BizOrgs

LLC Liability

Liability: Limited.

LLP Liability

Liability: a general partner in a LLP will be personally liable for the LLPs debts and obligations. Limited Partners - have no control over the limited partnership but won't be personally liable for debts and obligations. (except for unusual circumstances).

LLP Tax

Tax: Flow through tax treatment.

Buy-Sell Agreement

A partner could find a third party buyer to purchase his right to receive distributions but it would be difficult to sell this, not something marketable. 2. Partners can agree in advance to create a "market" for a partner's interest. The likely buyers are investors. 3. A Buy-Sell Agreement is like a business will, also known as buyout agreement.

D: Partnership What do they have to do to legally make it a partnership?

Two or more owners. Nothing, it's a default partnership if it's more than one. It happens automatically.

Liability for Torts of Agents--RESPONDEAT SUPERIOR:

a. An employer IS subject to liability for torts committed by employees while acting with in the SCOPE of their employment. b. An agent doesn't have to be an employee. c. An Employee always has to be an agent. 2. Employee For purposes of this section, a. an employee is an agent whose principal controls or has the right to control the manner and means of the agent's performance of work, and b. the fact that work is performed gratuitously does not relieve a principal of liability.

I. Two Primary Considerations

a. Limited Liability (state law) b. Tax Treatment (federal income tax law) b.1) "Flow Through" b.2) "Double Taxation"

A partner's duty of care is... Fla. Stat. § 620.8404(3).

...15.a. A partner's duty of care to the partnership and the other partners in the conduct and winding up of the partnership business is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law. (Very low standard) Example: If the partnership agreement had provided that a partner's duty of care is to avoid engaging in negligence, gross negligence, reckless conduct, intentional misconduct, or a knowing violation of law? See Fla. Stat.§620.8103(2)(e). Here would have breach of fiduciary duty and Dr. G would be responsible to the other partners for doing so. Example: A wealthy real estate investor is considering entering into a partnership with two other real estate tycoons to build a mall. However, the investor is concerned that if he joins the partnership, the other partners will try to prevent him from continuing to operate and invest in other real estate projects in this case the duty of loyalty should be modified to prevent this. Fla. Stat.§ 620.8103(2)(d).

Types of businesses entities that are not partnerships

...3.a. Fla. Stat. 620.8202(2). An association formed under a statute, other than this act, a predecessor statute, or a comparable law of another jurisdiction is not a partnership under this act. (Corporations, LLC, etc.) ...3.b. Anything formed under state statute is not a partnership. ...3.c. Joint venture can be partnership. If a corporation seeks to be a partner with another corporation they still are separate entities, although partners at that time. A partnership can't be a corporation in its own capacity.

Must a partnership file documentation with the state to be validly formed?

...4.a. No partnership filing is required. ...4.b. Just like sole proprietorship ...4.c. DBA-Doing Business As. A name other than your own but no liability protection.

Formation of a Partnership

...5.a. It is possible that two (or more) people can form a partnership without intending to do so. ...5.a.1. The association of two or more persons to carry on as co-owners a business for profit forms a partnership, whether or not the persons intend to form a partnership. ...5.b. Creditors will often argue that a partnership has been formed when the partners did not intend to do so. (HINT: Under Fla. Stat. § 620.8306, partners are jointly and severally liable for the debts of the partnership). ...5.b.1. A person admitted as a partner into an existing partnership is not personally liable for any partnership obligation incurred before the person's admission as a partner.

Partnership Formation - Factors

...6.a. Gross returns - Expenses = Profits ...6.b. The sharing of profits creates a rebuttable presumption that a partnership exists. May have facts that show sharing profits for other reasons. Exceptions to this rule See Fla. Stat. 620.8202(3)(c). 1) Of a debt by installments or otherwise; 2) services as an independent contractor or of wages of an employee; 3) Of rent; 4) Of an annuity or other retirement benefit to a beneficiary, representative, or designee of a deceased or retired partner; 5) Of interest or other charge on a loan, even if the amount of payment varies with the profits of the business, including a direct or indirect present or future ownership of the collateral, or rights to income, proceeds, or increase in value derived from the collateral; or 6) For the sale of the goodwill of a business or other property by installments or otherwise. ...6.c. The sharing of gross returns does not create a presumption that a partnership exists. See Fla. Stat. 620.8202(3)(b). ...6.d. Joint ownership of property does not create a presumption that a partnership exists. See Fla. Stat. 620.8202(3)(a).

