actual law exam 2
The parol evidence rule is designed to permit agents to collect commissions on sales completed after termination of the agency relationship if the sale primarily resulted from the agent's efforts.
False
The law does not treat a partnership as dissolved when a partner dies.
False. Explanation The business of a partnership may be continued when a partner dies, becomes insolvent, or wishes to retire. Nevertheless, the law treats the partnership as dissolved.
A corporation is affected by the death of a shareholder.
False. Explanation Legally, a corporation is not affected by the death or insolvency of a shareholder.
Which of the following statements is true concerning franchises?
Federal and state governments regulate the franchise relationship. Explanation Both the federal and state governments now generally regulate the franchise relationship.
Which of the following is true regarding partner liability to creditors in the continuation of a partnership?
New partners are liable for prior obligations only to extent of their contribution unless they agree to greater liability. Explanation New partners are liable for prior obligations only to extent of their contribution unless they agree to greater liability. The Revised Uniform Partnership Act (RUPA) declares that a new partner has no liability for partnership debts that arose before he became a partner. However, this rule can be changed by agreement. Accordingly, many partnership agreements require new partners to assume liability for all partnership obligations as a condition of joining the partnership.
Which of the following is true regarding making a choice as to the appropriate form of business organization?
Once it is formed a partnership may later be changed to a corporate form of business. Explanation: The partnership can be changed to a corporation later.
Which of the following is true regarding a partnership?
One can engage unwittingly in behavior that gives rise to the creation of a partnership. Explanation A partnership is a voluntary and consensual association involving two (2) or more persons. Nobody can be forced to become a partner, although one can engage unwittingly in behavior that gives rise to the creation of a partnership. The RUPA is extremely liberal in that it permits individuals, partnerships, and corporations to qualify as persons that can form a partnership.
Which of the following is false regarding the attributes of a limited liability company?
There are restrictions on the number of members a limited liability company may have. Explanation There are no restrictions on the number of members an LLC can have.
A corporation is a legal entity that can act only through agents.
True
A court may find that there is an agency relationship even though the parties have expressly agreed that they do not intend to create one.
True
Agency relationships are usually formed by contract.
True
Generally, a person can do anything through an agent that he or she could legally do personally.
True
Normally, a duty to pay the agent is implied unless special circumstances or the relationship of the parties suggests that a gratuitous agency was intended.
True
The agency at will doctrine stems from the judicial reluctance to force people to continue personal relationships against their will.
True
The agent has a duty to inform the principal of knowledge the agent gains in the course of his or her responsibilities.
True
The duty of loyalty demands that the agent avoid even the appearance of impropriety.
True
All the partners in a limited liability partnership have equal say in its management, but this maybe altered by agreement.
True Explanation As with general partnerships, all the partners in an LLP have equal say in its management. Of course, this can be altered by agreement.
An LLC may be sued in its own name.
True.
By statute, piercing the corporate veil is also an option for a plaintiff when a limited liability company is involved.
True. Explanation As with corporations, courts will pierce the veil between the LLC and its members if an LLC is created with the intent to defraud its creditors.
+______ is required to act outside the ordinary course of business or contrary to the partnership agreement
Unanimous agreement
To act contrary to a partnership agreement, _____.
a unanimous agreement among the partners is required Explanation Unanimous agreement is required to act contrary to the partnership agreement or to act outside of the ordinary course of the partnership business. When a certain action is proposed and there is an even split among the partners, the action cannot be taken. If it is an important matter and the deadlock continues, it may be impossible to continue the business.
Timothy grants Johnny the authority as his real estate agent to sell his house for $249,900 or more, with Johnny to receive a six (6) percent commission on the sale price when it actually sells. This arrangement will last for six (6) months, subject to renewal with the consent of both parties. Johnny has _____ authority to sell Timothy's house.
actual Explanation Actual authority is the true authority granted to the agent by the principal. It is proper authority in the sense that an agent acting within her actual authority is not in violation of her agency duty to the principal.
Which of the following is typically NOT subject to unlimited personal liability?
corporate shareholders. Explanation In a general partnership, as with a sole proprietorship, each partner is personally liable for any losses suffered by the partnership business, even if the losses exceed the individual partner's contributions to the enterprise. This is also true for the general partners in a limited partnership. Corporate shareholders are typically not exposed to unlimited personal liability.
