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21 Cards in this Set

  • Front
  • Back
how is a partnership formed
no formalities to becoming general partners, no writing, filing required.

deemed member of general partnership from CONDUCt alone -
what is the definition of a partnership
association of 2+ people carrying on as co-owners of a business for a profit.
what agency principals apply to partnerships
1) partners are agents of partnership for purpose of carrying on usual partnership business

2) partnership is bound by torts committed by partners in the scope of partnership busines

3) partnership is bound by contracts entered into by partners with authority
what are general partners personally liable for
the debts and obligations (including torts!) of the partnership.
are incoming partners liable for pre-existing debts, incurred before becoming partner?
no, but his contribution to partnership can be used to pay these off
is outgoing partner liable for subsequent debts of partnership
yup, until he dies or withdraws from partnership (giving notice to future creditors)
what happens if someone represents themselves as being in a partnership, but they're not?
will be estopped form denying it and will be liable as if parntership exists
what is a limited partnership
partnership with at least one general partner and at least one limited partner. by definition limited partners have limited liability and threfore are not liable for debts/obligtations of business, but also can't exercise control over it
how is a limited partnership formed
formation requirement - must file a certificate of limited partnership with the department of state that includes names of all general parnters
what is a registered limited liability partnership
general partnership engaged in professional services

must file certificate of registration with dept. of state

liabilities - no partner will be liable for the debts/obligatoins of the business form (but always liable for own wrongdoing and anyone in yyour supervision)
what is a limited liability corporation
designed to give owner of busines sthe same limited liability that shareholders of corp get.

limited liability+ limited liquidity+ limited life+ limited tax
how is an l.l.c. formed?
file articles of organization (not incorporation) and must publish summary of these articles once a week for six weeks in a row in two newspapers
what are rights and liabilities b/w parnters
1) partners are fiduciaries of each other and partnerships
a) duty of loyalty - no self dealign - no usurping partnership opportunities- no engaging in secret, undisclosed profits
b) bring action of accounting against breaching partner to recover losses caused by breach and disgorge illgotten gains

2) partners rights in partnership pproperty
a) specific partenership assets/land/lease/equipment -cannot be transfered by individual partner
b) share of profits/surplus-personal property can be transferred by partner
c) share in management - owned only by partnership itself - can't be transferred

if partnership was used to buy property - its partnerships property; if personal money, personal proeprty
absent an agreement to the contrary, what are the rights of partners pertaining to managemetn?
each partner is entitled to equal control /vote
absent an agreement to the contrary, what are the rights of partners pertaining to salary
no salary (just share of profits) UNLESS winding up partnership
absent an agreement to the contrary, what are the rights of partners pertaining to share of profits and losses
1) profits and losses are shared equally

2) losses are shared like profits
what is dissolution
any material change in partnership cuased by death or withdrawal of any single general partnership
real end
winding up
period b/w dissolution and termination
do partners receive compensation for winding up
priority of distribution?
first creditors are paid (outside creditors, then inside creditors who loaned money to partnership

then any capital contributions by partners are paid

then profits and surplus are shared equally, in absence of agreement