Partnership

Limited Liability Partnership-Liabilities :

Any claim must be satisfied out of the partnership assets. The partners are not personally liable. Some states only cover torts not K's.

Limited Partnership- Creation of Limited Partnerships (part 2)

4. Formation a. A limited partnership is formed by filing with the Secretary of State a certificate of limited partnership, which must state: (1) Name of partnership with agent for service or process (2) Name and Address of general partners (3) Name of partnership with language indicating it as an LP or LLP b. The name of a limited partnership must contain the words "limited partnership" or the abbreviations "LP" or "L.P."

Rights- Property Rights of a Partner (example)

Bella has a patent which she contributes to the partnership. She has lost this patent and it is now partnership property; if she were to leave the partnership, she could not demand return of the patent.

Relationship Between Partners: Fiduciary Duties-

Concerning partnership matters, partners have a fiduciary relationship to one another and owe the partnership and the other partners a duty of loyalty and a duty of care

Limited Partnership- Distributions and Dissociation (distributions)

Distributions a. This is the way to make a return on capital. They are in proportion to the capital contributed. b. A partner has no right to receive a distribution upon disassociation (unlike the general partner-ship). c. A partner may not receive a distribution if, after the distribution: They would not have enough assets to pay creditors.

Fiduciary Duties-Duty of Loyalty

Duty Not to Compete (1) A partner must not compete with the partnership in the conduct of its business A partner must 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 A partner may not exploit a business opportunity of the partnership unless he has made full disclosure and received the approval of his partners. (2) The duty not to compete is not implicated if the partner is acting outside the partnership's business interests and outside the ordinary course of business.

Creation of General Partnerships: Formation (example)

EXAMPLE: Jon and Randy run into Mrs. Greene, who asks if the two boys will remove a broken weather vane from the top of her garage for $20 each. When Jon and Randy agree between themselves that they will do the work for Mrs. Greene, they have formed a partnership.

Fiduciary Duties- Duty of Care

Each partner owes a partnership a duty of care in the conduct and winding up of the partnership business Such a duty is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of the law.

Creation of General Partnerships: Partnership by Estoppel

Even if a voluntary partnership does not exist, liability may be imposed on a person who has let it appear that he is in a partnership if a creditor is thereby mislead.

Rights- Property Rights of a Partner

Property Rights of a Partner - property given to the partnership becomes property of the partnership and cannot get it back. (1) The property rights of a partner consist of: a.) His interests in the partnership and b.) his right to participate in management c.) A partner is not a co-owner of partnership property and has no interest in partnership property that can be transferred

Relationship Between the Parties- Partnership Agreements

Relations among the partners and between the partners and the partnership are governed by the part-nership agreement. To the extent of the partnership agreement does not otherwise provide, the RUPA governs relations among the partners and between the partners and the partnership

Contributions, Profits, and Losses: Rights- Rights to Indemnify

Right to Indemnity (1) The partnership must indemnify every partner with regard to payments made and liabilities incurred by that partner in the ordinary course of the partnership's business or for the preservation of its business or property.

Rights-Right to Interest

Right to Interest (1) A payment made by a partner, incurred in the ordinary courses of the partnership business or as an advance beyond the amount of capital he agreed to contribute, constitutes a loan that accrues from the date of the payment of advance

Liability: Extent of Liability

a. Each partner is individually liable for the entire amount of the partnership obligation. A partner is entitled to indemnification by the partnership for any payments made on its behalf. They are jointly and severally liable b. If a partner is forced to pay the entire debt or more than his pro rata share: and the partnership is unable to indemnify him, he is entitled to contribution from his co-partners and may seek it through an accounting action.

