MEE PARTNERSHIPS

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The issue is who is personally liable for a partnership obligation that arises after conversion to an LLP.

A limited liability partnership (LLP) is a partnership in which a partner's personal liability for obligations of the partnership is eliminated. A limited partner in an LLP is not personally liable for an obligation of an LLP, but can be personally liable for his own personal misconduct including negligence. As partners in an LLP, Adam, Ben, and Diane, are not personally liable for the claims of the driver's estate. However, one or more of the partners may be personally liable if it is found that they acted negligently or wrongfully in causing in the driver's death.

MLP is a general partnership with Andy, Ben, and Carol as general partners.

A limited partnership is a partnership formed by two or more persons that has at least one general partner and at least one limited partner. To form a limited partnership, a certificate of limited partnership must be filed with the state and must include the name and address of each general partner. In addition, all of the general partners must sign the certificate. The limited partnership comes into existence upon the filing of the certificate of limited partnership. If a certificate is not filed, the limited partnership is not formed. A general partnership is an association of two or more persons to carry on a for-profit business as co-owners. In order to form a general partnership, at least two persons must intend to carry on a business for profit as co-owners but it is not necessary that they have the specific intent to form a general partnership. Individuals can inadvertently form a general partnership notwithstanding their expressed intention to do something else.

Effects of Wrongful Dissociation on Dissociating Partner

A partner can withdraw or dissociate from a partnership at any time, even if the dissociation is wrongful, such as when it violates an express provision of the partnership agreement. A partner who wrongfully dissociates is liable to the partnership and the other partners for damages caused by the dissociation. In addition, a dissociated partner generally does not have the right to participate in the management or conduct of the partnership business and cannot participate in winding up the business.

As a transferee of Gina's right to receive net profits in Petals, Ivan is legally entitled to Gina's share of those profits.

A partner has a transferable partnership interest, i.e., a partner may transfer the right to share in the profits and losses of the partnership and to receive distributions. The transfer of that partnership interest creates in the transferee a right to receive distributions to which the transferor would otherwise be entitled.

Marketing can recover from Andy, Ben, and Carol in their individual capacities, as each general partner is personally liable for MLP's debts and obligations.

A partner is jointly and severally liable for all partnership obligations. A judgment against a partnership is not a judgment against its partners. To collect from a partner personally, a party must first obtain a judgment against the partner individually and against the partnership. These judgments can be sought in the same action. Unless there is a judgment against the partner, a judgment against a partnership cannot be satisfied from a partner's assets, only the partnership's assets. If a claimant first obtains a judgment against the partner individually and the partnership, the claimant generally must exhaust the partnership's assets before levying on the partner's personal assets.

The issue is whether the man and the woman can be held personally liable for obligations that pre-existed their conversion to an LLP.

A partner is jointly and severally liable for all partnership obligations. Though a limited partner in an LLP is not personally liable for an obligation of an LLP, limited liability partnership status is generally only effective on the date that the statement of qualification is filed with the state and not before.

The issue is whether Adam was personally liable on the collector's claim before filing the statement of qualification when the claim arose from Ben's misrepresentation.

A partnership is an association of two or more persons to carry on a for-profit business as co-owners. A partner is jointly and severally liable for all partnership obligations. Because a partner is an agent of the partnership, the partnership is liable for a partner's tortious acts, including fraud, committed in the ordinary course of the partnership's business or with the partnership's authority, whether actual or apparent. Unless there is also a judgment against the partner, a judgment against a partnership cannot be satisfied from a partner's assets, only from the partnership's assets. Even though a partner is personally liable for a partnership obligation, a partnership creditor generally must exhaust the partnership's assets before levying on the partners' personal assets.

The issue is who remains personally liable for an obligation that was incurred before conversion to an LLP.

A partnership may be converted into a limited liability partnership. Unless the partnership agreement specifies otherwise, the conversion must be approved by all of the partners of the general partnership. Once the conversion is approved, the partnership must file the articles of qualification with the state. A general partner who becomes a limited partner as a consequence of a conversion remains liable for any obligation incurred by the partnership before the conversion.

Because Ivan is not a partner, he is not entitled to inspect the books and records of Petals. (

A partnership must provide its partners and their agents with access to all its records but a transferee is not entitled to participate in the management or conduct of the partnership business or access partnership records. A transfer of a partner's partnership interest does not make the transferee a partner unless the other partner or partners consent to making the transferee a partner.

