FL Partnerships
Charging Order
A creditor of a partner who has obtained a judgment against a partner may enforce the judgment against that partner's partnership interest only by obtaining a judicial charging order, which acts as a lien against the partner's interests.
General Partner Withdrawal from Limited Partnership
A general partner may withdraw from a limited partnership at any time, rightfully or wrongfully. Withdrawal is wrongful if it violates the partnership agreement or occurs before termination of the limited partnership.
Conversion Liability
A general partner who becomes a limited partner as a consequence of a conversion is liable for any obligation incurred by the limited partnership within 90 days after the conversion becomes effective if the other party to the transaction reasonably believes at the time of the transaction that the limited partner is a general partner.
Judgment against Partnership and Individual Partners
A judgment against a partnership is not a judgment against a partner, and unless a partner is named in a suit, only partnership assets can be used to satisfy a judgment. In order to reach both the partnership assets and each partner's assets, both the partnership and the individual partners must be named.
Duties of Limited Partner
A limited partner does NOT have any fiduciary duty to the limited partnership or to any other partner solely by reason of being a limited partner. If, however, the limited partner is vested with certain management powers or duties under the partnership agreement, then the only fiduciary duties the limited partner has with respect to those powers or duties are the duty of loyalty and care owed by the general partner.
Limited Partner Derivative Action
A limited partner has the right to bring a derivative action on behalf of the partnership. To do so, she must first have either made a demand on the general partner to do so, or she must explain why she believed making such an effort would have been likely to fail.
Limited Partnership bringing Derivative Action
A limited partner may bring a derivative action on behalf of the partnership as long as he either makes efforts to cause a general partner to bring the derivative action first, or he can show that he believes asking a general partner would be futile.
Transfer of Partnership Interest
A partner has the right to transfer his entire partnership interest, or any part of it, to a third party. This transfer does not trigger the partner's dissociation from the partnership; the transferring partner retains all rights and duties of a partner, aside from those transferred.
Limited Partnership Liability
A partner in a limited partnership may hold dual roles, and will be liable for partnership obligations based on his general partner status.
General Partner Transaction w/ Limited Partnership
A partner may transact business with the limited partnership and, subject to the fiduciary duties owed to the partnership, a partner has the same rights and obligations with respect to the transaction as a third party would
Partner's Fiduciary Duties
A partner owes the partnership AND the other partners 2 fiduciary duties - Duty of Loyalty & Duty of Care. Duty of loyalty prohibits competing with partnership business, and MAY NOT be eliminated by agreement.
Partner's Obligation to Partnership
A partner's obligation to contribute money, property, or other benefit to a limited partnership - including a promise to perform personal services - must be in a signed writing in order to be enforceable. If it is in a signed writing, the obligation may not be excused by the partner's death, disability, or inability to perform personally.
Signed Writing for Personal Services
A partner's obligation to contribute money, property, or other benefit to a limited partnership - including a promise to perform personal services - must be in a signed writing in order to be enforceable. If it is in a signed writing, the obligation may not be excused by the partner's death, disability, or inability to perform personally.
Formation of a Partnership
A partnership is formed merely by express or implied intent of the parties to share profits - no writing is required unless the partnership business cannot be completed within one year and no consideration or capital contribution is required At least two persons must intend to carry on a business for profit as co-owners, but it is not necessary that such persons have the specific intent to form a partnership
Judicial Supervision of Winding Up
Any partner, partner's legal representative, or transferee may seek judicial supervision of winding up.
Limited Partner Requirements in General Partner tries to act without their approval
Certain actions require the approval of limited partners, including amending a partnership agreement or admitting a partner.
Conversion
Conversion from a limited partnership to a partnership becomes effective upon the cancellation of the certificate of limited partnership. Note that conversion from a limited partnership to a partnership requires the approval of all of the general partners of a converting limited partnership and all of those limited partners who own a majority of distribution rights.
Management of Partnership
Each partner has a direct and equal voice in management unless expressly agreed otherwise in the partnership agreement
In the absence of an agreement between the partners, profit and loss are divided by partners
Equally
Purported Partnership
Even if a partnership does not exist, a person who is held out as a partner in a public manner may be able to bind another in contract if (i) a representation was made by a purported partner or with his consent that he is a partner in a purported partnership; (ii) a third party relied on the representation; and (iii) that third party suffered damages as a result of the reliance. The purported partner becomes an agent of the purported partnership and may bind the purported partnership.