Buyout of Dissociating Partner's Share of Partnership

a. If a partner is dissociated from partnership without a dissolution and winding up of a partnership business, the partnership shall cause the dissociated partner's interest in the partnership to be purchased for a buyout price. Can figure out what the value of the partnership and give them that amount but the partnership can go on. (1) The buyout price for a dissociated partner's share of the partnership must be equal to the greater of either of the following amounts, plus interest from the date of dissociation to the date of payment: (a) the liquidation value of the partnerships assets; or (b) The value of the partnership assets based on a sale of the entire business as going concern without the dissociating partners participation as if the partnership were wound up as of such date.

Powers- Knowledge That Authority Is Lacking

a. Partnership agreements may: include specific restrictions on authority. If a partner acts in contravention of such a restriction, and the third party has knowledge of the restriction, the partnership will not be bound. b. Restrictions on authority are ineffective against: A third party without knowledge of the restrictions. Although a partner may be in breach toward his other partners, he would still have to honor any agreement made with a third party. A person has knowledge of a fact not only when he has actual knowledge thereof, but also when he has knowledge of such other facts in the circumstances showing bad faith.

Limited Liability Partnership: Formation

1. A filing to be a LLP which insulates the partners from limited liability. Fill out a registration statement with names and addresses and add something to its name so people know they are dealing with an LLP. 2. This puts third parties on notice that they are dealing with a limited liability partnership entity and not the specific people/partners.

Limited Liability Partnership-Dissolution: Distribution of Assets

1. A limited liability partnership ("LLP") is a general partnership that is authorized by a state statute and complies therewith to adopt limited liability for its general partners. When a general partnership registers as an LLP, all the partners gain protection from liability for obligations of the partnership and of other partners, although they remain liable for their own negligence and the negligence of those they super-vise.

Limited Partnership- Contributions

1. All partners must make a contribution in return for a proportional partnership interest. That is the de-fault Contribution is likely not a service because a limited partner is supposed to be passive

Dissolution, Winding Up, and Termination—Terminology

1. Dissolution: Is the commencement of the winding up process. At that point the partnership is dissolved but remains in effect for the purpose of winding up. 2. Winding up: Is the process of settling partnership affairs 3. Termination: Is the point at which all the partnership affairs are wound up.

Limited Partnership-General Partners

1. Have the right to co manage with fiduciary duty and have personal liability unless LLLP. Need at least one to keep the enterprise going. If you have more than right there is right to co manage. 2. If limited liability partnership finds itself without a general partner, it must find one or risk reverting to a general partnership. 3. The consent of all partners is required to: a. Amend the partnership agreement; b. Amend the certificate filed with the secretary of state c. Sell the business or all the assets which amounts to a sale of the business

Relationship Between Partners: New Members

1. No person can become a member of a partnership without the consent of all partners When a new member is admitted to the partnership by consent, the new partners liability for obligations and torts arising before his joining is only his contribution to the partnership; the new partner is not personally liable for any such charges that arose prior to him joining the partnership

Dissociation, Dissolution, and Winding Up- Dissociation

1. Older versions of RUPA did not contain the concept of dissociation and merely used the term dissolution to denote a change in the relationship caused by a partner's ceasing to be associated in carrying on of the business. 2. Dissociation is: Withdrawal of a partner from the partnership

Dissolution: Distribution of Assets

1. Order of Distribution a. In winding up the business, the assets of the partnership (including any contributions from the partners necessary to pay partnership obligations to creditors and to partners) must be applied in the following manner: (1) First the assets must be applied to discharge obligations owing to creditors, including, to the extent permitted by law, partners who are creditors; and; (2) Any surplus must be applied to pay in cash the net amount distributable to partners in accordance with their distribution rights.

Limited Partnership- Creation of Limited Partnerships

1. The business must be owned by two or more persons. There must be at least one general partner and one limited partner. 2. A limited partnership consists of: a. General partners: Those with the right to manage, profits and fiduciary duty. They have unlimited liability. Often this is a corporation or a general partner that gets paid a lot. b. Limited partners: No right to manage or fiduciary duties. No unlimited liability. More like shareholders than partners 3. Limited Liability Limited Partnerships a. The same as a limited partnership but the General Partner does not have unlimited liability.