MacArthur Co. v. Stein

...7.a. Facts: Potter and Beebe were 2 of the investors that approached Stein. Had written agreement to form company that only added Gutters at the end of it. Wanted to make sure public knew that they were the same company because roofer had already established himself, even used the same phone number. ...7.a.1. Stein compensation was based on gross charges ...7.a.2. Beebe got line of credit for supplies based on new company name, no mention that Stein was involved (had bad credit) - until the investors disappeared with $40K bill due to MacArthur. ...7.a.3. Investors were gone and Stein was partner, needs to pay up. If not partner - would be out of luck. ...7.a.4. Based on factors there was partnership in fact between the parties.

Dreyfuss v. Dreyfuss

...8.a. A partnership is only established when all parties ...8.a.1. Contribute to the capital or labor of the business, ...8.a.2. have a mutuality of interest in both profits and losses, and ...8.a.3. agree to share in the assets and liabilities of the business. Under the doctrine established by Dreyfuss, regardless of what the business is called it's a partnership if it meets the criteria.

Liability of New Partners

1. A new partner is not liable for pre-existing partnership liabilities. See Fla. Stat. § 620.8306(2). 1.a. A new partner might lose this money, but not be responsible for any further debt. Could lose his or her capital contribution to a pre-existing debt.

Wrongful Dissociation

1. A partner's dissociation is wrongful when they dissociate and have no right to do so. 1.a. When breach of contract or if have partnership for DEFINITE TERM OR UNDERTAKING = if dissociate before that, wrongful 2. Reactive Withdrawal: If withdraw by express will before undertaking is complete, will be wrongful *BUT* if partner withdraws within 90 days of another partner's wrongful withdrawal, will be okay (reacting to first - second will be okay if within the 90 days and will be rightful) See Fla. Stat. § 620.8602(2).

Partnership liability

1. A partnership may sue or be sued in its own name. See Fla. Stat. § 620.8307. 2. A partnership is liable for any loss or wrongful act of a partner when the partner acts in the ordinary course of business of the partnership or with authority of the partnership. See Fla. Stat. § 620.8305. 3. Except as otherwise provided in subsections (2) and (3), all partners are liable jointly and severally for all obligations of the partnership unless otherwise agreed by a claimant or provided by law. See Fla. Stat. § 620.8306. 3.a. Joint and Several liability means that a claimant may go after just one of the partners for the entire debt, don't need to file against all of them (when third-party creditor) 3.b. That person can't say that only owe portion (not the person filing lawsuit's problem, go get back from other partners) - they can try for indemnification or contribution from partners.

Assignment of Partnership Interest

1. An assignee has no partnership interest, only rights to receive capital account funds and right to receive distributions that the transferor would have been entitled to See Fla. Stat. §620.8503(2). 2. A transferor partner remains a partner in the partnership - even though assigned rights to receive the shares of profits/losses to another. Still have the same rights and duties. See Fla. Stat. § 620.8503(4).

How do the Partners Make Money?

1. As a default rule, a partner is not entitled to a salary from the partnership. Money made is from the profits that are acquired. Could agree in partnership agreement to have one, but must be in the agreement. Fla. Stat. § 620.8401(8). 2. As a default rule, partners share profits and losses equally, irrespective of the amount of capitol contributed. Does it matter how much capital a partner has contributed to the partnership but will be okay if addressed in the partnership agreement Fla. Stat. § 620.8401(2).

Withdrawal of a Partner

1. Dissociation 2. Dissolution 3. Winding up 4. Termination

Dissociation

1. Dissociation occurs when: a partner's express will can dissociate the partner (can't force them to stay in), procedures where when accused of misconduct that violates the PA (prior to disbarring), expulsion of partner by judicial determination (due to wrongful conduct of partner), bankruptcy, and death or See Fla. Stat. § 620.8601. 2. The partnership agreement can't prohibit a partner from dissociating. See Fla. Stat. § 620.8103(2)(g). 3. A partner always have the power to dissociate. See Fla. Stat. § 620.8602(1). 4. A partner Does not always have the right to dissociate (even though have power). Could be breach of contract (partnership agreement).