Statutory Enumerated Exceptions to Partnerships
Exception for profits in payment of wages or other compensation to an employee or independent contractor.
Manager-Managed LLC
In a manager-managed LLC, the LLC is managed by the manager, not its members. The manager is an agent of the LLC for the purposes of its activities and affairs. An act of the manager binds the LLC unless the manager had no authority to act for the company in the particular matter and the person with whom the manager was dealing knew or had notice that the manager lacked authority.
General Partner Withdrawal in Limited Partnership
In the absence of a contrary agreement of the partners, a limited partnership will be dissolved by the withdrawal of the only general partner. There must be at least one general partner in a limited partnership. Note that the partnership can continue if, within 90 days, all partners agree in writing to carry on the business and appoint a necessary general partner, but the question supposes here that nothing else happens after the sole general partner withdraws.
General Partnership Liability
Partners in a general partnership are jointly and severally liable for the obligations of a partnership. While a partnership creditor must usually exhaust all partnership assets before going after a partner's personal assets, a creditor may obtain a judgment against a partner when the partnership's assets are clearly insufficient. Further, the partner is entitled to indemnification for any personal liabilities incurred either in the ordinary course of business or to preserve partnership assets.
Partner's Personal Property Distinction
Property is rebuttably presumed to be a partner's separate property (rather than the property of the partnership) when the property is acquired in the name of one or more partners, the instrument transferring title to the property does not indicate the person's capacity as a partner or the existence of a partnership, and partnership assets were not used to acquire the property.
Partner as a Creditor
RUPA allows partners to make loans to the partnership, and allows them to be treated as any other partnership creditor, subject to the same laws.
A transferee of a partnership interest is entitled to do which of the following?
The transferee of a partner's interest may seek a judicial order dissolving the partnership.
Consent of all partners required
Two things require the consent of all partners: any matter falling outside the ordinary course of the partnership's business and amending the partnership agreement.
Limited Partnership Distribution
Unlike a general partnership, a limited partnership allocates distributions among the partners based on the value of the partner's contributions to the partnership.
partnership assets are distributed as follows
Upon dissolution of the partnership, partnership assets are first used to discharge obligations to creditors, including partners who are creditors. After that, partners are entitled to recover their capital contributions. Anything that is left over is split equally between the partners.
Partner Transfers Partnership Interest
When a partner in a partnership transfers her partnership interest to another, the transferee does not become a partner of the partnership. The transferor partner retains all the rights and duties of a partner regarding the management of the partnership. This would include the duty to pay partnership obligations, if necessary. That obligation is not transferred to the transferee.
Third Party "Partner"
When a person is held out as a purported partner in a public manner, and a third party reasonably relied on that holding out, the purported partner may be treated as a partner of the partnership.
Partnership Property Interest Transfer
When property is acquired by a partner in a partnership and the instrument does not indicate the involvement the partnership in the transaction, the property is nevertheless presumed to be partnership if it is purchased with partnership assets or if partnership credit is used to obtain financing. Although the leasehold interest is partnership property, a partner may transfer partnership property held in one or more partners' names by executing an instrument of transfer (e.g., a deed) in the partners' names. This ability exists whether or not the instrument transferring the property to the partnership reflected the existence of the partnership or the status of the transferees as partners.
Partnership Agreement Limitations
While a partnership agreement may NOT prevent a partner from withdrawing from the partnership, it can place some limitations on the withdrawal, such as requiring that the partner's notice of withdrawal be in writing.
A corporation seeks to join a limited partnership as a general partner. The approval of
all of the general partners and all of the limited partners is required.
Management Rights General Partnership
management rights in a general partnership do not track capital contributions, profits, or losses unless the partnership agreement so specifies.
Apparent Authority
the partner's unauthorized act must be performed in the ordinary course of apparently carrying on the partnership business. Additionally, the third party dealing with the partner cannot have known or received notification that the partner was acting without authorization.