Limited Liability Partnership-Distributions, Dissolution, and Other Rules

1. The same rules of RUPA still apply. Don't confuse this with a limited partnership. 2. Dissolution of an LLP occurs:

Creation of General Partnerships-introduction

1. These notes on general partnerships are based on the Revised Uniform Partnership Act (RUPA) and on general principles of partnership law followed by a majority of jurisdictions. RUPA has been enacted in some form by almost all the states. The most recent version was promulgated in 1997. 2. Partnerships have the following characteristics: a. Unlimited personal liability for partners for acts of partnership b. Partners have the right to co-manage the partnership (need to be hands on) c. Fiduciary duties exist between and among the partners and the partnership; and d. Partners share in profits by default e. The get flow through taxation

Relationship Between Parties and Third Parties-Liability: Nature of Liability

All partners are liable jointly and severally for all obligations of the partnership, whether arising under tort, K, or otherwise. They are always liable to what they bring to the partnership and can be more

Rights- Management and Control

All partners have equal rights in the management and conduct of the partnership business (this may be changed by agreement) Any differences arising as to matters connected to the ordinary course of partnership business may be decided by a majority of the partners, but no act in contravention of any agreement between the partners may be accomplished properly without the consent of all the partners.

Partnership Property- Property Originally Brought In

All property originally brought into the partnership stock on account of the partnership is partner-ship property. Any property - cash, contributions in kind, goods, labor, or skill- brought into the business as its formation is the capital of the partnership

Creation of General Partnerships: Capacity

Any person who has the capacity to enter into a K can enter into a partnership agreement. Partnerships, societies and other associations can enter partnerships with others persons or entities.

Creation of General Partnerships: Partnership vs. Joint Venture

Are similar to partnerships. As a general rule, a joint venture is described as an association contemplating a single transaction or a related series of transactions, as compared to a partnership, which is generally said to carrying on a business. (just calling themselves partners or joint ventureers is not enough) Will use partnership law to govern.

Sharing of Profits vs. Sharing of Revenue (can be on bar)- Examples

EXAMPLE: A makes cookies. It costs him $0.50 per cookie to make it, and he resells them for $1.00. He sells $10 cookies. $10.00 is his revenue, $5.00 is his profit. EXAMPLE: Bella and Edward agree to give Jacob 1/5 of the profits. This looks like a partnership. EXAMPLE: Bella and Edward agree to pay Jacob $15 an hour. This does not look like a partner-ship. EXAMPLE: Bella's dad gives Bella and Edward $10,000 to start the site, to be repaid out of ad revenue until paid in full. He looks more like a creditor, not a partner.

Dissociated Partner's Power to Bind Partnership

For two years after a partner without resulting in a dissolution and winding up of the partnership business, the partnership is bound by an act of the dissociated partner that would have bound the partnership before dissociation only if, at the time of the transaction, the other party (1) Reasonably believed that the dissociated partner was then a partner; and (2) Is deemed not to have knowledge or notice of the dissociation The dissociated party has the authority to bind the partnership in winding up matters but anything else will be exceeding their authority.

Limited Partnership- Transfer of Partnership Interests

General partner interests are not freely transferable. They can sell their financial interest (distributions and liquidation rights)

Dissolution: Winding Up

Generally, all partners who have not wrongfully dissociated may participate in winding up the partner-ship's affairs A partner winding up a partnership may: 1.) Preserve the partnership business or property as a going concern for a reasonable time; 2.) Prosecute and defend actions and proceedings; 3.) settle ad close the partnership's business; 4.) dispose of and transfer the partnership's property; 5.) discharge the partnership's liabilities; 6.) distribute the assets of the partnership; 7.) settle disputes by medication or arbitration; and 8.) perform other necessary acts. Duty of loyalty is still in effect.

Fiduciary Duties-Duty of Loyalty (example)

If a partner in a law firm receives a referral fee, the fee belongs to the partnership.

