Ch. 32 BLAW

Sufficient, No, Estoppel

1) Sharing profits are necessary but not ___. 2) Laura and Mary are going to raise money to help dislexic kids and raise 250k and have 50k left over. Are they partners? (This is a charity) 3) Partnership by ___: You tell people you are partners, even though you're not. If Laura the lawyer works for Haymans, the secretary answers the phone as Rutledge and Haymans, they are representing they are in a business together. If Haymans screws up, people will sue YOU (Rutledge) too.

Limited, general, legislature

A ___ partnership of two or more people to make a partner, consisting of a 1) Limited 2) ___ partner This type of partnership must be formally created by state ____

Yes

Are partners always liable for independent debts in the partnership?

Yes

Are partners free to contract with each other? (Agreeing to give 5% to one person, and 20% to another)

No, easy

Are partnerships taxed? Are they hard or easy to form?

Actual, Implied, yes, Apparent

Authority Rules are similar to partnerships: 1) ___ Authority: A partner is liable to any act a partner has authorized 2) ___ Authority: If Daniel agrees to pay to BUY the house and Laura agrees to build it and Laura has to drive to get wood and uses gas. Would Daniel pay for these things? 3) ___ Authority: Without Daniel's knowledge, Tamika promises to pay for Jane's record collection. Buying used records is the same kind of business as buying used books.

True

Both limited partnerships and general partnerships have pass through taxation; true or false?

No, joint

Can a partner borrow money without the other partner knowing? This is an example of ___ liability.

Creditors

Charlie and Becky decided to end their partnership with Andy. During the winding up process, how are the assets of the partnership paid out? ___ first and then to the partners, unless the partnership agreement states otherwise

Yes

Dennis and Claudia were partners who operated a retail store.They agreed to end the partnership.In July, a customer slipped and fell in the store. When Dennis learned that Claudia had allowed the liability policy to lapse, he was very upset and claimed he should not be liable for the customer's injury. Is Dennis liable to the customer?

No, 2

Does a partnership require a formal agreement? How many members make up a partnership? At least __

Unlimited, assets, investors, invest, silent

Everyone in a general partnership has ___ liability; you are liable for what Kara does in the Grove Tent business; clients can sue you and your personal ___ However, in a limited partnership, you have controllers of the business and separate ___ in the business, who determines who gets what percent of profit The limiteds in the limited partnerships ___ money; they may not manage the business; they are "___ investors"

Bankruptcy

Filing ___ is the biggest thing you can do to stop all creditors from coming after you. If you do this as a partner, generally you will be thrown out of this partnership.

No, no, harmed

Harry and Betsy are in a dispute. Betsy says they are in a partnership; Harry says they are not. Harry sold some land prior to his relationship with Betsy. Is Betsy entitled to 1/2 the proceeds? What if Harry sells some land to Betsy's cousin. Can Betsy win a claim of partnership and get 1/2 by estoppel? ___ because Betsy's cousin was not ___ by the sale.

Leaves

How do you terminate the business under limited and general partnerships? If one of the partners ___ the business, then the partnership terminates

Yes

If Harry is a partner to Lila, and Lila did some data analysis for a local hockey team (by herself), must Lila share the profits with Harry? __, unless there is a written agreement to the contrary

Interest

If Laura and Mac get in a turkey hunting business, and Mac guarantees Laura she will make money, even if the business loses. Then, she realizes she was making him double that amount. Laura says, why don't we SPLIT up the profits and SHARE the expenses of equipment and travel and so on. Laura and Mac were agreeing to SPLIT profit. They made 700k, had 300k in expenses, so they had 400k profit. BUT of the 700k, Laura generated 600k of it. Laura just decides to start her own business instead of buying out his ___.

Idemnify

If you get sued after you leave the partnership, the partnership can ___ you, but why would anyone sue YOU, the one who isn't even acting in the business anymore?

Winding up, creditors, loans

In ___ __ a partnership: There is 250k in the Grove Tent business, then you decide to end the business. Who gets paid first to last? 1) Outside ___ (bank) 2) ___ from partners (inside creditors - another partnership 3) Partners - get whatever is left over

Manager, investor

In a limited partnership: 1) General partner is the ___ 2) Limited partner is the ___

True

In a partnership you are still liable for debts of other partners, even after you leave; true or false

Share, management, profit

In a partnership... 1) Partners must ___ profits and losses 2) Partners must have a right to participate in the ___ of the business 3) Partnership must be for a ___ motive, not charitable purpose

False

In order to have a partnership, all partners must split profits equally, true or false?