Liability - Enforcing Judgments

1. If a creditor gets a judgment against the partnership, the judgement isn't automatically enforceable against the partners. A judgment against a partnership is not by itself a judgment against a partner. A judgment against a partnership may not be satisfied from a partner's assets unless there is also a judgment against the partner. Fla. Stat. § 620.8307(3). 2. A creditor may satisfy a judgment from a partner without first exhausting the partnership's assets if the partner was the one who committed the tort in the ordinary course of business that gave rise to liability - then creditor may go after partner's assets without first exhausting the partnership's assets. 1.a. In respect to other partners, creditor would first need to exhaust partnership's assets and once exhausted in full, creditor may go after non-tortfeasor partners under joint and several liability § 620.8307(3). 3. If the partner was the tortfeasor the claimant must sue them also and they may go after their stuff without first waiting. See Fla. Stat. § 620.8307(4).

Settlement of Accounts

1. Once the partnership is dissolved and its business wound up, how are partnership assets applied and distributed. Creditors will always get paid first, then partners See Fla. Stat. § 620.8807(1) & (2). 1.a. There is no distinction between a creditor who is also a partner.

Indemnification/Contribution

1. Partners May agree to share their losses in any way they wish. They may seek indemnification of partnership. If no assets to indemnify the partner, that partner could demand the other partners contribute more capital to partnership to have the indemnification paid. If one party agrees to share 1/3 of losses, but other paid all of losses - could get indemnification of 3-people partnership from the other 2 to get their money back. 2. Third party creditors are not bound by PA's their goal is for them to get money back, no matter from who - then that partner could get from another. See Fla. Stat. § 620.8401(11). 3. If a partner pays more than his share of partnership debt, he has the right of contribution and indemnification from the partnership and/ or the other partners. See Fla. Stat. § 620.8401(2) & (3).

Sale of Ownership Interest to a Third Party

1. Partnership property is owned by the partnership as an entity, not by the partners as co-owners. A partner has no interest that can be transferred, either voluntarily or involuntarily, in specific partnership property. 2. A partner does have a partnership interest, considered personal property (nothing for real estate) - not co-owner of partnership property and has no interest that may be transferred. See Fla. Stat. §§ 620.8501, 620.8502. 3. A partner may transfer his or her partnership share of profits and losses and partner's right to receive distributions to a third party See Fla. Stat. § 620.8502. 3.a. THAT DOES NOT ENTITLE THE TRANSFEREE TO BE A PARTNER, other partner is still active until dissociation or dissolution and winding up of business) See Fla. Stat. § 620.8503.

Sources of Law

1. State Law 2. State in which organization is formed governs it "internal affairs" 3. Hierarchy of state law 4. Constitution (rarely applies in business organizations) 5. Statutes 6. Case law/common law 7. Federal law (securities law)

Creditor of a Partner

1. The judgment of a creditor of a partner may not attach or levy any property that belongs to the partnership. This is because partner is not co-owner and has no interest in it (partnership only liable when acts of partner during ordinary course of business, partnership not on hook here for this) See Fla. Stat. § 620.8501. 2. If a creditor of a partner seeks to levy against the partner's partnership interest the Creditor is entitled to CHARGING ORDER (similar to garnishment against wages) - will make the creditor be the assignee of the partnership interest with rights to profits/losses and distributions? See Fla. Stat. § 620.8504(1) & (2). 3. The judgment creditor can't seize the partner's partnership interest and become a partner in the debtor partner's place, they can't act as partner, only have interest in the shares of profits/losses See Fla. Stat. § 620.8504.

Withdrawal of a Partner--Winding up

3. Winding up- Wrapping up all the pending business, no longer takes on new business

3. Limited Liability Partnership (LLP)

In a LLP there are two different types of partners: general partners and limited partners. General Partners - have more control but acquire more liability as well.

