Chapter 27: Partnerships
Joint venture
1. an express or implied agreement to carry on an enterprise 2. a manifestation of intent by the parties to be associated as joint venture 3. a joint interest as reflected I the contribution of property, finances, effort, skill or knowledge by each party to the joint venture 4. a measure of proprietorship of going control of the enterprise 5. a provision for the sharing of profits of losses.
What are the formalities of a limited partnership?
A certificate must be filed with the secretary of state or the county recorder. The certificate must describe the nature of the businesses, its location, and the term of its existence. It must also give the names and addresses of all partners. A description and a statement of the agreed value of contribution in property other than cash must be included.
Wrongful dissociation:
A partner has the "power" to dissociate a partnership even though she does not have the "right".The general rule is that there is no right to continue a partnership beyond the originally agreed-on term.
Nonwrongful Dissociation:
A partnership established for a certain period of time dissolves at the end of that period.
Who gets paid paid first when winding up a partnership?
All partnership creditors (including partners who have made loans to the partnership) are paid first. Then if there still are assets remaining, the proceeds from their sale are distributed pro rata among the partners b tased on the net amounts in there capital accounts.
What is the MAJOR distinction between a joint venture and partnership?
Joint related to a single enterprise or transaction, and partnership relates to a continuing business. Both require a meeting of the mins and contract formation.
Continuation without Wind Up
Many partnerships declare that there will be no dissolution at such an event, even if a new partner or partners enter Into the partnership.
Revised Uniform Partnership Act (RUPA)
Newest uniform revision of law on limited partnerships.
Is a partner entitled to salary or wages?
No, they are not. The compensation is presumed to be the partner's share of profit.However, the patterns may agree that one or more of them is to be paid salary, rent, interest, or wages in addition to sharing in profits.
If a crime is committed by a partner, are all other partners in the partnership Subject to imprisionment?
No, this is true even if the crime was committed by the wrongdoing partner while acting for the partnership.
Duties of partners during Winding up?
Partners continue to have fiduciary duties to their co-partners during winding up.
What is the duty of care in partnership business?
Partners have a duty to pass on to the other partners all information coming to them that may be important to the operation of the partnership. This is because a notice by a third person to any partner is treated as having been given to the partnership.
What is the duty of Loyalty and Good faith in a partnership?
Partners not only must be honest, but also must not permit self-interest to come before duty to the partnership.
What is partners ownership of partnership property?
Partnership interest. Partners have no separate interest in partnership property.
profit
The financial gain made in a transaction
Compensation for winding up?
Under the RUPA the partners who wind up a partnership business are entitled to be paid for that work. They also may receive their share of the profits.
Can former partners be held liable for the new obligations of a continuing partnership when the new or continuing partners have apparent authority to bind the former partner?
Yes, since authority is likely to arise when creditors of the old partnership have not been notified of he departure of the former partner and rely on his continued presence in the partnership when extending new credit.
A creditor who gets a judgement against a partner may obtain from the court, what?
a "charging order" against the partners interest in the firm.The court may appoint a receiver to look after the creditor's interests.
what is a novation?
an agreement by the creditor with both the withdrawing partners ( or representatives of deceased partners) and the continuing partners. The continuing partners agree
What is the RUPA definition of a partnership?
applies only to instance in which two or more persons carry on a business for profit. However, any trade, occupation or profession os treated as a business in determining the existence of a partnership.
How does the RUPA define " dissociation"?
as a change in the relation of the partners caused by any partners ceasing to be associated with the carrying on of the business.
For there to be a partnership there must be what?
co-ownership, which means ownership of the business as such.
What are the 3 authority acts for partnership?
express, implied and apparent.
What happens when the formalities in limited partnership are absent?
failed to file the proper certificate, it would. be treated as a general partnership. This resulted in all the partners, limited and general alike, being personally liable on all partnership debts.
What does the doctrine of "respondent superior" impose on liability on the partnership for torts committed by any partner or employee?
if a partner or employee commits a tort while engaged in partnership business, the principle of the agency law depends on whether a tort is committed within the scope and during the course of the partnership business.
