Partnership

Events causing dissolution (judicial decree) (application of transferree of partner's interest)

it is equitable to wind up partnership i) after the term expires or the undertaking is completed in a partnership for a definite term or particular undertaking ii) at any time in a partnership at will.

Indemnification (General Partner)

not entitled to renmeration for services performed for partnership. However, limtied partnership must indemnify general partner for liabilities that she incurs in ordinary course of the activities of the partnership.

Formation of Partnership- Statement of Partnership Authority

A partnership may choose to file a statement of partnership authority with secretary of state, which can give constructive knowledge of extent of partners' authority with regard to the partnership.

Indemnification and Other Repayment

A partnership must indemnify every partner with regard to payments made and obligations reasonably incurred in carrying out the partnership business. If a partner makes a payment or advance on behalf of the pship beyond contribution the partner agreed to make, the paymetn or advance constitutes a loan that must be repaid with interest.

Actual Authority

A partnership will be bound by an act of the partner if the partner has actual authority (what partner reasonably believes based on communications between partnership and partner). Can come from agreement or vote of partners. A majority vote of teh partners is requried toauthroize ordinary business, a unanimous vote of partners is required to authorize extraordinary acts.

Admission of Additional General and LImited Partners

A person may be admitted to a limtied partnership as a general or limtied partner as provided in partnership agreement, as a result of merger or conversion, or on consent of all parties.

Rights Specific to Limited Parnters (Management Rights)

Although limited partners have no statutory right to participate in management or control of the partnership, the partnership agreement may allocate such rights to limited partners as a matter of contract. Participation does not cause a limited partner to become personally liable for obligation of limited partnership.

Partnership

An association of two or more persons as co-owners in a business for profit. Persons include individuals, trusts, corporation, partnership or another entity.

Liability of Outgoing Partner

An outgoing or disassociated partner remains liable for obligations arising while he was a partner unless there has been a payment, release or novation. An outgoing partner can also be liable for acts done after disassociation.

Limited Liability Limited Partnership

Any liability incurred while a limited partnership is a limited liability limtied partnership belongs to the partnership alone; general partner is not personally liable on the obligation.

Right to Dissolve (LP)

Any partner may apply for a decree of dissolution of the limtied partnership whenever it is not reasonably practicable to carry on the business in conformity with the partnership agreement.

Partners May Waive Dissolution and Continue Business

Any time before winding up of the partnership business is complete, partners may decide to waive dissolution and continue partnership by unanimous vote of partners who have not wrongfully dissolved. Such waiver does not affect rights of partners who have relied on dissolution before receiving a notice of waiver.

Rights Specific General Partners (Management Rights)

Each general partner has equal rights in management and conduct of limited partnership's activities. Generally, any matter relating to activities of limited partner may be exclusively decided by a general partner or if there is more than one general partner, a majority of the general partners.

Extent of Liability

Each is personally and individually liable for entire amount of partnership obligations. A partner who pays more than his fair share of an obligation is entitled to contribution from other partners, and a partner who pays the whole of obligation is entitled to indemnification.

Rights Specific to Limited Partners (Right to Information)

Each limited partner has right to inspect and copy any partnership records required to be maintained.

RUPA- Application of Agency Law

Each partner is an agent of the partnership for purpose of its business. The authority of a partner to bind the partnership when dealing with third parties roughly follows agency law.

Partners Account

Each partner is deemed to have an account that is credited with an amount equal to the partner's contribution plus his share of any profits and debited with partner's share of any losses and liabilities. Where partner personally profits at expense of partnership, partner must account to the partnership for those profits.

Fiduciary Duties

Each partner owes four of them to partnership 1) loyalty 2) care 3) obedience 4) Provide complete and accurate information concerning the partnership.

Duty of Partner- Limited Partner

Owes no fiduciary duty to partnership and is free to compete with partnership and have interests adverse to those of partnership unless the agreement provides otheriwse.