Liability of Bought Out Partner

3.a. A bought out partner remains liable for partnership debts. Fair for creditor to look to them for payment because part of it at the time incurred the obligation. Fla. Stat. § 620.8703(1) & (3). 3.a.1) If the liability was incurred before dissociation, dissociated partner on the hook. 3.a.2) If after, generally the dissociated partner is not liable for any post-dissociated liabilities. 3.b. EXCEPTION: If within 2 years of dissociation, that third-party creditor reasonably believes that the dissociated partner was still partner and did not receive (or deemed to receive) notice of the dissociation and has extended more credit, can go after the dissociated party since still on hook If have to pay that amount, indemnity from partnership since not one of liabilities. See Fla. Stat. § 620.8701(4).

Negative consequences to a wrongfully dissociating partner.

3.a. If partnership goes to dissolution, wrongful partner has no right to wind up partnership 3.b. If not dissolved - may buy out the dissociated partner (amount received will be offset by damages caused by doing so), and if for definite term - buyout will occur when completed (unless show payment won't be undue hardship to the partnership's business) - See Fla. Stat. §§ 620.8602(3); 620.8701(3), (8), 803(1). 3.c. A partner's dissociation is Rightful when they follow the appropriate processes.

PARTNERS MAKE MONEY in a three-step process

3.a. Partnership generates a profit; 3.b. Profit is allocated to a partner's capital account (profit share determined by partnership agreement; otherwise equal share by default); 3.c. Partnership makes distributions to partners (note that the partnership is not required to immediately distribute profits to partners, unless the partnership agreement says so).

Withdrawal of a Partner--Termination

4. Termination- Once there is dissolution and winding up, then conduct liquidation if any assets remaining and partnership is donepartnership is done

Article 8 Dissolution

A PARTNER'S DISSOCIATION DOESN'T ALWAYS RESULT IN DISSOLUTION. May either dissolve or have a buy-out of the dissociated partner (art 7) See Fla. Stat. § 620.8603(a). 2. Events that cause dissolution are: 2.a. If at will - may dissolve when have express will of any partner to withdraw (not good idea to have this type of partnership) 2.b. Will dissolve when have expiration of term or undertaking, one partner then dissociate, anybody left can take vote within 90 days to dissolve. 2.c. If 50% want to dissolve, 50% continue = will dissolve (express will of at least half of the remaining partners will cause it to dissolve) 2.c.1) Not a tie, goes in favor of dissolution, occurs within 90 days May occur by death 3. Express will of all partners 4. Expiration of term or completion of undertaking 5. Judicial order to dissolve (won't discuss that) 6. If for definite term, vote of at least half within 90 days of another's dissociation will dissolve. See Fla. Stat. § 620.8801.

A partner's duty of loyalty is Fla. Stat. § 620.8404(2).

A partner's duty of loyalty to the partnership and the other partners is limited to the following: a. To account to the partnership and hold as trustee for the partnership any property, profit, or benefit derived by the partner in the conduct and winding up of the partnership business or derived from a use by the partner of partnership property, including the appropriation of a partnership opportunity; (can't cheat the partnership) b. To refrain from dealing with the partnership in the conduct or winding up of the partnership business as or on behalf of a party having an interest adverse to the partnership; and (can't screw the partnership over for another) c. (c) To refrain from competing with the partnership in the conduct of the partnership business before the dissolution of the partnership. (can't enrich oneself over Partnership)

Implied Warranty of Authority

A person who purports to make a contract, representation, or conveyance to or with a third party on behalf of another person, lacking power to bind that person, gives an implied warranty of authority to the third party and is subject to liability to the third party for damages for loss caused by breach of that warranty, including loss of the benefit expected from performance by the principal, unless a. the principal or purported principal ratifies the act as stated in § 4.01; or b. the person who purports to make the contract, representation, or conveyance gives notice to the third party that no warranty of authority is given; or c. the third party knows that the person who purports to make the contract, representation, or conveyance acts without actual authority. If agent and represent acting on another's behalf, giving warranty of authority Says acting on behalf of principal, but they actually have no idea. Someone has to be on hook for contract. If don't actually have authority, breached the implied warranty of authority - liable for any breach and damages that may be caused to third party (unless ratify or one of other exceptions).

