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48 Cards in this Set

  • Front
  • Back
FOUR TYPES OF UNINCORPORATED BUSINESS PARTNERSHIPS
1. General Partnership

2. Limited Partnerships

3. Limited Liability Partnerships

4. Limited Liability Companies
GENERAL PARTNERSHIP FORMATION
A general partnership is an association of two or more persons who are carrying on as co owners of a business for profit.

There are no formalities to becoming a general partnership.
PARTNERSHIP LEGALITY OF PURPOSE
A partnership may be formed only to achieve a legal purpose; a partnership formed for an illegal purpose is void, and the courts will not compel an accounting or settlement of a void partnership's affairs.
STATEMENT OF PARTNERSHIP AUTHORITY
A partnership may, but is not required to, file a statement of partnership authority with the secratary of state.

(Remember no formalities are required to form a general partnership)
SHARING OF PROFITS PRESUMPTION
A person who recieves a share of the profits of a business is presumed to be a partner unless the profits were received as payment of a debt, for services, wages or other compensation, rent, annuity, interest on a loan, or for the sale of good will.
PARTNERS AND MANAGEMENT
All partners have equal rights in the management of the partnership business.

This can be modified by agreement.
PARTNERSHIP FIDUCIARY DUTIES
The only fiduciary duties a partner owes to the partnership and the other partners are the duty of loyalty and the duty of care.
PARTNERSHIP DUTY OF LOYALTY
Under the duty of loyalty to the partnership a partner must:

1. Account to the partnership for profits, property, opportunities, or other benefits derived by the partner in conjunction with the partnership business.

2. To refrain from dealing with the partnership as or on behalf of a party having an interest adverse to the partnership

3. To refrain from competing with the partnership.
PARTNERSHIP DUTY OF CARE
Under the partner's duty of care to the partnership a partner must:

refraining from engaging in grossly negligent or reckless conduct, intentional misconduct or a knowing violation of law.
PARTNERSHIP REMUNERATION
Absent an agreement to the contrary, a partner is not entitled to pay or salary, except for reasonable compensation for services rendered in winding up the partnership's business
PARTNERSHIP INDEMNIFICATION
The partnership must indemnify partners for payments reasonably made and obligations reasonably incurred by a partner in carrying on the business of the partnership
PARTNERSHIP AS ENTITY
A partnership is an entity distinct from its partners.
JOINT PROPERTY NOT CONCLUSIVE
Joint tenancy, tenancy in common, tenancy by the entireties, or part ownership does not by itself establish a partnership, even if the co-owners share profits made by the use of the property.
PARTNER AS AGENT OF PARTNERSHIP
Each partner is an agent of the partnership for the purpose of its business.

An act of a partner for apparently carrying on in the ordinary course the partnership business binds the partnership, unless the partner had no authority to act for the partnership in the particular matter.
PARTNERSHIP LIABILITY
A partnership is liable for loss or injury caused to a person, or for a penalty incurred, as a result of a wrongful act or omission, or other actionable conduct, of a partner acting in the ordinary course of business of the partnership or with authority of the partnership.
PARTNER LIABILITY
All partners are liable jointly and severally for all obligations of the partnership
PARTNER'S SHARE OF PROFITS AND LOSSES
Each partner is entitled to an equal share of the partnership profits and is chargeable with a share of the partnership losses in proportion to the partner's share of the profits.
ACTIONS AGAINST THE PARTNERSHIP
An action may be brought against the partnership and any or all of the partners in the same action or in separate actions.
JUDGMENT AGAINST PARTNERSHIP
A judgment against a partnership is not by itself a judgment against a partner unless there is also a judgment against the partner.
PARTNERSHIP CRIMINAL LIABILITY
The mutual agency of partners is not sufficient tomake other partners criminally responsible for the crime of a partner committed within the scope of the partnership business, unless other partners participated eitehr as principals or accessories.
PARTNER'S RIGHTS UPON DISSOLUTION
Upon dissolution, a partner is entitled to a settlement of her account.
LIMITED PARTNERSHIP TRANSFERABILITY
A general partner may not freely transfer its interest in a limited partnership.

Limited partners are generally free to transfer their interests.
LIMITED PARTNERSHIPS
A limited partnership is a partnership with at least one general partner and at least one limited partner.
LIMITED PARTNERSHIP DISSOLUTION
Limited partners may withdraw freely without dissolution of the partnership occurring.

Dissolution occurs if any general partner withdraws UNLESS all of the remaining partners agree in writing to appoint at least one new GP(if necessary) and continue within 90 days of the withdrawal of the general partner.
LIMITED PARTNERSHIP FIDUCIARY DUTY
Duty – Limited Partners are not fiduciaries.