The issue is whether or not the investor who became a partner in an existing LLP can be held personally liable for the judgment incurred by the former partnership.

A person admitted as a partner into an existing partnership is not personally liable for any prior partnership obligations. However, any capital contribution made by an incoming partner to the partnership is at risk for the satisfaction of such partnership obligations.

The issue is whether Diane was personally liable on the collector's claim before filing the statement of qualification when she was admitted as a partner after the claim arose.

A person admitted as a partner into an existing partnership is not personally liable for any prior partnership obligations. However, any capital contribution made by an incoming partner to the partnership is at risk for the satisfaction of such partnership obligations. Here, Diane joined the partnership after the collector's claim arose. Although she will likely lose her $250,000 capital contribution, she will not be personally liable for the collector's claim.

Effects of Wrongful Dissociation on Partnership

Dissociation may, but does not necessarily, result in dissolution of the partnership and the winding up of its business. Wrongful dissociation creates a possibility of dissolution, if, within 90 days of dissociation, a majority of the remaining partners express a will to wind up the business. If dissolution results, the dissociated partner is not entitled to any payout until the end of the original term unless the partner can prove to the court that earlier payment would not cause undue hardship to the business.

Effects of Rightful Dissociation on Partner

Dissociation that complies with the provisions of the partnership agreement may also trigger dissolution, such as when it is an at-will partnership agreement with no definite term or when the partnership agreement so provides. If the dissociating partner's withdrawal is not wrongful, the partner is not liable for damages and would retain the right to participate in the dissolution and winding up the partnership.

ack's estate can recover from Andy, Ben, and Carol personally for the wrongful death claim because the partners are jointly and severally liable for MLP's obligations as general partners of MLP.

Here, Andy, Ben, and Carol are jointly and severally liable for MLP's obligations as general partners of MLP. To recover from the individual partners, Zack's estate must first obtain a judgment against Andy, Ben, and Carol individually and against MLP. Zack's estate must first exhaust MLP's assets to satisfy its judgment. If MLP's assets are insufficient, Zack's estate can recover from the partners individually. The fact that Andy, Ben, and Carol filed the certificate of limited partnership before Zack's death occurred does not change their liability. The filing of the certificate of limited partnership failed to create a limited partnership as there was no general partner and no signature of a general partner on the certificate. Therefore, Andy, Ben, and Carol are general partners of a general partnership and are jointly and severally liable to Zack's estate for his wrongful death.

Effects of Rightful Dissociation on Partnership

Once a partnership has been dissolved, but before the winding up of its business is complete, the partnership may choose to resume carrying on its business as if dissociation had never occurred. To do so, all partners (including any rightfully dissociated partners) must agree to waive the right to terminate the partnership within 90 days of dissociation. A person winding up the partnership business may preserve the business or property as a going concern for a reasonable time to maximize its value.

Fran is not entitled to use the delivery truck on Sundays to take her children to their soccer games because the delivery truck is partnership property.

Property is partnership property if it is acquired in the name of the partnership. It is property of the partnership and not of the partners individually. A partner may use or possess partnership property only on behalf of the partnership.

The issue is whether the conversion from a partnership to an LLP relieves the LLP of obligations incurred by the partnership.

The filing of a statement of qualification, which transforms a partnership into an LLP, does not create a new partnership. A limited liability partnership ("LLP") is a partnership in which a partner's personal liability for obligations of the partnership is eliminated. In other respects, an LLP is governed by the same rules as a partnership.

Dissociated Partner's Liability during Winding-Up Process

The partnership is not terminated until the partnership business is wound up. After dissolution, the partnership is bound by a partner's act that is appropriate for winding up the partnership. Each partner is liable to the other partners for his share of partnership liability incurred by such post-dissolution acts. Further, although a dissociated partner loses any right to participate in the business, his apparent authority to bind the partnership lingers after dissociation for up to two years. Thus, regardless of the characterization of his dissociation, Adam will be liable for partnership debts incurred during the winding-up.

Fran and Gina are general partners in the Petals partnership, but Hank is only a creditor of Petals.

When two or more persons carry on as co-owners of a business for profit, it is presumed that they are partners, whether or not the persons intend to form a partnership. However, a partnership does not exist between persons when one person receives profits in payment of a debt.


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