Ratify--all or nothing rule

All or nothing rule: Must ratify entire contract, or none of it - can't just piece parts together that like. May be done expressly or implicitly

Actual Authority

An agent acts with actual authority when, at the time of taking action that has legal consequences for the principal, the agent reasonably believes, in accordance with the principal's manifestations to the agent, that the principal wishes the agent so to act. § 2.01.

Apparent authority

Apparent authority is the power held by an agent or other actor to affect a principal's legal relations with third parties when a third party reasonably believes the actor has authority to act on behalf of the principal and that belief is traceable to the principal's manifestations. § 2.03.

Disclosed Principal

Disclosed if, when an agent and third party interact, third party has notice that agent is acting for principal and has notice of principal's identity a. Third party knows who agent is acting for. b. If agent has actual/apparent authority, then the principal is bound to the third party (and vice-versa) for contract. c. No Contract between agent and third party.

Withdrawal of a Partner--Dissolution

Dissolution-Beginning of the end of the partnership

"C" Corp--Tax

Double layer of taxation. The corporation itself files and pays taxes on the dividends that they get in their gross income so therefore this type of business is taxed twice. Profits gets taxed when the business makes them and when they are paid out. To limit your liability you have to be more regulated.

Default vs. Mandatory Rules--Examples

Example: Amy, Betty, and Claude formed a partnership. One section of their partnership agreement provided: "Under no circumstances shall any partner be personally liable to a third party for any debts or other obligations of the partnership." This provision is not enforceable Example: A partnership agreement contained the following provisions: A new partner may be admitted to the partnership if 75% of the current partners vote yes; OK, within the scope of the agreement, doesn't affect TP's. Ordinary negligence will be considered to be a breach of a partner's duty of care to the partnership. Ok, increases the minimum standard of care. No partner will be deemed to owe a duty of loyalty to the partnership. NO, can't eliminate but can restrict.

Duty of care--ex

Example: If a doctor has committed malpractice, injuring a patient the Dr. has not violated her duty of care to the partnership? Negligence mentioned above is ordinary negligence. Partnership agreement may increase duty of care - but needs to state that.

Pship decisions--examples

Example: Law Firm with 100 partners has a partnership agreement, but the does not address how it may be amended. Unanimous vote is needed because amending the agreement is outside the normal course of business. It would it be permissible for the Big Law Firm's partnership agreement to provide that it may be amended if at least 75% of the partners vote in favor of a proposed amendment Example: One day, P1 told the other two partners that he thought that the partnership needed to buy a new diagnostic computer for $20,000. P2 agreed, but P3 disagreed. Here we have a %66 majority and in the course of normal business. Note: Never will be a majority if only two partners and one votes no.

Auth of Pners--examples

Example: P1 and P2 decided that the partnership should not buy the computer. P3 bought the computer for $20,000. The partnership is obligated to purchase this computer because of apparent authority. P1 &P2 could have prevented this from happening by calling the company and informing P3 had no authority to act. Example: P3 also decided (on his own) that the partnership should go into the business of running a coffee shop. P3 ordered several coffee machines and several hundred pounds of coffee beans. The partnership is not obligated her because it is outside of the course of business.

FORMING AN AGENCY RELATIONSHIP

Fiduciary relationship between the agent and the principle. The two parties of an agency relationship are the AGENT and the PRINCIPLE. AND then there is a THIRD PARTY usually (TP). Two types of situations: Contractual situations Tort situations

Limited Partnership (LP) (Tax and structure)

Flow through tax treatment General partners and limited partners.

Article 7 Buyout

If a partner dissociates, but the partnership does not dissolve the remaining partners will need to do a buyout. See Fla. Stat. § 620.8701(1). 1.a. If a partner is bought out, would get price if liquidated the partnership and sold all assets. See Fla. Stat. § 620.8701(2).

Limited Liability Limited Partnership (LLLP)

Is just an LP with a twist: general partners will not be personally liable for the LPs obligation if the PP elects to become an LLLP.

Corporations

Liability is growing because they are getting bigger. Shareholders are the owners of the corporation but they have little control over it. They annually elect the directors, who have authority to run the business. And then they can give power to other officers or employees.

P.ship liability

Liability now is going to the separate legal entity, joint and several liability. A is a person. B is a person. And now AB is a person.