Rights- Right to Compensation

In general, a partner is not entitled to compensation for services performed for the partner-ship, except reasonable compensation for services rendered in winding up the partnership business

Rights- Management and Control: Example

In the Bella-Edward-Jacob example, they may agree that only Edward has the power to make management decisions.

Powers-Other Methods of Informing Third Parties

Letters to venders setting out the limits. But overall should be diligent and aware of how the partner is exerting their authority.

Limited Partnership-Limited Partners

Liabilities and Limitations a. Control of Business (1) The limited partner has not right to co manage but if for some reason they do they will not be made into a general partner

Partnership by Estoppel (example)

Neither Bella, Edward, nor Jacob consider Jacob to be a partner, but all of them allow others, third par-ties, to believe that Jacob is a partner. Jacob will be held a partner by estoppel.

Relationship Between the Parties- Contributions, Profits, and Losses: Partners' Contributions and Shares

Partners' Contributions and Shares a. Partners make contributions to the partnership in cash or otherwise for an interest in the partner-ship b. In regards to profits and losses: Partners may agree to share the profits other than equally, and would then share the losses in the same ratio, unless specifically agreed otherwise EXAMPLE: Bella, Edward, and Jacob are involved in a partnership and have no agreement as to profits and losses. Bella, Edward, and Jacob will each take 1/3 of the profits and 1/3 of the losses. EXAMPLE: Bella, Edward, and Jacob have a partnership agreement that states that Bella and Edward will each take 25% of the profits and Jacob will take 50% of the profits. The agreement is silent as to losses. Therefore, Bella and Edward will each take 25% of the losses, and Jacob will take 50% of the losses. c. Contributions: Can be cash, property (of any kind), or services

Creation of General Partnerships: Tests of Partnership: Control

Partners, as co-owners of the business, must have the power of ultimate control. If a person shares in the profits, but lacks any power to control, he is probably an agent, and is receiving his profit share merely as an incentive or a bonus, unless the agreement shows a contrary in-tent.

Creation of General Partnerships: Agency Created by Holding Out

When a person has been represented to be a partner in an existing partnership, or with others who are not actual partners, he is an agent of those consenting to the representation, and he can bind them as if he were in fact, a partner. If all members of an existing partnership consent to such a representation, any liability is a partnership obligation; otherwise, the person acting and the partners consenting to the representation are jointly and severally liable.

Creation of General Partnerships: Tests of Partnership

When evaluating whether a partnership was formed, courts will: (1) The key test of whether a partnership has been formed is the intent of the parties to enter a partnership relationship, no matter what it is called. An express agreement is the best indicator of that intent. 1.) Courts will first look to see if there is a partnership agreement; 2.) Was there an agreement to co-own a business for profit? (2) If the partnership agreement was merely implied, other factors must be considered. The court may consider such evidence as the sharing of profits, the management practices of the entity, the amount and type of services rendered by the parties, and the record title to any real or personal property used by the entity.. (a) Under the RUPA: A person's receipt of a share of the profits of a business is prima facie evidence that he is a partner in the business.

Duty of Loyalty-Duty to Disclose

1) By statute, partners must render on demand true and full information concerning all things affecting the partnership to any partner, legal representative of any deceased partner, or partner under legal disability.

Dissolution: Permissive Dissolution

(1) A partnership can be dissolved at any time by unanimous consent, regardless of any duration specified in the partnership agreement (2) A partnership can also be dissolved: (a) on application by a partner, by a judicial determination stating that 1.) economic purpose of the partnership is likely to be unreasonably frustrated 2.) Another partner has engaged in conduct relating to the partnership business that makes it not reasonably practicable to carry on business in partnership with that partner; or 3.) It is not otherwise reasonably practicable to carry on the partnership business in conformity with the partnership agreement; or (b) On application by a transferee of a partner's transferable interest, y a judicial determination stating that it is equitable to wind up the partnership business

Limited Partnership- Distributions and Dissociation Dissociation: Dissociation of Limited Partner

(1) A person does not have a right to dissociate as a limited partner before the termination of the limited partnership. (2) A person is dissociated from a limited partnership as a limited partner upon the occurrence of any of the following: (a) Declaring a will to disassociate (b) By death (c) By law (d) By bankruptcy (e) Judical disolution (f) Expulsion (3) Effect of Dissociation (a) There is no dissolution if it is a limited partner dissociating unless it is the last limited partner because there always must be a general and a limited partner (b) The limited partner will have no further rights with respect to the partnership, but will have no liabilities because they were not liable at the outset.

