Partnership

Front 1

Factors indicating creation of partnership

Back 1

1) receipt of or right to receive share of profits

2) expression of an intent to be partners

3) participation or right to participate in control of business

4) sharing or agreeing to share losses or liab for cliams by 3rd parties against business

5) contributing or agreeing to contribute money or other property to business

Front 2

Factors NOT indicating creation of partnership

Back 2

1) Receipt of or right to receive share of profits as:

(a) repayment of debt; (b) wages or compensation; (c) payment of rent; (d) payment of interest on loan; (e) payment to former partner, rep of deceased/diabled partner, or transferee of partnership interest; OR (f) payment of consideration for sale of biz or other property

2) existence of joint or common tenancies

3) sharing or possession of right to share gross receipts; and

4) ownership of mineral property under joint operating agreement

Front 3

Partnership by estoppel (estopped parties to 3rd parties)

Back 3

Liab of person held out as partner - when person represents himself or permits another to represent him as partner, he will be liab to 3rd parties that extend credit to partnership

Liab of person who olds another out as partner - when person holds out another as partner, he makes that person his agent to bind him to 3rd parties (if there IS a partnership, only those partners who know of or consent to this holding out will be bound)

Front 4

Poperty DEEMED partnership property

Back 4

Property acquired in partnership name or the name of 1 or more partners with an indication in instrument transferring title of person's capacity as partner or the existence of the partnership

Front 5

Property PRESUMED partnership property

Back 5

Property acuired w/ partnership cash, credit, or other partnership property, whether acquired in name of partnership or in name of 1 or more partners w/ indication in instrument transferring title of person's capacity as partner, or existence of partnership

Front 6

Property PRESUMED partner's separate property

Back 6

If property acquired in name of 1 or more partners and (i) instrument transferring title does not indicate person's capacity as partner or existence of partnership, AND (ii) partnership property NOT used to purchase property, presumed partner property, EVEN IF used for partnership purposes

Front 7

Partner's INTEREST in partnership

Back 7

Partner's interest consists of his share of profits, losses, and distributions

Partner's interest is treated as personal property, and is transferable w/out causing winding up of partnership biz

Front 8

If partner transfers interest, what rights does transferee acquire/ not acquire?

Back 8

Transferee acquires right to transferring partner's share of profits, NOTHING MORE

Transferee does NOT acquire rights w/ regard to operation of partnership

(NOTE: Partners may not SELL partner status absent consent of other partners)

Front 9

Rights of Partners

Back 9

Management - all Ps have equal right to participate in mgmt of pship UNLESS PA provides otw

Distributions - Ps has whatev rights granted in PA as to distribution of profits; if PA silent, Ps share profits (and losses) equally

Remuneration - NO RIGHT to remuneration UNLESS winding up

Indemn - P has right to indemn by fellow Ps for expenses incurred on behalf of pship

Contribution - P has right to contribution from FP where P has paid more than his share of pship liab

Inspection - P right to inspect & copy pship books

Lawsuits - Gen, P may sue pship & pship may sue partner in action at law OR equity

Front 10

OUTGOING P liab

Back 10

Gen remains liab for all pship debts incurred while P

Front 11

INCOMING P liab

Back 11

Gen has NO liab for debts incurred before became partner

Front 12

Events of WITHDRAWAL

Back 12

1) receipt by pship of notice of P's desire to withdraw

2) occurence of an event specified in PA as as event of withdrawal

3) expulsion of P per agreement, majority in interest vote, or judicial decree

4) P's bankruptcy, death or incapacity of P, or termination of P that is an entity

5) redemption of all P's interest in pship by transferee holding that interest

6) vote by majority-in-interest to continue biz after P has requested that pship be wound up

Front 13

Wrongful WITHDRAWAL

Back 13

A P's withdrawal is wrong if:

1) it is in breach of an express provision of PA

2) occurs before expiration of period of duration, completion of particular pship undertaking, or occurrence of an event specified in PA; OR

3) is pursuant to court-ordered expulsion

(NOTE: P who wrongfully w/draws is liab for damages caused by w/drawal)

Front 14

Definition of Partnership

Back 14

An association of 2 or more person to carry on as co-owners a business for profit, whether they inted to form a partnership or not

Front 15

FACTORS used to determine who is a P

Back 15

1. Capital - capital contribution is not req to be P

**2. Control - right to control may be enough, even if control is never exercised

3. Sharing profits - just 1 factor, no presumption of partnership

Front 16

Does pship law REQUIRE writing?

Back 16

NO; BUT SOF might (e.g., agreement among Ps that pship last 2 years falls under SOF)

Front 17

Difference b/t Pship and JOINT VENTURE

Back 17

Treated same EXCEPT JV requires EXPRESS AGREEMENT on how losses shared

Front 18

Pship vs. P right to Pship PROPERTY

Back 18

PSHIP: rights are totally unrestricted

- can pledge as collateral

- creditors may attach

P: VERY LIMITED; P may use Pship property ONLY for Pship purposes; this right is NOT transferable (non-Pship use requires consent of partners)

Front 19

P's ECON INTEREST in Pship

Back 19

1. DEF: P's share of profits

2. IS TRANSFERABLE: like any other financial asset

3. COMMUNITY PROPERTY if acquired during life of community

Front 20

General rule for what GOVERNS relations among Ps

Back 20

Statute (TX Bus Org Code) supplies default rules, but Ps may K around them, so PA usually governs this area

Front 21

What affect if PA states P will NOT bear any losses?

Back 21

WILL NOT limit liability to 3rd parties - Ps CANNOT limit the rights of 3rd parties - BUT agreement will be effective as indemnification agreement among themselves

Front 22

MANAGEMENT RIGHTS in Pship

Back 22

Unless otherwise agreed, Ps have equal mgmt rights; BUT, statute also says that matters of ordinary biz are decided by a majority in interest (profit share, not #)

Ex. - 3 partners X(60%), Y(20%), Z(20%); X would prevail in matters of ordinary biz over others

Front 23

DUTIES Ps owe to each other/ Pship

Back 23

Ps owe fiduciary duties of care, loyalty and good faith, but they may limit or [RECENT CHANGE] even eliminate them