Sole prop--liability

Liability: Liability is completely on the owner. The types of liabilities that could happen is anything that legally comes about from contractual obligations.

"C" Corporation--liability

Liability: Limited liability to the owners (shareholders). You still are out some money, but they can't come after your house and car like they could if you were a sole proprietor.

Withdrawal of a Partner--Dissociation

No longer associated with partnership. May be express withdrawal, death, incapacitated, bankruptcy, etc.

Fiduciary Duties of Partners

Partners owe a duty of loyalty and duty of care to the partnership and the other partners.

Ratification

Ratification is the affirmince of a prior act done by another, whereby the act is given effect as if done by an agent acting with actual authority. --A person ratifies an act by a. manifesting assent that the act shall affect the person's legal relations, or b. conduct that justifies a reasonable assumption that the person so consents. § 4.01 Happens after the fact, must know the material facts of the contract to do this

Limited Liability Company (LLC)

Relatively new company. No restrictions like S Corp. It's a hybrid between a corporation and a partnership.

Duty to act with scope of actual authority--What happens if the agent exceeds his actual authority, but nonetheless binds the principal in a contract to a third party due to apparent authority?

Restatement § 8.09: a. An agent has a duty to take action only within the scope of the agent's actual authority. b. An agent has a duty to comply with all lawful instructions received from the principal and persons designated by the principal concerning the agent's actions on behalf of the principal. May bind principal, even without actual authority. Agent has breached fiduciary relationship with principal.

"S" Corp Liability

Same as a C corporation, limited liability to the owners (shareholders).

Scope of Employment

Sec. 7.07(2) An employee acts within the scope of employment when performing work assigned by the employer or engaging in a course of conduct subject to the employer's control. An employee's act is not within the scope of employment when it occurs within an independent course of conduct not intended by the employee to serve any purpose of the employer. 1) Frolic and detour in the law of torts occur when an employee (or agent) makes a physical departure from the service of his employer (or principal). A detour occurs when an employee or agent makes a minor departure from his employer's charge, whereas a frolic constitutes a major departure wherein the employee is acting on his own and for his own benefit, rather than a minor sidetrack in the course of obeying an order from the employer.

P.ship Tax

Tax: For tax situation is a "flow through entity." 1--The partnership doesn't pay taxes itself, instead it flows through to the partners to pay taxes on their personal taxes. 2--Ex. AB makes 100,000 then A pays 50,000 of taxes and B pays 50,000 of taxes. 3--The partnership does fill out a tax form, just to let the IRS know how the money is being distributed.

LLC Tax

Tax: It's a Flow through. Liability: Limited.

Sole prop--tax

Tax: We call this for tax reasons a disregarded entity. The business does not pay taxes, instead the owner pays an income tax. This is also called a disregarded entity, because it is not a separate entity for tax purposes the business is the same as the person.

Agency

The fiduciary relation that arises when one person (a "principal") manifests assent to another person (an "agent") that the agent shall act on the principal's behalf and subject to the principal's control, and the agent manifests assent or otherwise consents so to act. § a. You have 2 main players: principal and agent. b. Principal has to manifest assent to the agent. c. The agent acts on the principal's behalf. d. The only reason the person is an agent is BECAUSE they are working for someone else.

Sole prop--establishing

They don't have to file anything. This doesn't require someone to set it up if a person makes a business by himself and does nothing else it is a sole proprietorship.

"S" Corporation--tax

To avoid the double layer of taxation you can be an S corporation. Tax: Flow Through Taxation (like a partnership) You have to qualify with the Internal Revenue Code and there are restrictions.

Undisclosed Principal

Undisclosed if, when an agent and third party interact, the third party has no notice that agent is acting for principal. a. Third party has no idea that there is a principal, thinks dealing directly with agent b. If agent has actual authority, all would end up being parties to the contract (P - TP, A - TP) c. No apparent authority because impossible when don't know that there is principal, d. can't reasonably believe that there is authority (no manifestations have been made)

Unidentified Principal

Unidentified if, when an agent and third party interact, the third party has notice that agent is acting for principal, but does not have notice of principal's identity a. Third party knows that agent is acting for someone, but not sure who. b. If agent has actual/apparent authority, then the principal is bound to the third party (and vice-versa) for contract. c. For third party and agent, the agent is a party to contract (unless agent and third party agree otherwise) - need to know who to look at for performance since don't know who principal is.