Limited Partnership- Distributions and Dissociation Dissociation: Dissociation of General Partner

(1) Effect of Dissociation (a) If the last general partner it will dissolve unless you find another general partner (2) Wrongful Dissociation (a) A dissociation is wrongful if: 1) the general partner existing before the end of the term or completion of the under taking or if they were expelled. 2) it occurs before the termination of the limited partnership, and:

Rights- Right to Accounting

(1) The accounting action is equitable in nature, and determines each partner's investment, the partnership's profits or losses and share of profits to which each partner is entitled

Buyout of Dissociating Partner's Share of Partnership (partner who wrongfully dissociates)

(2) A partner who wrongfully dissociates: before the expiration of a definite term or the completion of a particular undertaking is not entitled to payment of any portion of the buyout price until the expiration of the original term or the completion of the undertaking originally agreed upon, unless the dissociating partner establishes to the satisfaction of the court that an earlier payment will not cause undue hardship to the business of the partnership.

Events of Dissociation (continued)

(4) The partners expulsion by a unanimous vote of the other partners, if, among other things a.) It is unlawful to carry on the partnership with the partner; b.) A partner transfers his transferable interest (5) A judicial determination, after application to the court by the partnership or another partner because: a.) the partner engaged in wrongful conduct that adversely and materially affected the partnership business; b.) The partner willfully or persistently committed a material breach of the partnership agreement or of a duty owed to the partnership or other partners; or c.) the partner engaged in conduct relating to partnership business that makes it impracticable to reasonable carry on the business in partnership with the partner (6) The partner's bankruptcy

Rights- Property Rights of a Partner (transfer):

(a) A partner's only transferable interests is his share of profits and losses of the partner-ship and his right to receive distributions. Such interest is deemed personal property A partners economic or financial interest in the partnership is transferable (unlike his interest in specific partnership property) The right to receive contributions can be transferable (b) Such a transfer does not entitle the transferee, in the absence of a contrary agreement, to: 1) Participate in the management or conduct of the partnership business (voting); or 2) Require access to any information concerning the partnership, or to inspect the partnership books or records. Encumbrances (a) A judgment creditor can subject the partners transferable interests to a charging order

Creation of General Partnerships: Tests of Partnership- Sharing of Profits vs. Sharing of Revenue (can be on bar)

-- Splitting profits involves an upside and a downside so it is more likely to be a partnership. e.g., Send 10 cookies for $1 and they cost 50c to make. Profit = $5, revenue = $10 -- Sharing revenue only has upside so is not a partnership

Limited Partnership-Winding Up

1. Upon dissolution: The limited liability winds up, sells assets bring in accounts receivable and look to pay all creditors. Here the only partners with this ability is the general partner. 2. If there is no rightfully dissociating general partner: then a limited partner can do the winding up. 3. Priority of Liabilities Upon Dissolution a. In winding up a limited partnership's activities, the assets of the limited partnership, including contributions required upon winding up, must be applied in the following order: (1) Pay off outside creditors and partner creditors (2) To the partners in proportion to partnership interests b. If the limited partnership's assets are insufficient to satisfy all of its obligations upon winding up: The general partner makes up the short fall.

