Chapter 2: Partnerships and Special Business Forms (textbook ch. 36/37)

Unanimous Consent (management)

______ is likely to be required for a decision to undertake any of the following actions: 1. to alter the essential nature of the firm;s business as expressed in the partnership agreement or to alter the capital structure of the partnership 2. to admit new partners or to engage in a completely new business 3. to assign partnership property to a trust for the benefit of creditors 4. to dispose of the partnership's goodwill 5. to confess judgment against the partnership or submit partnership claims to arbitration 6. to undertake any act that would make further conduit of partnership business impossible 7. to amend the terms of the partnership agreement

Winding Up and Distribution of Assets

a partnership's assets are distributed according to the following priorities: 1. payment of debts, including those owed to partner and non partner creditors 2. return of capital contributions and distribution of profits to partners

Partnership Status

in resolving s=disputs over whether partnership status exists, courts usually look for the following three essential elements of partnership implicit in the UPA's definition: 1. a sharing of profits or losses 2. a joint ownership of the business 3. an equal right in the management of the business

limited liability partnership (LLP)

is a hybrid form of business designed mostly for professionals who normally do business as partners in a partnership

confession of judgement

is an acth by a debtor permitting judgment to be entered against him or her by a creditor, for an agreed sum, without the institution of legal proceedings

cooperative

is an association that is organized to provide an economic service to its members (or shareholders); it may or may not be incorporated

business trust

is created by a written trust agreement that sets fort the interest to eh beneficiaries and the obligations and powers of the trustees

winding up

is the actual process of collecting and distributing the partnership's assets, when ______ is complete the partnership's legal existence is terminated

changing order

judgment creditors can attach a a partner's interest by petitioning the court that entered the judgement to grand the creditors a ______; this order entitles the judgment creditors to the profits of the partner and to any assets available to the partner on dissolution

joint and several liability

means that a third party may sue all of the partners together (jointly) or one or more of the partners separately (severally) or at his or her option

articles of organization

must be filed with a central state agency-- usually the secretary of state's office; typically the articles are required to include such info ration as the name of the business, the business's principal address, the name and address of a registered agent, the names of the owners, and the information on how the LLC (limited liability corporations) will be managed

dissociation

occurs when a partner ceases to be associated in the carrying on of the partnership business; normally entitles the partner to have his or her interest purchased by the partnership, and terminate his or her authority to act for the partnership and to participate with the partners in running the business

joint liability

the liability is shared between partners, but each partner is liable for the full amount; under the prior version of the UPA, which is still in effect in some states, partners were subject to ______ on partnerships debts and contracts but not on partnership debts arising from torts

Capital Contributions

1. amount of capital that each partner is contributing 2. the agreed-on value of any real or personal property that is contributed instead of cash 3. how losses and gains on contributed capital will be allocated, and whether contributions will earn interest

partnership

an association of two or more persons to carry on as co-owners a business for profit; the intent to associate is a key element of a ______, and one cannot join a partnership unless all other partners consent

general partner

assumes management responsibility for the partnership and thus has full responsibility for the partnership and for all its debts

limited partner

contributes ash or other property and owns an interest in the firm but does not undertake any management responsibilities and is not personally liable for partnership debts beyond the amount of his or her investment

special business forms

hybrid organizations-- that is, they have characteristics similar to those partnerships or corporations, or combine features of both; these forms include joint ventures, syndicates, joint stock companies, business trusts, and cooperatives

Terms Commonly Included in a Partnership Agreement

- basic structure - capital contributions - sharing of profits and loses - management and control - accounting and partnership records - dissolution - miscellaneous

Rights of Partners

- management - interest in the partnership - compensation - inspection of books - actions of accounting against the partnership and among the partners - property rights

Management and Control

1. how management responsibilities will be divided among the partners 2. name of the managing partner or partners, and whether other partners have voting rights

Accounting and Partnership Records

1. name of the bank in which the partnership will maintain its business and checking accounts 2. statement that and accounting of partnership records will be maintained and that any partner or her or his agent can review these records at any time 3. the dates of the partnership's fiscal year and when the annual audit of the books will take place