One advantage of the corporate form over that of a partnership is that:
corporations can more easily hold property over long periods of time. Explanation A corporation is treated as an entity separate and distinct from its owners. Incorporating makes it is easier to hold property over long periods of time because corporate existence is not generally threatened by the death, bankruptcy, or retirement of an individual owner.
•Limited partners are not _________.
fiduciaries
Parties have _____duties when winding up. Under R U P A, partners may be paid for winding up.
fiduciary
Martin, Norris, and Olsen (MNO) was a partnership that contracted for and performed a variety of painting jobs. Before the partnership was dissolved, MNO had entered into a contract under which MNO was supposed to paint every room in the state capitol building. At the time of the partnership dissolution, MNO had not yet performed the work called for by this contract. If the partners involved in the winding up elect to perform the contract, they _____.
have the authority to enter into new contracts with subcontractors, material suppliers, and workers Explanation In a partnership involved in the construction business, it may be desirable to finish contracts for constructing large buildings that may take two or three years to complete. In order to finish these jobs, the winding-up partners would have authority to enter into new contracts with subcontractors, material suppliers, and workers. As a result, it may be necessary that the winding-up partners borrow money on behalf of the partnership in order to complete these contracts.
Duty of Loyalty and Good Faith
•Partners must be honest and not put self-interest before their duty to the partnership.
Duty of Care in Business
•Partners must exercise reasonable care and skill in transacting business for the partnership. •Partners cannot exceed their authority. •Partners are liable for their negligence.
Continuation without winding up.
•Partnership agreements may specify that there will be no dissolution upon death of a partner. •Buyout agreements may be permitted.
Partnership Liability on Contracts.
•R U P A [Revised Uniform Partnership Act]: The Firm is primarily liable for contracts. •If a partnership doesn't pay, the partners are jointly liable.
Partnership Liability for Torts.
•Respondeat superior: The partnership is liable for torts committed while doing business.
Factors (two most important) when deciding whether co-ownership exists.
•Share of profits: Absent other evidence, shared profits are presumptive evidence of a partnership. •Sharing of partnership management.
Certificates must be filed with the state to form limited partnerships
•Statutory formalities must be kept in legal compliance. •The certificate must describe the business, its location and its assets.
Partnership Liability for Crimes.
•The partnership and individual partners are liable for fines. •Partners will not be imprisoned for a crime committed by one partner even if it was done in the name of the business.
Termination.
•The winding-up process is complete when all assets are distributed and creditors satisfied.
Allow some partners to have limited liability.
•There must be both general partners and limited liability partners. •Limited liability partners are not responsible for partnership debts.
Property belongs to the partnership if title or possession was transferred:
•To the partnership in its name. •To a partner by a transfer document naming the partnership. •To any partner by a transfer document indicating the partner's status or the existence of a partnership.
Distribution of assets is the final act of winding up a dissolved partnership.
•When there are losses, all creditors are paid first. •If assets remain, the proceeds from the sale are distributed pro rata among partners. •If a partner's net capital account is negative, he must pay the partnership the deficiency.
Purported partnerships.
•You can be liable as a partner without being a partner.
If an agent takes the principal's property with the intent to deprive the principal of it, the agent is guilty of the crime of extortion.
False
Zach, Khalid, and Ira form a partnership. Zach's capital contribution to the firm is $5,000, while Khalid and Ira contribute $10,000 each. The parties do not make any express agreement concerning how profits are to be divided. However, they agree to share losses as follows: Zach, 40%, Khalid and Ira, 30% each. During the first year of the partnership, the business makes a profit of $30,000. Given this scenario, what is Zach's share of the profit?
$10,000 Explanation A partner is not ordinarily entitled to salary or wages. The compensation is presumed to be the partner's share of profits. This is true even if one partner spends much more time than another on partnership business. In the absence of a contrary agreement, profits are shared equally even if capital contributions are unequal. In the given scenario, Zach's share of the profit is $10,000.
Termination of an agency occurs if the objective of the agency becomes impossible or illegal, but not if the subject matter of the agency is lost or destroyed.
False
Charlene, Darrin, and Eleanor form a partnership. They make no express agreement concerning how profits are to be divided. Of the $30,000 initial capital of the firm, Charlene and Darrin each contributed $12,000. Eleanor contributed $6,000. The partnership had a profit of $15,000 during the first year of operation of the business. Given this information, Darrin's share of the profit is _____.