General Partners are always fiduciaries of each other and the partnership and may never:
1. engage in self-dealing
2. usurp partnership opportunities
3. earn undisclosed profits at the partnerships expense
LIMITED PARTNERSHIP LIABILITY
General partners are liable personally for all limited partnership liabilities

limited partners are not liable personally for obligations of the business.

LPs must pay consideration for their interest in the partnership to gain this limitation on liability.
LIMITED PARTNERSHIP FORMATION
The partnership must file a limited partnership certificate with the appropriate state agency that includes the names of all general partners.
LIMITED PARTNERSHIP MANAGMENT
General partners may exercise substantial managerial control while limited partners may not.
CERTIFICATE OF LIMITED PARTNERSHIP
A certificate of limited partnership must be filed with the secratary, and must set forth:
1. the partnership name
2. the name and address of the agent for service of process
3. the name and business adress of each general partner
4. the latest date on which the limited partnership is to disolve.
NAME OF LIMITED PARTNERSHIP
The partnership name may not contain the name of a limited partner unless it is also the name of a general partner, or the partnership had been carried out uner that name before the admission of that limited partner.
LIMITED PARTNERS CAN BE HELD LIABLE IF:
They are also a general partner or if she participates in the control of the business and the person dealing with the limited partnership reasonably believes that she is a general partner.
LIMITED PARTNER DUTY TO OTHERS OUTSIDE THE BUSINESS
LPs must explicitly disclose their LP status when dealing with other parties, so that such parties are on notice that the individual negotiating with them carries limited liability.
LIMITED PARTNERS RIGHT TO VOTE
The partnership agreement may grant to all or a specified group of the limited partners the right to vote on a per capita or other basis upon any matter.
LIMITED PARTNER CONTROL SAFE HARBOR
A limited partner does not participate in the control of the business spolely by providing services for the partner.

Substantial managerial control will subject them to liability.
LIMITED PARTNER NAME USED IN PARTNERSHIP TITLE
A limited partner who knowingly permits his name to be used in the name of the limited partnership is liable to creditors who extend credit to the limited partnership without actual knowledge that the limited partner is not a general partner.
LIMITED PARTNERSHIP DISTRIBUTION OF ASSETS
Upon winding up the assets are distributed first to creditors, then to partners for any debt owed to them, then for return on their contribution and finally any remaining assets as profits.
ERRONEOUS BELIEF OF LIMITED PARTNERSHIP
One who erroneously beleives she is a limited partner will not be held liable as a general partner if she filed an appropriate certificate and withdraws from future equity participation.

She will be bound if she transacts business before withdrawal and filing of the certificate.
RIGHT TO ASSIGN A PARTNERSHIP INTEREST
A partner may assign her interest (not her rights). Upon an entire assignment she ceases to be a partner.

An assignee may become a limited partner if the assignor had the authority to convey that right or the remaining partners consent.
LIMITED PARTNERSHIP RIGHTS TO SHARE IN PROFITS AND LOSSES
A partner is entitled to share in profits and losses specified in the agreement. If not specified then based on value of contribution.
LIMITED PARTNER DERIVATIVE ACTIONS
A limited partner may bring an action in the right of a limited partnership to recover a judgment in its favor if general partners with authority to do so have refused to bring the action or if an effort to cause those general partners to bring the action is not likely to succeed.
LIMITED PARTNER RIGHT TO INSPECT RECORDS
Each limited partner has the right to:
1. Inspect and copy any of the partnership records

2. Obtain from the general partners from time to time upon reasonable demand(a) information regarding the state of the business and financial condition of the limited partnership; (b) the limited partnership's federal, state and local income tax returns for each year; and (c) Other information regarding the affairs of the limited partnership as is just and reasonable.
LIMITED LIABILITY PARTNERSHIPS LIABILITY
Partners are not personally liable for L.L.P. obligations.

A partner remains personally liable for her own wrongful acts.
LIMITED LIABILITY PARTNERSHIPS FILING
Limited liability partnerships must file a statement of qualification stating:

1. The name of entity
2. The street address of the chief executive office
3. The name and street address of its agent for service of process
4. A statement that it is applying for status as a limited liability partnership;
5. A delayed effective date, if any.
DISSOCIATION
Dissociation is a material change in the GP caused by any single partners express will to withdraw from the partnership. In a partnership at will a dissolution occurs.
LIMITED LIABILITY COMPANIES FORMATION
LLCs must file articles of organization and an operating agreement with the state.
LIMITED LIABILITY COMPANIES LIABILITY
No partner maty be held personally liable. Members have limited liability.
LIMITED LIABILITY COMPANIES MANAGEMENT
Members can manage or the articles of organization may delegate control to a team of managers.
LIMITED LIABILITY COMPANIES LIQUIDITY
Members may transfer interest only through unanimous approval of members or another percentage specified in the articles.