Business Law- 14

advantage sod sole proprietorship

1. easy and cheat to start up 2. wonder maintains right to all business decisions 3. sole owners have the rights to all profits 4. easy to sell of transfer the business

disadvantages to sole proprietorship

1. capital resources limited to personal funds and personal loans 2. personally liable for debts of the business (more later)

fictitious business name statement

helps others identify the business

formation of general partnership

UPA (uniform partnership act) 1. association of two or more persons 2. carrying on a business 3. as co-owners 4. for profit

tort liability: unlimited

a general partner's liability for the debts and obligations of the partnership is... in tort liability

uniform limited partnership act

a model act that was adopted and regulated limited partnerships

entrepreneur

a person who forms and operates a new business either by himself or with others

wrongful dissolution

a situation in which a partner withdrawals from a partnership without having the right to do so at the time, note that a partner always has the power to withdraw and dissolve

limited partnership

a special type of partnership that has two types of partners: general and limited

general partnership agreement

a written agreement that a partners sign to from a vernal partnership. the UPA serves as a gap filler should a general partnership agreement fail to address one or more matters as its creation

limited partners

have limited liability for the debts and obligations of the LP, such liability to their capital contributions. have no personal liability for the debts and obligation of the LP

management of a limited partnership

activities that a limited partner may engage in without losing their limited liability: 1. being an agent, employee, or contractor of the LP 2. being a consultant or an advisor 3. acting as a surety for the LP 4. approving or disapproving an amendment to the LP agreement 5. voting on the following partnership matters 5.1. the dissolution and winding up of the LP 5.2. the sale, transfer, lease, or mortgage of the assets of the LP 5.3. the incurrence of indebtedness by the LP other than in the ordinary course of business 5.4. a change in the nature of the business of the LP 5.5. the removal of a general partner

distribution of assets upon dissolution

all liquidated and reduced to cash 1. creditor (except partners who are creditor) 2. creditos- partners 3. capital contributions 4. profits

general partnership

an association of two or more persons to carry on as co-owners of a business for profit. the rights and duties created among the partners is governed by a partnership agreement and by law. they are personally liable for the debts and obligations of the partnership

personal guarantee

an exception to the usual rule that limited partners have no personal liability for the debts and obligations of the LP is when a limited partner consents to such liability

name of a general partnership

can operate under one or more names, name cannot suggest that the partnership is corporation i.e.: Inc

dissolution of a limited partnership

certificate of cancellation must be filed with secretary of state distributions: 1. creditors of the LP, including partners who are creditors 2. partners with respect to 2.1. unpaid distributions 2.2. capital disributions 2.3. remainder of the proceeds

formation of limited partnership

certificate of limited partnership first filed with secretary of state 1. name of limited partnership 2.character of business 3. address of [principal place of business and agent for service of process 4. name and address of each general partner and limited partner 5. latest date on which it is to dissolve 6. amount of property or services each partner contributed

unlimited personal liability of a sole proprietor

creditors may recover against the sole proprietor for all debts of the business

right to participate in the management of a general partnership

each partner has a right to participate in the management of the partnership and has an equal vote on partnership matters. non-unanimous maters are put to a vote under UPA

incoming partner liability

enters into an existing partnership that is liable for the existing debts and obligations of the partnership.

continuation agreement

expressly sets forth the events that allow for the continuation of the partnership

action for accounting

formal judicial proceeding in which the court is authorized to 1. review the partnership and the partners transactions 2. award each partner its share of the partnership assets

right to an accounting

general partners are not allowed to sue the partnership or the other general partners at law, instead they might bring an action for accounting

contract liability: joint

general partners have unlimited personal liability for contracts of the partnership. have joint for the contracts and debts of the partnership. this means that a plaintiff must name the partnership and all of the partners as defendants in a lawsuit.

flow- through taxation

general partnerships do not pay federal taxes, instead, the gains and losses flow through to the general partners individually

general partners

have unlimited liability for debts and obligations

defective formation

incorrect formation of a limited partnership that occurs when: 1. partnership not properly filed 2. defects in a certificate that is filed 3. some other statutory requirement for the creation of a limited partnership is not met can escape liability by either: 1. causing the appropriate certificate of LP to be filed or 2. withdrawing from any future equity participation and filing a certificate nothing that withdrawal

limited partner

invests capital but does not otherwise participate in management and is not personally liable for partnership debts beyond their capital contributions

general partner

invests capital, manages the business, and is personally liable for partnership debts

taxation of a sole proprietorship

it does not pay taxes, instead the owner bears the burden for all gains and losses

limited partnership agreement

sets forth the rights and duties of general and limited partners, including the terms and condition regarding the operation, termination, and dissolution of a partnership

dissolution of a general partnership

the change in the relationship if partners in a partnership caused by any partner ceasing to be associated in the carrying on of the business --a partnership with a fixed duration is: partnership for a term --a partnership with no fixed duration is: partnership at will --winding up: the process of liquidating a partnership's assets and distributing the proceeds to satisfy any claims against the partnership

d.b.a.

the designation stands for doing business as, a designation that a business is doing business under a trade home

sole proprietorship

the simplest form of business organizations in which the owner is actually the business; the business is not a separate legal entity. created simply by acting

tort liability: joint and several liability

tort that is liability of partners both together and individually

right to share in profits

unless otherwise agreed by the general partners, the UPA mandates that a general partner has a right to an equal shear in the partnership's profits (and losses) ... if the agreement is otherwise silent of how losses are allotted, then losses are allotted in the same manner as profits. The reverse, though, is not true. Instead, profits are shared equally in cases where the agreement does not designate how they are to be allotted- allotted means to give something to someone

right of survivorship

upon death of a general partner, the deceased partner's right in specific partnership property vests in the remaining partner or partners; the value of the deceased partner's interest in the partnership passes to his or her beneficiaries or heirs

liability of outgoing partners

you do not lose liability just because you leave, every general partner is personally liable for existing debts and obligations