Dissolution: Distribution of Assets (contribution)

2. Contribution a. Liabilities are satisfied first out of partnership property; if this is insufficient, the partners must contribute the amount necessary to satisfy the liabilities. If a partner fails to contribute the full amount required: All of the other partners must contribute the additional amount necessary to satisfy the partnership obligations for which they are personally liable b. Any partner who pays more than his share: can recover his contribution from the other partners to the extent that the amount exceeds his share.

Dissolution: Causes of Dissolution (mandatory dissolution)- Part 2

2.) The expiration of the term or completion of the undertaking 3.) Can be dissolved by unanimous consent (c) an event agreed to in the partnership agreement resulting in the winding up of the partnership; (d) an event that makes it unlawful for all, or substantially all, of the business of the partnership to be continue: 1) Exception: When there is a cure of illegality within 90-days after notice of the event to the partnership, which is effective retroactively to the date of the event for purpose of this section.

Creation of General Partnerships- in General: General Partnership

A general partnership is: an association of two or more persons to carry on as co-owners of a business for profit. a. Person is defined to include: an individual; a corporation; a business trust; an estate; a trust; a partnership; an association; a joint venture; a government; a governmental subdivision; an agency; an instrumentality; or any other legal or commercial entity. Businesses include ever trade, occupation, and profession

Relationship Between Partners:Suits Between Partners

A partner may maintain an equitable or legal action against another partner or the partnership to en-force the partner's rights under the partnership agreement, under the RUPA, and any other rights otherwise protectable, whether or not arising under the partnership relationship.

Dissolution: Causes of Dissolution (mandatory dissolution)

A partnership is dissolved and its business must be wound up upon the occurrence of any of the following events: (very limited) (a) in a partnership at will, the partnership receives notice from a partner of that partner's express will to withdraw as a partner: It is a rightful dissociation. It can be stopped by vote. (b) in a partnership for a definite term or particular undertaking: 1) Within 90 days after a partner's dissociation by death, bankruptcy or insolvency, in-capacity, distribution of all of a trust or estate that is a partner of such trust or estate that is a partner of such trust or estate entire transferable interest in the partnership or termination of a partner that is not an individual partnership corporation, trust, or estate it is the express will of at least half of the remaining partners to wind up the partnership business; or

Liability: Partnership Liability for Acts of Partners

A partnership is liable for loss or injury caused to a person, or for a penalty incurred, as a result of a wrongful act, omission, or other actionable conduct of a partner acting in the ordinary course of business of the partnership or with authority of the partnership.

Powers-Statement of Partnership Authority (with the sec of state)

A partnership may file a statement of partnership authority, which must include: name of partner-ship, the address of the CEO and office in state; names and addresses of all partners; the names of partners authorized to execute an instrument transferring real property held in the name of the partnership)- May state the authority, or limitations of the authority, of some or all of the partners (a) A grant of authority contained in a filed statement of partnership authority is conclusive in favor of a person who gives value without knowledge to the contrary, so long as and to the extent that a limitation is not included in the statement. This is not enough to give everyone constructive notice. (1) Exception: Transfers of real estate, It does provide constructive notice for these transactions.

Fiduciary Duties- Duty to Keep Books and Right of Inspection

The partnership books and records must be kept, subject to any agreement between the partners, at the chief executive office, and every partner shall, at all times, have access to any may inspect and copy any of the books and records. As a fiduciary a partner who keeps books is bound to keep them complete and accurate.

Limited Partnership-Mistaken Filing

The whole enterprise will revert to a general partnership under the RUPA. The Limited partnership will fail.

Limited Partnership-In General

There are several versions of the Uniform Limited Partnership Act. The following section is based on the rules under the Uniform Limited Partnership Act 2001 (ULPA). Some references will be made to the 1916 version (1916 Act), 1976 version (1976 Act), and 1976 version with amendments in 1985 (1985 Act). Most states still follow the 1976 Act or 1985 Act. Approximately 13 states have adopted the 2001 version so far.

Dissolution: Effect of Dissolution on Authority of Partner

They only have the actual authority to do those things necessary for the winding up.