Wrongful Dissociation Buyout

When a wrongfully dissociating partner is bought out the Buyout price is offset for damages caused from dissociation, also if term of undertaking/expiration - buyout not complete until that is done (unless wrongful partner goes to court and shows not undue hardship to pay earlier) See Fla. Stat. § 620.8701(3). 2.b. A wrongfully dissociating partner receive the buyout at the end of the term unless hardship is shown. See Fla. Stat. § 620.8701(8).

Partnership Property

a. A partnership an entity separate from its owners and may hold title to property in its own name. b. A question may arise whether the property belongs to the partnership or an individual partner. c. Partnership property.—Property acquired by a partnership is property of the partnership and not of the partners individually. Partnership property includes: 1) property acquired "in the name of the partnership." Fla. Stat. § 620.8204(1)(a). 2) Property that a partner contributed to the partnership intending it to become partnership property. 3) property acquired with partnership assets (funds or assets) is reputably presumed to be partnership property, even if the property is not titled in the partnership's name. Fla. Stat. § 620.8204(3). Your return is the partnership interest if your property becomes the partnerships. Personal property brought to the partnership should be included in the partnership agreement if the desire by the partner is to retain personal possession of the property.

Who Decides What the Partnership Will Do?

a. In the absence of an agreement (default rule)—partners each have an equal right to manage the partnership if the Fla. Stat. § 620.8401(6). b. When partners vote on ordinary matter concerning partnership business a majority vote is required. Fla. Stat. § 620.8401(10). c. When partners vote on matters outside the ordinary course of business a unanimous vote is required. Fla. Stat. § 620.8401(10).

Default vs. Mandatory Rules

a. Many of the provisions of the Florida RUPA apply by "default." This is similar to Gap fillers in contracts. If agreement is silent on an issue, look to the RUPA. b. Partners may alter the "default" rules by the creation of a partnership agreement. c. As a general rule partners may alter the default rules that define the rights of partners vis-à-vis each other, but some rules may not be changed because they are mandatory. d. Generally speaking, partnership agreements may not attempt to affect the RIGHTS OF A TP, or eliminate the DUTY OF LOYALTY (but reasonable exceptions may be made), and can't unreasonably reduce the DUTY OF CARE. e. See Fla. Stat. 620.8103(2)(d)(e)(j).

Meinhard v. Salmon

a. Meinhard was investor, had contract for joint venture. Meinhard was never informed of Salmon's future plans once the lease ended, claimed that breached fiduciary duty by not telling him. b. Salmon had duty of the finest loyalty, by going to another lease and never telling him was breach of that duty. Partner has higher standards than just an investor in the relationship. 1) If Meinhard v. Salmon took place today, Salmon be found to have violated Fla. Stat.§ 620.8404 because Salmon took away a partnership opportunity.

MISREPRESENTATION

a. Misrepresent lack of agency (saying there isn't one), need more than silence b. Principal and agent must also have reason to believe that third party would not have dealt with principal if the third party had known.

1. Sole Proprietorship

a. One owner. b. The simplest form of a business organization. c. Liability is solely on the person (or sole proprietor).

Authority of Partners

a. Partners are agents of the partnership. Fla. Stat. § 620.8301(1). b. Partners have apparent authority to bind the partnership in the ordinary course of business. If admitted as partner, gives apparent authority for the agent/partner to act. Fla. Stat. § 620.8301(1). c. A partner does not have the authority to bind the partnership to a transaction outside the ordinary course of business unless there is actual authority. Fla. Stat. § 620.8301(2).Fla. Stat. § 620.8301 is a mandatory rule. Fla. Stat. § 620.8103(2)(j).

Partnership

an association of two or more persons to carry on as co-owners a business for profit formed under s. 620.8202, predecessor law, or the comparable law of another Jurisdiction.

Person

an individual, corporation, business trust, estate, trust, partnership, limited partnership, association, joint venture, limited liability company, government, governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. Fla. Stat. 620.8101(11).