship agreement term
-At will -Bona fide expulsion -Death -Bankruptcy |
|
|
[General P'ship - Dissolution: Causes]
What are 2 "wrongful" causes of dissolution? 18 |
-Violation of pship agreement
-Wrongful expulsion |
|
|
[General P'ship - Dissolution: Causes]
What type of action may partners bring against one who has wrongly causes a dissolution? 18 |
A breach of K action
|
|
|
[General P'ship - Dissolution: Causes]
What are t grounds for which a court will grant a dissolution? 18 |
-Misconduct of partner
-When it is not reasonably practicable to continue the pship |
|
|
[General P'ship - Dissolution: Effect]
Post-dissolution, what type of business may continue? 19 |
ONLY the business needed to wind-ip pship affairs
|
|
|
[General P'ship - Dissolution: Effect]
When may a partnership nevertheless continue, even AFTER a dissolution? (2 situations) 19 |
If the pship agreement so allows
If there was a WRONGFULY dissolution by one of the partners |
|
|
[General P'ship - Dissolution: Effect]
If there is a wrongful dissolution, what may the wrongful partner recover? 19 |
MAY get a cash buy-out
BUT: -Buy-out is reduced by any damages due to the wrongful dissolution -Wrongful partner cannot force sale of partnership PROPERTY |
|
|
[General P'ship - Dissolution: Effect]
What MAY a partner due after there is a "proper" dissolution? 20 |
Demand liquidation
|
|
|
[General P'ship - Dissolution: Effect]
What is a liquidation? 20 |
Forced sale of pship assets
|
|
|
[General P'ship - Dissolution: Effect]
What's the order of priority of liquidation pay-out |
-Pay off liabilities
-Excess to partners according to pship interest (default: equal shares) |
|
|
[General P'ship - Dissolution: Effect]
What are are the rights of the family of a deceased partner? 20 |
Deceased partner's share GOES TO THE PARTNERSHIP
The family CANNOT demand liquidation BUT, partner family can demand cash payment of valid of interest |
|
|
[General P'ship - Dissolution: Distribution]
What is the default rule if, at liquidation, there is not enough to satisfy creditors (let alone any excess to split? 20 |
The partners must contribute EQUALLY to satisfy debt obligations
|
|
|
[General P'ship - Dissolution: Distribution]
What is the FULL order of liquidation preference? 21 |
-Payments to non-partner creditors
-$ partners specifically lent to pship -Return of individual partner's capital contributions -Remaining excess split based on profit sale (default rule = split equally) |
|
|
[Limited P'ship - Definition]
What's the definition of a limited partnership? 21 |
Pship formed by 1 or more GENERAL partners, and 1 or more LIMITED partners
NOTE: general partner may be a corp |
|
|
[Limited P'ship - Formalities]
What type of writing and formalities are required to create a general partnership? 21 |
-NO partnership agreement is required
-DO need to file a certificate w/ sec. of state -Pship name MSUT include the words "limited pship" |
|
|
[Limited P'ship - Rights and Obligations]
What is the liability of a limited partner? 22 |
Liability is limited to the entity's debts & obligations
|
|
|
[Limited P'ship - Rights and Obligations]
How can a limited partner lose his "limited" status? 22 |
If limited partner participates in control
|
|
|
[Limited P'ship - Rights and Obligations]
If a limited partner participates in control, to WHOM is the limited liabliity destroyed? 22 |
Limited liablity is NOT detsroyed to all
Limited liability only destroyed to that who transact business with pship, believing the limited partner is really a GENERAL partner |
|
|
[Limited P'ship - Rights and Obligations]
What is the default rule for share of profit and share of loss for partners of a limited partnership? 22 |
In PROPORTION to the partner's contribution
|
|
|
[Limited P'ship - Dissolution]
What are the 4 general occurrences that result in the dissolution of a limited partnership? 23 |
-End of agreement term
-Consent of all partners -Withdrawal of general partner |
|
|
[Limited P'ship - Dissolution]
However, when does the withdrawal of a general partner nevertheless NOT cause dissolution? 23 |
When either:
-At least one other general partnership remains and the remaining limited partners agree to continue under him -When one limited-partner steps-up to become a general partner, and all remaining limited partners agree IN WRITING w/i 90 days |
|
|
[P'ship Tax Issues]
What type of tax entity is a partnership? 23 |
The partnership itself is NOT a taxable entity (unlike a corp)
Partners only pay days ONE on profits |
|
|
[P'ship Tax Issues]
What is the term for the type of tax treatment partnerships get? 24 |
"pass through" taxation
|
|
|
[P'ship Tax Issues]
When must a partner pay taxes on his pship INTEREST? 24 |
Must pay taxes on partnership interest WHEN they have fixed the right to to receive the money (accrual method)
Partner need NOT make a draw, and still owes taxes on that money |
|
|
[P'ship Tax Issues]
When must a partner pay taxes on his pship PROPERTY? 24 |
Pship PROPERTY sale must first be realized, but the treatment is still pass-through taxation to the individual partners for their share of the pship property
|
|
|
[LLPs & LLCs]
Why are LLCs and LLPs the 'best of both worlds'? 24 |
Because:
-ALL partners have limited liability -Still get to keep pass-through tax treatment |