Yes, business, yes

Joe embezzles $10,000. Yolanda is his business partner. Is Yolanda liable to his client? ___ because it happened within the ordinary course of ___. What if Yolanda becomes a partner to the business after Joe embezzles it; is she liable for the $10,000? ___, but only if she invested $10,000 in the partnership

Limited, unlimited

Limited partners have ___ liability; the general partner has 1) management 2) control 3) ___ liability

Yes

Mackey was a partner in Mackey and Associates. He wanted to retire and sold off his share. Wendy later wins a judgment against Mackey and Associates and has her judgment satisfied after the sheriff seizes Mackey's boat and sells it at auction. Can Mackey recoup his loss by suing his old firm? ___ because Mackey sold his share in the partnership

Share

No matter what the business's arrangement, if they do not ___ profit, they are not partners.

Joint, several, yes

Partnerships have ___ and ___ liability. If your Grove Tent business loses money, do you share the losses equally?

Vote, share, liquidated

Ramiro is dissociated from the partnership he helped form ten years ago. If his partners want to continue the business, what must they do or take into consideration? 1) Have a unanimous ___ to continue the business 2) Buy out Ramiro for the value of his ___ 3) Value is calculated as though the business were ongoing or ___.

Default

The Uniform Partnership Act sets ___ Rules, meaning these are the rules, unless stated otherwise by partners: "In an absence of agreeing to the contrary, this statute controls."

Terminating

The process of ___ the partnership is called "Winding it up"

Common law

Traditionally partnership were regulated by ___ ___, but a lack of consistency among the states became troublesome as interstate commerce grew, but now it's regulated by the UPA (Uniform Partnership Law.)

True

True or false: A partner can leave at anytime for no reason at all

False

True or false? Partnerships are regulated by Common Law.

Yes, estoppel

Village Bank believed that Spencer and Nadia were partners in an e-business. Spencer and Nadia were not partners. Spencer owned the business as a sole proprietor. Nadia, however, was a close friend of Spencer. When Spencer visited Village Bank in an effort to obtain a $10,000 loan, Nadia went with him. During the conversation with the banker, Spencer referred to Nadia as "my partner." Village Bank made the business loan believing that Spencer and Nadia were partners. Spencer defaulted on the loan. Village Bank claims that both Spencer and Nadia are liable on the loan. Will Nadia be liable on the loan? ___, under agency by ____

No

Wanda and Xavier are partners. Xavier wants to leave the partnership, but Wanda does not agree. They currently have three clients and Xavier tells each that he and Wanda are no longer in business together. Can Wanda compel Xavier to remain in a partnership with her? ___, such compulsion would force an involuntary servitude upon Xavier.

Approved, before

Wanda and Xavier were partners. Without his knowledge, in May 2010, Wanda cancels their insurance covering the partnership van. Two months later, while returning from a job that started in March 2010, Xavier ran a stop sign and hit a pedestrian. What is relevant to determine who, Wanda or Xavier (or both), is liable for the damages caused by Xavier's car accident? Whether Xavier ___ of the policy cancellation ___ the accident.

Liable

What happens to this person's liability? Mitch goes to Afghanistan, so he leaves the partnership; he sure doesn't want to get sued over there because of what another partner did wrong back home; A partner is ___ for debts that occurred BEFORE he dissociated.

Two

What is the liability for the partnership AFTER the dissociation? A dissociated partner is liable for the debts of the other partners within ___ years AFTER you leave the partnership

Management, share

When determining if a person is a partner or not: 1) Was she involved in the ___ of the business? 2) Was there an agreement to ___ profits and losses? 3) Do they refer to themselves as partners?

No

Xavier is an architect for a partnership, Nu-Dezyns. Xavier lands a big contract and does all the work - making the drawings and plans. His share of the profit for the contract is $20,000. Under the UPA, is Xavier also due payment for his labor? ___, unless the partners agree otherwise

Yes

Xavier is an architect for a partnership, Nu-Dezyns. Xavier lands a big contract and does all the work - making the drawings and plans. If Xavier elects to pocket all the earnings from the contract, has he violated a fiduciary duty?

Yes

Xavier is no longer satisfied with his arrangement in Nu-Dezyns, a term partnership. He wants to end his association. Xavier has the power to dissociate, but it would be wrongful dissociation. Would he be liable to his partners for damages?

Tort

___ Liability: If Laura is out doing business for the partnership and happens to have 4 beers at lunch and goes and practices law in a case, and a client sues her, Laura's partner is liable too.

Creditors

___ cannot keep collecting the partners' debts after the partners have paid the total amount owed. This is an example of Joint and Several liability.