$5,000 Explanation A partner is not ordinarily entitled to salary or wages. The compensation is presumed to be the partner's share of profits. This is true even if one partner spends much more time than another on partnership business. In the absence of a contrary agreement, profits are shared equally even if capital contributions are unequal. In the given scenario, Darrin's share of the profit will be $5,000.
Duty to Account
•Partners must account for any expenditure of partnership funds. •One partner usually keeps the account books and must be accurate.
Disassociation:
A change in the relation of the partners caused by any partner ceasing to be associated with the business. •Starting point for dissolution, winding up, and termination.
Suppose that Armadillo Groceries, Inc. (Armadillo) in San Antonio, Texas hires Rocky B. Atterson to work in its store delicatessen. Prior to hiring him and during his period of employment, Armadillo did not conduct a background check of Rocky. A background check would have revealed prior assault and battery convictions indicating that Rocky had a penchant for physically abusing children, including his own son. After six (6) months on the job, Rocky assaulted and battered two children "misbehaving" in the store deli area. In this case, _____.
Armadillo is liable under a theory of direct liability Explanation Under direct liability the principal basically is liable because of its own tort. Direct liability frequently occurs when the principal is negligent in the hiring and/or the supervision of the agent. Principals who fail to conduct thorough background checks or are remiss in supervising their agent's behavior are susceptible to direct liability when their agents commit torts or crimes. In the subject case, Armadillo Groceries, Inc. is liable under a theory of direct liability. Arguably, the company should not have even hired Rocky B. Atterson, and was negligent for doing so.
Marissa, the chief executive officer (CEO) of Carmine Laboratories, Inc., appointed Raphael as marketing manager and gave him the express authority to hire other people to help him carry out his duties. Raphael hired Dana as his secretary. Based on these facts, which of the following is true?
Between Marissa and Raphael, it is Raphael who is ultimately liable for Dana's actions as an employee.; Explanation Between Marissa and Raphael, it is Raphael who is ultimately liable for Dana's actions as an employee. A subagent is an agent of the agent. If the agent is found to have express authority, both the principal and the agent are bound to a third party by acts of the subagent. Between the agent and the principal, however, it is the agent who is ultimately liable for the acts of the subagent.
Bruce, a lawyer and member of a limited liability partnership consisting of other lawyers, committed legal malpractice. Which of the following is true regarding the liability of Bruce and the other members of the limited partnership?
Bruce has personal liability, but the other members of the limited liability partnership do not. Explanation Partners who are directly involved in the litigation (those who actually committed the malpractice) still have unlimited personal liability.
Partners may agree to permit a partner to sell his interest to another and to accept that person as a substitute partner. What are these agreements called?
Buyout agreements Explanation Partners may agree to permit a partner to sell his interest to another and to accept that person as a substitute partner. 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.
An agency coupled with an interest is revocable without the consent of the agent.
False
An agency relationship may not arise in the absence of a contractual agreement.
False
An agent's fiduciary duty of loyalty to her principal can be eliminated by an agreement between the parties.
False
An unincorporated association is a legal entity that can act only through agents.
False
Which of the following is a taxable entity?
Corporation Explanation A corporation is a taxable entity. Partnerships, sole proprietorships and limited partnerships are not taxable entities, but rather taxes are accounted for on the owner or owners' personal returns.
Thomas and Millicent have operated their law partnership in Detroit, Michigan for five (5) years. In the early years, the practice was quite successful, so much so that two (2) years ago, Thomas and Millicent took on another lawyer, Forrest, as a third partner. Things have not worked out with Forrest. He has shown up to the office and to court on numerous occasions intoxicated, and clients have expressed regret and even anger over his poor lawyering. One client recently expressed to Thomas and Millicent that a "hung over" Forrest slept through most of his trial, resulting in an adverse verdict for the client and the firm. Both Thomas and Millicent are considering dissolution of the partnership. Not only are they upset (an understatement) with Forrest, but they are even seriously considering going their own separate ways because of the bad experience. Who may demand a dissolution and winding up of the existing partnership?
Either Thomas or Millicent Explanation Each non-wrongful partner may demand that the business of the partnership be dissolved and wound up. Thus, the partnership business cannot be continued in the absence of the unanimous approval of all the non-wrongful partners. In the subject case, either Thomas or Millicent may demand a dissolution and winding up of the existing partnership.
Which of the following federal administrative agencies has created rules requiring more information to be turned over to a franchisee regarding the franchise deal?