Basic Structure

1. name of the partnership 2. name of the partners 3. location of the business and the state law under which the partnership is organized 4. purpose of the partnership 5. duration of the partnership

Sharing of Profits and Losses

1. percentage of the profits and losses of the business that each partner will receive 2. when the distributions of profit will be made and how net profit will be calculated

Actions for Accounting Against the Partnership and Among the Partners

a partner also has the right to bring an acting against the partnership or another partner, with or without a formal accounting, in the following situations: 1. to enforce the partner's rights under the partnership agreement 2. to enforce the partner's rights under the UPA 3. to enforce the partner;s rights and interest arising independently of the partnership relationship

articles of partnership

a partnership agreement, called ______ can include virtually any terms that the parties wish, unless they are illegal or contrary to public policy or statute

limited partnership

a partnership consisting of one or more general partners (who manage the business and are liable to the full extent of their personal assets for debts of the partnership) and one or more limited partners (who contribute only assets and are liable only to the extent of their contribution)

certificate of limited partnership

additionally the partners must sign a ______, which requires information similar to that found in a corporate charter

Insufficient Evidence (partnership status)

if the evidence in a particular case is insufficient to establish all three factors, the UPA provides a set of guidelines to be used: 1. a debt by installment or interest on a loan 2. wages of an employee or for the services of an independent contractor 3. rent to a landlord 4. an annuity to a surviving spouse or representative of a decreased partner 5. a sale of the goodwill of a business or property

family limited liability partnership (FLLP)

is a limited liability partnership in which the majority of the parters or persons related to each other, essentially as spouses, parents, grandparents, siblings, cousins, nephews, or nieces

joint stock company

is a true hybrid of a partnership of a corporation; it has many characteristics of a corporation in that: 1. its ownership is represented by transferable shares of stock 2. it is usually managed by directs and officers of the company or association 3. it can have a perpetual existence

limited liability limited partnership (LLLP)

is a type of limited partnership which differs from a limited partnership in that a general partner in an ______ has the same liability as a limited partner; that is, the liability of all partners is limited to the amount of their investments in the firm

joint venture

is an undertaking by two or more persons or business entities engaged in a single defined project or series of related transactions

Dissolution

occurs when any partner (or partners) initiates proceedings in the partnership agreement occurs 1. events that will dissolve the partnership, such as retirement, death, or incapacity of any partner 2. how partnership property will be valued and apportioned on ______ 3. whether an arbitrator will determine the value of partnership property on ______ and whether that determination will be binding

partnership by estoppel

persons who are not partners may nevertheless hold themselves out as partners and make representations that third parties rely on in dealing with them; in such a situation a four may conclude that a ______ exists and impose liability-- but not partnership rights-- on the alleged partner or partners

buy-sell agreement

sometimes called simply a buyout agreement, provides for one or more partners to but out the other or others, should the situation warrant

syndicate

a group of individuals getting together to finance a particular project, such as the building of a shopping center or the purchase of a professional basketball franchise, is called a ______, or an investment group

Events Causing Dissociation

under UPA 601, a partner can be dissociated from a partnership in any of the following ways: 1. by voluntarily giving notice of "express will to withdraw" 2. by the occurrence of an event agreed to in the partnership agreement 3. by a unanimous vote of the other partners under certain circumstances, such as when a parter transfers substantially all of his or her interest in the partnership, or when it becomes unlawful to carry on partnership business with that partner 4. by order of a court or arbitrator if the partner has engaged in wrongful conduct that affects the partnership business, breached the partnership agreement or violated a duty owed to the partnership or the other partners, or engaged in conduct that makes it "not reasonably practicable to cary o the business in partnership with the partner" 5. by declaring bankruptcy, assigning his or her interest in the partnership for the benefit of creditors becoming physically or mentally incapacitated, or by death

Miscellaneous

whether arbitration is required for any dispute relating to the partnership agreement