Partnership Agreements- Absence of Agreement

They take the RUPA or the statue

Duty of Loyalty- Duty to Account

Under RUPA, every partner must account to the partnership for any benefit, and holds as trustee for the partnership of any profit, derived by him without the consent of the other partners from any transaction connected with the conduct and winding up of the partnership business or from any use by him of his property.

Partnership Agreements- RUPA

Under the RUPA, the partnership agreement may not: Vary the rights and duties of filing the statement of partnership; unreasonably restrict access to books and records; Eliminate or reduce a partner's fiduciary duties; eliminate or reduce the obligation of good faith and fair dealing

Partnership Property- Conveyance of Real Property

Under the RUPA: The title does not have to be taken in the partnership name. (1) Again, if property is acquired with partnership funds, it is presumed to be partnership property even if held in one partner's name. If title to the real property is in the partnership name, any partner may convey title by a conveyance title by a conveyance executed in the partnership name.

Partnership Property- Property Subsequently Acquired

Unless a contrary intention appears, all property subsequently acquired by purchase or otherwise on account of the partnership is property of the partnership and not that of the partners individually.

Effect of Dissociation on Rights and Duties of Dissociating Partner

Upon a partner's dissociation, that partner's: (1) right to participate in the management and conduct of the partnership business terminates (2) Duty of loyalty for future events terminates; and (3) duty of loyalty and duty of care continue only with regard to matters that arose before the partners dissociation

Liability: Retiring Partner

Usually a retiring partner remains liable on all obligations incurred before his retirement. However, partners can agree to cut off liability between the parties but does not work with third parties.

Power to Dissociate

a. A partner as the power to dissociate at any time, rightfully or wrongfully, by expressly stating the intention to do so. That does not mean they have the right. b. A partner who wrongfully dissociates is liable to the partnership and the other partners for dam-ages caused by the dissociation. This liability is in addition to any other obligation the partner has to the partnership or to the other partners.

Relationship Between Parties and Third Parties- Powers: Authority

a. A partner has actual authority to carry on the partnership in the ordinary course of business. A partner may have express authority to act by the terms of the partnership agreement, or by con-sent of the other partners. A partner may have apparent authority based on the nature and course of business of the partnership, or on the custom in similar partnerships in the same area. An act of a partner that is not apparently for carrying on in the ordinary course of business of the partnership does not bind the partnership unless authorized by other partners. b. If there is no partnership agreement: All partners will have the right to carry on the partnership in the ordinary course of business,

Events of Dissociation

a. A partner is dissociated from a partnership upon the occurrence of any of the following: (1) The partnership having notice of the partner's express intention to withdraw as a partner; (2) An event delineated in the partnership agreement as causing the partners dissociation (3) The partners expulsion pursuant to the partnership agreement

Continuing Obligations of Dissociating Partner

a. A partner's dissociation does not by itself discharge the partner's liability for partnership obligations incurred before dissociation. A dissociated partner is not liable, however, for a partnership obligation incurred after dissociation. b. For a third party which regularly does business with the partnership: Can hold the exited partner liable if they are not notified. Gives motivation to send a letter letting people know they are no longer with the partnership. c. A dissociating partner or the partnership may file: A statement of dissociation with the Department of State stating : 1.) The name of the partnership; and (2) that the partner is dissociated from the partnership

Dissolution: Continuance After Dissolution

a. A partnership continues only for the purpose of winding up the business. b. Following dissolution and before winding up, all the partners, including any dissociating partner (except those that have wrongfully dissociated), may: Waive the right to have the partnership's business wound up and the partnership terminated All partners who did not wrongfully disassociate have the right to participate in the winding up

Creation of General Partnerships: Formation

a. A partnership is based on an agreement between the partners; there are no particular formalities or statutory requirements for formation A partnership contract may be oral and may be inferred from the conduct of the parties. No written agreement is required. No filing required. A partnership may be formed : (by mistake or unintentionally) 1.) For a specific undertaking 2.) for a term; or 3.) at will