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38 Cards in this Set
- Front
- Back
5 parts to the definition of partnerships
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1. an association
2. of two or more "persons" 3. acting as co-owners 4. in a business 5. for profit |
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definition of implied partnership
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2 persons who are working together but arent actually partners.... however, they appear to look like partners
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danger of an implied partnership
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if one guy gets in trouble, they come after the other guy, even though they are not formal partners, they still appear to be partners
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TRUE or FALSE: the law requires a partnership to be in writing
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FALSE, you dont have to put it in writing
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TRUE or FALSE: the law of partnerships is state law
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TRUE
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What does UPA stand for?
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Uniform Partnership Act
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2 benifits of the UPA
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-tells us what to put into a writen partnership
-incase we forget anything, the UPA will fill the gap |
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TRUE or FALSE: partners must share in profits equally because of state law
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FALSE, partners may share profits anyway they want; however, if you say nothing, (absence of agreement)profits are shared equally
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TRUE or FALSE: parnters must share in losses equally because of state law
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FALSE, in absence of an agreement, losses are shared the same way that you share profits
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definition of capital contribution
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assets that are put into the partnership
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definition of partnership property
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property that is put into the partnership that should yield dividends... can use it anytime they want to make money
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definition of buy/sell clause
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allows new people to buy into the partnership or to sell it
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TRUE or FALSE: you can name a partnership anything you want; you just have to put the 2 partners in writing
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TRUE
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what are the legal rights of partners to manage their business?
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each and every partner has the right to participate in management
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how do partners divide the management duties?
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anyway they want... all they have to do is agree on it
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do partners have the right to get a salary?
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partners have no right to a salary... they control the profits of the business
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TRUE of FALSE: partners do not have the right to inspect the books and records unless they control the majority of the profits
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FALSE, partners have the right to inspect the books and records so they hire an unrelated independent CPA to check
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TRUE or FALSE: partners have the right to watch each other or anything they want (they may want u to account for the money)
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TRUE
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what are the individual rights to do partnership business?
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each and every partner has an unlimited right to conduct partnership business.. they can do whatever they want as long it is as in pursuit of the business
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definition of fiduciary duty
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the legal responsibility that binds partners to the partnership as a whole (loyality and trust)
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2 points about viarious liability
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-to be liable even though you were not physically there
-you dont have to be there, but it is part of your partnership |
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definition of Intential tort
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intentional physical harm or damage to a person or personal property
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3 ways to end a partnership (dissollution)
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1. voluntary dissolution by partnership vote
2. involuntary dissolution by operation of law 3. involuntary dissolution by court order |
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4 circumstances that cause the partnership to end by involuntary dissolution by operation of law
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-event of the death of a partner, when a partner dies, the partnership dies
-insanity of a partnerl crazy people cant volunteer -the bankruptcy of a partner, no longer can consent -when the nature of the business becomes illegal |
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When would a partnership be dissolved by court order?
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when partners cant get along or agree so a judge ends the partnership
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2 dangers of being in a partnership
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-unlimited personal liability of partners in a partnership
-Joint and Several Liability |
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what does 'joint' mean in joint and several liability?
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the partners are jointly, as a group, liable
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what does 'several liability' mean in joint and several liability?
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to take any partner and make them pay it alone
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TRUE or FALSE: when the creditors single out and attack one partner, that partner has the right to demand the money from their other partners
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TRUE
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What does PC stand for?
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Professional Corporation
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What does LLP stand for?
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Limited Liability Partnership
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What does LLC stand for?
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Limited Partnership Company
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definition of PC
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corporations made up of shareholders but u have to be a member of the same profession (denistry , art, etc)
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definition of LLP
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liability is limited to their own wrongful acts in a limited liability partnership
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definition of LLC
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open to all businesses... also foreign companies.. it is so foreign companies can come here and do business and not be subject to our laws so much (note: each company isnt a shareholder, they are a member)
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2 reasons why LLCs are dangerous
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-much more expensive that corporation
-you dont know what u are getting in an LLC; u know what ur getting in an LLC |
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What is the flaw to limited partners in an LP having limited liability
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limited partners have zero management authority... there is always one general partner who has all the management power and all the liability.... who owns the general partner if there is none? a corporation
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What kind of partnership is noted for selling risky investments to ppl who dont know shit?
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Limited Partnerships (LP)
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