Partnership

What are the 3 main differences between Common Law Entities and Statutory Entities?

1. Taxation 2. Liability 3. Transferability

How is a Partnership dispute settled if not addressed in the Partnership Agreement?

UPA provisions fill the gaps.

What are the 2 types of remaining obligations when a Partnership is dissolving?

1) Duty of loyalty to disclose material information to other partners 2) Duty not to lie

What 2 things can happen when a Partnership interest goes to a deceased Partner's heirs?

1) Remaining partners buy heirs out of their interest, or 2) Heirs keep their interest and are entitled to a share of profits and growth in capital

What are the 6 considerations for whether information is a trade secret from Coroon v. Hosch?

1) extent to which info is known outside the business 2) extent to which info is known by employees and others involved in the business 3) extent of measures taken to guard the secrecy of the info 4) value of the information to the business and its competitors 5) amount of effort or money expended to develop the info, and 6) ease or difficulty with which the info could be acquired or duplicated by others

What are the 2 Elements of Partnership?

1. Control 2. Sharing profit/loss

What 2 things are required to find a Partnership by Estoppel (Young v. Jones)?

1. Reasonable reliance 2. Change of position in reliance

What 4 things is a Partner traditionally entitled to?

1. Share of profits 2. Return of capital (if they paid in capital) 3. Proportional share of partnership assets 4. Participate in mgmt and control of partnership

In RNR v. Peoples First, what 2 things did we look at to determine whether the Partnership was liable for the Partner's unauthorized actions?

1. Was the Partner carrying on business in the usual way? 2. Did the 3rd Party have actual notice of the Partner's limits of authority?

In what type of entity is ownership freely transferable?

A Corporation

What is the difference between a Partnership and a Joint Venture?

A Joint Venture is formed for one purpose - to make money in one particular way - and usually restricted to a singular transaction. A Partnership may be formed to make money in a variety of ways (or one way) and involves conducting an ongoing business (not single transaction).

What business entity allows for "flow through taxation?"

A Partnership

What is a Limited Partnership?

A Partnership with two types of Partners - 1) General Partners that participate in mgmt and day to day operations 2) Limited Partners who don't participate in mgmt and have limited liability(limited to the capital they brought to the partnership)

Define "Dissolution" under the UPA.

A change in the relation of the partners caused by any partner ceasing to be associated in the carrying on of the business (i.e. a change in the ownership of the partnership - the partnership is NOT necessarily terminated)

What typically happens when the proper steps are not taken to establish a statutory entity?

A common law entity is formed (i.e. Partnership)

When do Partners have the power to dissolve?

Always - because it is an at will relationship

What is the "formal" definition of a Partnership?

An association of 2 or more persons, carrying on as co-owners, a business for profit.

Define "Dissociation" under the UPA?

Dissociation occurs at the point a Partner expresses the will to no longer participate as a partner.

Define "Winding up" under the UPA?

Figuring out who gets what if a Partner leaves

What is the definition of "material information?"

Information that is important to making decisions for the business.

Does calling someone a Partner make him/her a Partner?

It does not bind the court, but it creates a presumption that a Partnership exists (Fenwick v. Unemployment Comm).

Is ownership freely transferable in a Partnership?

No, typically can only sell your interest to someone the remaining partner approve.

Is the Power to Dissolve the same thing as the Right to Dissolve?

No. A Partnership Agreement may have a term. In that case, a Partner has the Power to leave (i.e. walk out the door), but not the Right to leave, so he/she would have to pay any damages (apply for a Decree of Dissolution).

Under common law, what is required for a Partnership to exist?

Only agreement between the parties (i.e. handshake) - need not be written.

What is a main difference in how a Partnership and a Corporation are managed?

Partnerships have decentralized management (all partners are in charge) and Corporations have centralized management (may have one person in charge)

What is necessary to prove Partnership by Estoppel in Young v. Jones?

Reliance

How does a court look at the "sharing of profits" when analyzing whether a Partnership exists?

Sharing of Profits is Prima Facie evidence of a Partnership, unless there's an agreement that the sharing is not really sharing but is another method of payment for services (i.e. rent, loan).

Which type of entity offers "some limit on liability" - Common Law or Statutory?

Statutory

Who prevails when there are two Partners that can't agree?

The Status Quo prevails - their last agreement

Can a Partner also be an Agent?

Yes, Partners are Agents of each other and the Partnership

What is "penalty dilution?"

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