FTC Explanation The FTC has passed rules requiring additional information to be turned over to a franchisee regarding the franchise deal.
Pascal is a clothing buyer for Kelly-Benjamin Fine Fashions, Inc. (Kelly-Benjamin) in Paducah, Kentucky. While on a business-related trip to San Francisco, California, Pascal noticed a solar-powered automobile on sale for $29,000. Since Kelly-Benjamin had expressed corporate support for alternative energy (including solar technology) as well as the need for a new company car, Pascal contracted to buy the car for Kelly-Benjamin. Upon being informed of the purchase, Kelly-Benjamin instructed the seller to ship the car to the company. Under these circumstances, _____.
Kelly-Benjamin is considered to have ratified the contract; Explanation Kelly-Benjamin is considered to have ratified the contract and is liable for the transaction. One may become liable through ratification for an unauthorized act that was done by an agent. Ratification may occur with respect to either an act of an agent who has exceeded the authority given or an act by someone who has not been appointed an agent at all. In this case, by asking the seller to ship the solar-powered car, Kelly-Benjamin has ratified the contract and is liable for it.
__________ formed by specific business organizations.
L L L P
Partners must indicate intent to create an_________
L L L P. Must comply with applicable state L L L P laws and regulations.
Mary eats at ABC Franchise Co., a fast food restaurant, and gets food poisoning. Once she recovers, she wants to sue. She discovers, however, that ABC Franchise Co., has very few assets and little money. She really wants to sue Big Franchise Co., the company that granted the franchise to ABC Franchise Co. Which of the following is true regarding her position in regard to Big Franchise Co.?
Mary may be able to establish liability on the part of Big Franchise Co. if she can show that because of the control exercised on the part of Big Franchise Co., ABC Franchise Co. was not an independent contractor. Explanation The control exercised by the franchisor over the franchisee has been sufficient in many cases to cause courts to hold that the franchisee is not an independent contractor. Thus, the franchisor becomes liable for torts committed by the franchisee's employees.
After retiring from Jones Corporation (a partnership founded by Megan Jones and other partners), Megan grew tired of staying at home and started visiting the firm's place of business. The current partners would introduce her to prospective customers as "My partner, Ms. Jones," or "Our partner, Ms. Jones." Megan did not bother to correct anybody about this. She was introduced in this manner to Tiffany, a new customer. Relying on the belief that Megan was a partner, Tiffany entered into a contract with Jones Corporation. Which of the following is true regarding Megan's liability to Tiffany if Jones Corporation does not fulfill its obligations?
Megan will be liable because she failed to correct the statement introducing her as a partner. Explanation In the given scenario, Megan would be held liable because she failed to correct the statement when she was being introduced as a partner. You can be liable as a partner without being a partner. If a person stated that you were his partner and you failed to correct the statement, you could be held liable.
Which of the following is true regarding a principal's liability for notice and payments to the agent?
Payment to the agent of a debt owed to the principal discharges the debt if the agent has the authority to receive such payments. Explanation Known as the imputation doctrine, notice to the agent is notice to the principal if it relates to the business of the agency. If the information does not relate to the scope of the agent's responsibilities and authority, the principal is bound only by the information that is actually passed on by the agent. Payment to the agent of a debt owed to the principal discharges the debt if the agent has authority to receive such payments. This is true even if the agent steals the money. An agent who makes over-the-counter sales is viewed as having apparent authority to collect for the goods.
Which of the following has is indicative of owners who are family or small group of people who know one another?
Privately held corporation Explanation A privately held corporation is owned by family members or a small group of people who know one another.
The following form of business organization exposes the owner to personal liability the most:
Sole proprietorship. Explanation From a risk standpoint, a shareholder. LLC member or limited partner is better off than sole proprietor.
Which of the following is true of a partner's right to compensation?
The partners may agree that one or more of them is to be paid a salary in addition to sharing in profits. Explanation A partner is not ordinarily entitled to salary or wages. The compensation is presumed to be the partner's share of profits. Of course, the partners may agree that one or more of them is to be paid salary, rent, interest, or wages in addition to sharing in profits. Often, drawing accounts for all partners are agreed on, or perhaps regular monthly payments are made. These are then deducted from the partner's share of profits when year-end settlements are made.
Duty to Inform
•Partners have a duty to timely disclose important information received that could impact the partnership.
