Partnerships - Management & Operation

Front 1

What governs the structure of a partnership and the rights and duties of partners?

Back 1

The partnership agreement, which may be written, oral or implied. In the absence of a partnership agreement, the provisions of §323A govern the partnership.

Front 2

What provisions is the partnership agreement prohibited from including?

Back 2

Provisions that:
(i) vary the rights under §105 (execution, recording and filing of statements) except to remove the need to provide copies of statements to all partners;
(ii) unreasonably restrict access to records and books under §403(b);
(iii) eliminate duty of loyalty under §404(b) and §603(b), BUT: may identify specific types of conduct that do not constitute a breach, if not unreasonable, and partners may unanimously (default rule) or through the vote of a number named in the agreement authorize/ratify an act that would otherwise be considered a breach;
(iv) unreasonably reduce duty of care under §404(b) and §603(b);
(v) eliminate the requirements of good faith and fair dealing, although limits may be defined differently if not unreasonable;
(vi) vary the right to dissociate as a partner under 0602(a) except to require notice to be in writing;
(vii) vary the right of a court to expel a partner under 0601(5);
(viii) vary the requirement to wind up the partnership under 0801;
(ix) vary the law applicable to LLPs under 0106(b); or
(x) restrict the right of third parties.

Front 3

How is the management of the partnership to be conducted?

Back 3

All partners are presumed to have equal rights in the management and the conduct of the business, regardless of how profits are divided (§323A.0401(f)).

Majority vote is the mechanism for deciding on differences arising in the ordinary course of business (§323A.0401(j)).

Front 4

What legal relationship exists between a partner and the partnership?

Back 4

A partner is considered an agent of the partnership, with the power to bind the partnership where an act is carried out in the ordinary course of business (§323A.0301).