Business Law Chapter 37

joint and several liability

In partnership law, a doctrine under which a plaintiff can file a lawsuit against all of the partners together or one or more of the partners separately

personal liability

LLp allows partners to avoid __________ in the event of malpractice by another partner

uniform partnership act

UPA

pass through entity

a business entity that has no tax liability; the entity's income is passed through to the owners, and they pay taxes on the income.

limited liability partnership

a hybrid form of business organization that is used mainly by professionals who normally do business in a partnership; a pass through entity for tax purposes, but a partner's personal liability for the malpractice of other partners is limited; NO GENERAL PARTNERS

family limited liability partnership

a limited liability partnership in which the majority of the partners are members of a family

limited partnership

a partnership consisting of one or more general partners and one or more limited partners

partnership by estoppel

a partnership imposed by a court when nonpartners have held themselves out to be partners, or have allowed themselves to be held out as partners, and others have detrimentally relied on their misrepresentations

loan payments, wages, rent, sale of goodwill

a partnership is not inferred if profits are received as payment in the following situations...

information return

a tax return submitted by a partnership that reports the business's income and losses; the partnership itself does not pay taxes on the income, but each partner's share of the profit (whether distributed or not) is taxed as individual income to that partner

limited liability limited partnership

a type of limited partnership in which the liability of the general partner is the same as the liability of the limited partners—that is, the liability of all partners is limited to the amount of their investments in the firm

articles of partnership

a written agreement that sets forth each partner's rights and obligations with respect to the partnership

each partners share of income

according to the aggregate theory of partnership, while a partnership does not pay federal income tax, it still files a return to report...

easy to maintain, informal, profits and losses shared equally

advantages of a partnership (under UPA)

partnership

an agreement by two or more persons to carry on, as co-owners, a business for profit

yes

can a partner assign his interest?

yes

can corporations be partners in a partnership?

personal liability for torts, dissolved upon death, difficult to raise financing

disadvantages of a partnership

no

do partnerships pay federal income tax?

big 4

example of llp in real life

general partner

in a limited partnership, a partner who assumes responsibility for the management of the partnership and has full liability for all partnership debts

limited partner

in a limited partnership, a partner who contributes capital to the partnership but has no right to participate in its management and has no liability for partnership debts beyond the amount of her or his investment

investment/capital contributions

in an lp, the limited partners liability is limited to....

joint liability

in partnership law, a doctrine under which a plaintiff must sue all of the partners as a group, but each partner can be held liable for the full amount

charging order

in partnership law, an order granted by a court to a judgement creditor that entitles the creditor to attach profits or assets of a partner on dissolution of the partnership

one equal vote

in the absence of a partnership agreement, the UPA says each partner gets __________ in management

buy sell agreement

in the context of partnerships, an express agreement made at the time of partnership formation for one or more of the partners to buy out the other or others should the situation warrant

torts

joint and severable liability for...

contracts

joint liability for...

management

limited partner loses his limited liability if he engages in....

management

limited partners do not engage in...

formal creation

limited partnership requires...

third party creditors, partner loans, capital contributions, distribution

order of obligations to be paid

agents and fiduciaries

partners are both ______ and _______ of one another

compensation

partners do not have right to....

sell assets or donate

partners need unanimous consent to....

oral or written

partnership agreements can be...

two years

partnership is bound to liabilities that arose by acts of outgoing partner for...

common law and statutory law

partnerships are governed by both...

subordinate

supervising partner is liable for acts of __________

buyout price

the amount payable to a partner on his or her dissociation from a partnership, based on the amount distributable to that partner if the firm were wound up on that date, and offset by any damages for wrongful dissociation

certificate of limited partnership

the document that must be filed with a designated state official to form a limited partnership

dissolution

the formal disbanding of a partnership, corporation, or other business entity; for instance, can be by acts of the partners, by operation of law, or by judicial decree

winding up

the second of two stages in the termination of a partnership or corporation, in which the firm's assets are collected, liquidated, and distributed, and liabilities are discharged

dissociation

the severance of the relationship between a partner and a partnership or between a member and a limited liability company

assignment or charging order

these do not dissolve the partnership

UPA

this governs a partnership in the absence of a partnership agreement

true

true or false: partnerships are recognized as separate legal entities

for a term, at will

two durations of partnerships

equal profits and losses

under UPA this is how partnership interest is shared

majority

under UPA this vote wins (except in the case of actions that impact the existence of the partnership)

deadlock

when equal business partners disagree on a major decision and can't move forward until the decision is resolved

1065

where is partnership income reported?