Apparent authority may exist _____.
if the principal's conduct causes a third person to reasonably believe that another has the authority to act on the principal's behalf Explanation Apparent authority is created by the conduct of the principal that causes a third person reasonably to believe that another has the authority to act for the principal. It may exist if a principal has intentionally or by want of ordinary care induced and permitted third persons to believe a person is her agent even though no actual authority has been conferred on the agent.
An attorney-in-fact is the label given to an agent whose authority is _____.
in writing Explanation Authority is express when the principal specifically describes the extent of the agent's powers. An attorney-in-fact is the technical label given to an agent whose authority is in writing.
When Nancy's aunt left for her annual holiday vacation, she left Nancy in charge of her coffee shop. During this time, there was a riot in the city and the door of the coffee shop was damaged. Under these circumstances, Nancy can make necessary repairs if she cannot successfully contact her aunt for further instructions because she has _____.
inherent agency power Explanation Agents have implied power to act in emergencies (sometimes called inherent agency power). Therefore, Nancy's decision to repair the coffee shop door is part of her implied authority.
A partner who wrongfully dissociates _____.
loses the right to demand a dissolution and winding up Explanation A partner who wrongfully dissociates loses the right to demand a dissolution and winding up. In addition, the wrongful partner forfeits the right to participate in the winding-up process should any non-wrongful partner decide on one.
An S corporation may not have:
more than 100 shareholders. Explanation In an S Corporation, there can be no more than 100 shareholders.
Back in Style Fashions is a partnership firm dealing in the manufacture of casual clothes. Raul, one of the partners, thinks the firm should liquidate its current clothing inventory before the end of the calendar year. For this purpose, Raul _____.
must have the unanimous agreement of all the partners Explanation In the given scenario, Rahul requires the unanimous agreement of all the partners of Back in Style Fashions. Unanimous agreement is required to act contrary to the partnership agreement or to act outside of the ordinary course of the partnership business. When a certain action is proposed and there is an even split among the partners, the action cannot be taken. If it is an important matter and the deadlock continues, it may be impossible to continue the business.
David signs a contract to purchase Orrin's property. David informs Orrin that the property is being purchased for one of his clients but refuses to tell Orrin who the client is. The principal here is _____.
partially disclosed Explanation The principal in this scenario is partially disclosed. A principal is partially disclosed when the third person knows he is dealing with an agent but does not know the identity of the principal. This is likely to occur when an agent signs a contract or negotiable instrument, indicating her status as an agent, but forgetting to identify her principal.
Having just passed the bar examination, Thomas and Millicent have decided to open their own law partnership in Detroit, Michigan. It will be a general services firm, with Thomas and Millicent practicing in many different areas of the law. The young lawyers hope the practice will be successful (for now, though, it will just involve the two of them), and they would like to operate the partnership together for their entire careers. Thomas and Millicent have a(n) _____.
partnership at will Explanation Where no time duration or specific undertaking is agreed on, the partnership is a partnership at will. Such a partnership may be dissolved at any time by any partner. In the subject case, Thomas and Millicent have a partnership at will, since their law practice will be wide-ranging in its scope (in other words, there is no specific, limited undertaking), and it is of indefinite (but hopefully permanent) duration.
Winding up involves liquidating assets at the highest value.
•Partners may need to complete contracts or assign contracts.
When an agent takes an unauthorized action, the _____.
principal may not ratify only a portion of the action Explanation There can be no ratification of an act done in the name of a corporation that was not in existence when the act was done. Only the entire act of the agent can be ratified; the principal may not ratify what is beneficial and deny what is burdensome.
If a partner assigns his or her partnership interest to a creditor, the creditor is entitled to _____.
receive that partner's share of the profits Explanation A creditor of a partner may not attach any of the property owned by the partnership; however, a partner may assign her partnership interest to a creditor or to anyone else. This entitles the assignee to receive that partner's share of the profits. It does not give the assignee a right to any information about partnership affairs or a right to look at its books.
A freeze-out:
results in the minority shareholder having little or no influence in important corporate issues such as reduction or elimination of dividends or loss of employment. Explanation A minority shareholder in a close corporation has little power and, thus, may be "frozen out" (left out of important opportunities) by the majority regarding such issues as a reduction or elimination of dividends as well as a loss of employment.
The test of an agent's express authority is the _____.
specific language used by the principal in granting the authority Explanation Authority is express when the principal specifically describes the extent of the agent's powers. Generally, this may be done orally, although some states have statutes that require the authority of an agent who is to buy or sell land to be in writing. The test of an agent's express authority is the specific language the principal used in granting the authority.