How can a limited partnership be dissolved?
limited partners are not involved in the actual management of the partnership business. Accordingly, the personality of the limited partners will not always be vital to the existence of the limited partnership.
When there is a dispute whether or not a partnership has been created, what do courts generally do?
look at all the facts , paying particular attention to whether there appears to be a community of interest.
What does a partner forfeit when wrongfully dissociates?
loses the right to demand a dissolution and winding up. In addition, the wrongful partners losses the right to participate in the winding up process should any non wrongful partners decide on one.
Can the death or bankruptcy of a limited partner result in dissolution in a limited partnership?
no it does not, however the limited partnership certificate must be cancelled when all limited partners have died or withdrawn.
Are limited partnerships fiduciaries?
no, the rights and liabilities of general partners are essentially the same as those of partners in an ordinary partnership.
Can someone be forced to be in a partnership?
nobody can be forced to become a parter, although one can engage unwittingly in behavior that gives rise to the creation of a partnership. The RUPA is extremely literal in that it permits individuals, partnerships, and corporations to qualify as persons that can form a partnership.
What is the Duty to account in a partnership?
partners have a duty to account for any expenditure of partnership funds they make. They must also account for the sale or other disposal of partnership property.
What is termination?
refers to the end of the partnership's exercise.
What are the two most important factors in determining whether such co-ownership exist?
sharing of profits and sharing of management.
What are examples of a partnership committing a crime by the manner in which it carries on its business?
such crimes would include violating antitrust laws, failing to obtain a necessary business license, or discharging a prohibited pollutant.
How can an investor become liable in a limited partnership?
taking part in the control of the business becomes liable to partnership creditors like a general partner. There have been a few cases, but it appears that "control" means participation in day-to-day management decisions.
What is dissolution?
the beginning of the process of settling all the partnerships affairs.
What is winding up?
the orderly liquidation of partnership and their distribution among those with claims against the partnerships.
What happens if the partnership is liable to pay of liability and they don't pay?
the partners become "jointly liable., which is when liability is joint, all those liable must be sued in the same suit at common law.
Who normally winds up in a dissolution?
the partners themselves do and liquidate the assets of the business after dissolution.
Are there any issues during the final act of winding up a dissolved partnership ?
there is no problem if the partnership has been profitable; all creditors and partners will be paid in full.
What is the characteristics of limited partnerships?
they have 1 or more general partners and 1 or more limited partners. Normally, limited partners have no obligation for the debts of the partnership. Management of the business of the partnership is in the hands of the general partner or partners.
What is a (LLLP) Limited liability limited partnership
this is a limited partnership except the limited liability and general partners.
What is the RUPAs Goal when there is a dissociation?
to avoid unnecessary dissolution of partnerships.
When is the termination of a partnership complete?
when the partnership assets are entirely distributed and the claims of the partnership creditors are satisfied. Only after completion of this liquidation process is the partnership terminated.
Is it desirable to to have written articles of partnership?
yes a written contract tends to minimize misunderstandings and disagreements. The process of preparing such an agreement is likely to cause the parties to provide for contingencies they might not otherwise consider.
Does a partner have right to take possession of the firms property for partnership purposes?
yes they do, but not for personal use. For Example, if you are a partner, you have no right to use the firm's automobile for your vacation. Permission of a majority of the partners would be required.
Do courts apply partnerships law to joint ventures?
yes they do, perhaps the only signifiant difference is that joint ventures sometimes are held to have less implied and apparent authority than partners.
Can a partner sell his or her interest to another and to accept that person as a substitute partner?
yes, these agreements are called 'Buyout agreements". Normally, they include provisions seeking to protect the financial interests of the partners who are leaving (and those who are entering) the partnership.
In a partnership does each partner have equal voice?
yes. A vote of the majority prevails if there is more than two partners. This may be changed in agreement, however.
Can the continuing partnership become liable for debts incurred by the original partnership?
yes. A withdrawing partner or the representative of a deceased partner remains liable for those debts if the continuing partnership does not or cannot pay them.
Can you be liable as a partner without being a partner?
yes. es with the concept of "estoppel", the person who seeks to hold another liable as a partner must prove that she relied on the holding out of consent.