Duty of Loyalty

Partner must i) account for all profits or other benefits derived by partner in connection with partnership business ii) not deal with partnership as one with an adverse interest iii) not compete with the partnership.

LLP voting to form

Terms and conditions on which a partnership become LLP must be approved by whatever vote is necessary to amend partnership agreement, or if specified, the vote necessary to amend the contribution obligations of the partners. If partnership agreemetn is silent as to how it may be amended, all partners must approve the terms and conditions of the partnership becoming an LLP.

Titled Property (Revised Uniform Partnership Act) (RUPA)

Titled property is partnership property if 1) It is titled in the partnership name 2) It is titled in the name of one or more partners and the instrument transferring title notes titleholder's capacity as a partner or the existence of a partnership.

Filing- LLP Statement of Qualification

To become an LLP, a partnership must file a statement of qualification with secretary of state. The statement must be executed by at least two partners and contain such information as i) name and address of partnership ii) statement that partnership elects to become an LLP iii) deferred effective date, if any. The partnership becomes an LLP at time of filing the statement or on date specified in statement, whichever is later.

Diassociation of LP- Effect on Limited Partner

Treated as transferee of limited partners transferable interest

Formation- Certificate of Limited Partnership

Must be filed with Sec of State. Must be signed by all general partners and set forth the name of the partnership, names and addresses of agent for service of process and each general partner, whether the limited partnership is a limited liability limited partnership.

Books and INformation

Must be kept at partnership's chief executive office. Each partner has a right to inspect and copy the partnership books. Upon demand, each partner must render true and full information of all things affecting the partnership.

LLP Name

Must end with words RLLP or LLP

Formation of Partnership- Agreement.

No formal agreement is required to form a partnership; parties' intent may be implied from their conduct

Limited Partnership-Contributions

No rights to distributions unless partner makes contribution to partnership. Contribution may be in form of any benefit to partnership. A partner's contribution obligation is not excused by death or other disability and may be compromised only on consent of all partners. If partner fails to make agreed upon nonmonetary contributions, limtied partnership has option of seeking cash in lieu of agreed upon contribution.

Formation of Partnership Writing

No writing is required to form a partnership. SOF, if partners wish to have enforceable agreement to remain partners for more than one year, they may generally execute a writing reflecting their agreement.

Incoming General Partner to Existing Limited Partnership

Not personally liable for obligation that limited partnership incurred before he became a general partner.

Liability of Incoming Partner

Not personally liable for obligations incurred by partnership before the person became a partner.

Purported Partnership (No Duty to Deny Partnership)

Note that a person held out by another as partner is not liable as a partner unless he actually consents to holding out. Mere failure to deny a representation of partnership does not give rise to liability as a purported partner.

Wrongful Disassociation

One who leaves in violation of the partnership agreement or before expiration of partnership term or completion of a particular partnership undertaking is liable to partnership for damages caused by wrongful diassocation. Not entitled to payment of the buyout price until the term expires or undertaking is completed, unless he can establish that earlier payment will not cause undue hardship to p business. Interest must be paid on the buyout price from date of dissociation to date of payment.

Events of Disassociation

1) oral written notice of the partners express will to withdraw 2) happening of an agreed event 3) valid expulsion of a partner 4) partner's bankruptcy 5) partner's death or incapacity to perform partnership duties 6) decision of a court that partner is incapable of performing duties 7) termination of business entity that is a partner

Legal Actions By & Against Partners

A partnership may be sued in its own name. To reach a partner's personal assets, there must be a judgment against an individual partner. A partnership may sue a partner for breach of a partnership agreement or a duty owed to the partnership. A partner may sue the partnership or other partners to enforce a right created by partnership act or agreement or a right otherwise belonging to a partner.