Vale Mountain Properties, Inc. (Vale) has contracted with Colorado Property Brokers, LLC (Colorado) to sell several of its land holdings at a public auction. Rob, Patricia, and Luke, sales representatives employed by Colorado, arrange for and effect the sale of Vale's properties. In this case, in terms of the sale of Vale's land holdings, Rob, Patricia, and Luke are _____ of _____.
subagents of Colorado Explanation A subagent is an agent of the agent. When a corporation is made an agent, of necessity the principal is served by subagents. In the subject case, in terms of the sale of Vale Mountain Properties, Inc.'s land holdings, Rob, Patricia, and Luke are subagents of Colorado Property Brokers, LLC.
The principal is bound by representations that _____.
the agent is expressly authorized to make Explanation The principal is bound by representations that the agent is expressly authorized to make. The principal is also liable for representations that are reasonably necessary for the agent to make in order to accomplish the purpose of the agency, since they would be impliedly authorized.
Acme Chemical Consultants, a general partnership, discharges from its facility a pollutant prohibited by the Environmental Protection Agency (EPA). In this case, _____.
the firm is liable for the resulting fines Explanation A partnership may commit a crime by the manner in which it carries on its business. Examples of such crimes would include violating antitrust laws, failing to obtain a necessary business license, or discharging a prohibited pollutant. The firm is liable for the resulting fines. The individual partners are liable if the firm has inadequate assets.
Implied authority
to bind the partnership on contracts that are usually appropriate to that business. May be abolished or limited by agreement of the partners
Express authority
to do whatever she is authorized to do by the rules of partnership. Express authority stems from any other agreement of the partners.
Acme Enterprises, Inc. (Acme), a large and well-known corporation, plans to purchase five hundred (500) acres of land for a new plant. To avoid escalating land prices if landowners in the area discover Acme's intentions, the corporation orchestrates a plan to purchase the land in small tracts from dozens of landowners. It does so by employing several agents, with each agent purporting to purchase the land for personal use. In this case, Acme is a(n) _____.
undisclosed principal Explanation Sometimes principals do not want their identities known to those who deal with their agents. A common example is when a large and well-known corporation wants to acquire a plot of ground, perhaps for a new plant. One reason such a principal remains undisclosed is because the third party might demand a larger payment for the goods or services if it knew who the principal was.
Liability for Obligations.
•A continuing partnership is liable for debts incurred by the original partnership. •Former partners may become liable for new obligations of a continuing partnership.
Wrongful Disassociation.
•A partner exercises power to dissolve without the right to do so Innocent partners may continue without breaching partner.
Right to compensation
•A partner is not ordinarily entitled to a salary or wage. •Compensation = partner's share of profits.
Nonwrongful Disassociation.
•A partnership entered into for a period of time that dissolves at the end. •Partnerships with no time period specified are at will.
Creation of a Partnership requires: An association of two or more persons
•A partnership must be voluntary and consensual. •The "persons" may be natural or artificial (corporate) persons. Must be at least two partners
Partners usually wind up/liquidate assets.
•A party who wrongfully dissociates loses the right to demand dissolution and winding up. •A court may appoint a receiver if the dissolution is court ordered.
Limited partners Rights and Liabilities
•All partners maybecome personally liable if the limited partnership failed to complete the formalities. •Limited partners cannot take control of the business. •Limited partnerships may be dissolved and wound up.
Creation of a Partnership requires: Carrying on a business for profit
•Any trade, occupation, or profession is treated as a business in determining the existence of a partnership. •Profit is key. Nonprofits are not partnerships. Objective must be to make a profit
Voice in Management.
•Each partner normally has an equal voice. •Majority rules in disputes among partners.
Authority to act for a partnership can be:
•Express. •Implied. •Apparent. •Partners may become liable for ratified contracts.
Both limited and general partners are protected by limits on liability.
•General partners liable only for torts or crimes.
Partners have a "partnership interest" in property.
•It cannot be used for personal use. •Creditors cannot attach partnership property but may have an interest in it or a charging order against it.
Creation of a Partnership requires: As co-owners
•Multiple parties must own the business. •There is no requirement that partnership property be owned by all partners or in equal share by all partners. Must have a community interest: Sharing losses, sharing profits, sharing management
Articles of Partnership.
•Not required but desirable.