Limited Partnership

1 or more general partners, 1 or more limited partners. General partner is personally liable for partnership obligations, while the limited partner generally does not have any liability beyond the liability to make agreed upon contributions. A limited partnership differs from a general partnership in that a limited partnership can be created only by filing a certificate of formation with the state. A entity distinct from partners and has perpetual duration unless otherwise provided.

Untitled Property-Common Law Criteria

1) Acquisition of property with partnership fund 2) Use of the property by partnership in conducting partnership's business 3) Entry of the property in partnership books as a partnership asset 4) A close relationship between property and the business operations of the partnership 5) Improvement of property with partnership funds 6) Maintenance of property with partnership funds.

Formation of Partnership Requirements

1) Agreement 2) Writing if over 1 year 3) capacity 4) legality of purpose 5) consent 6) Statement of partnership authority.

Events Causing Dissolution (RUPA) Continued

1) Happening of event agreed to in partnership agreement that requires winding up of business 2) Happening of an event that makes it unlawful for partnership to continue

Apparent Authority Under RUPA

1) The act of any partner 2) for apparently carrying on in the ordinary course the partnership business or business of the kind carried out by the partnership 3) binds the partnership unless i) partner had no authority to act on matter ii) person with whom the partner was dealing knew or had notice that partner lacked authority (could be actual noticed or delivered to third party)

Duty of Partner- General Partner in Limited Partnership

A general partner owes the limited partnership limited fiduciary duties of care and loyalty, similar to those owed by a partner in a general partnership. A general partnership does not automatically violate the duty of loyalty merely because general partner's conduct furthers his own interests.

Liability for Improper Distributions

A general partner who consents to an improper distribution is personally liable to the limtied partnership for amount that distribution exceeds what could properly have been dsitributed. ANy partner who recieves an imprper distribution knowing that it is improper may be forced to return the improper amount to the apartnership. NO personal liabiltiy for an improper distrubtion arises if the distribution appears to have been proper based on reaosnably prepared financial statements.

Right to Information (General Partner in LP)

A general partner's right to information is similar to that of a partner in a general partnership

LP- Liability of Limtied Partner

A limited partner is not personally liable for an obligation of the limited partnership solely by reason of being a limited partner. Limited partners personally liable if their names were used in a partnership name or they participated in management or control of the partnership. No longer the case. Only liable up to their contributions.

Rights of Partner in Partnership Property

A partner is not a co-owner and thus has no transferable interest in specific property of the partnership.

Right to Transact Business w/ Partnership (LP)

A partner may lend money to and transact other business with the limited partnership.

Direct Action Against Limited Partnership By Partner

A partner may maintain a direct action against the limited partnership or another partner for legal or equitable relief to enforce her rights or interests.

Transfer of Partnership Property- Partnership Interest Indicated

A partner may transfer property held in the name of the partnership. If partnership property is held in name of one or more partners (who are identified as such) but the partnership is not named, transfer by titleholders in their own names is effective. In either case, if the transferring party lacked authority, partnership may recover the property from initial transferee but not from a subsequent bona fide purchaser.

Notice Imputed to Partnership

A partner's notice of fact relating to partnership is imputed to partnership immediately unless partner having notice is participating in a fraud against partnership.

Right to Assign Partnership Interst

A partners right to distributions is personal property that may be transferred, in whole or in part. Such a transfer gives transferee only the right to receive transferred distrubionts and demand an acounting, the transfer does nto make trasnferee a partner or give transferee any rights as a partner. Transferring partner remains a partner, transfer does not constitute disassociation or cause a dissolution. Transfer of a partner's entire transferable interest in partnership is ground for expulsion.

Formation of Partnership-Legality of Purpose

A partnership formed to achieve an illegal purpose is void, courts will not compel an accounting or a settlement of a void partnership's affairs.

Formation of Partnership

A partnership is formed as soon as two or more people associate to carry on as co-owners in business for profit.

Partnership as a Legal Entity

A partnership is legally distinct from its partners. Title to land may be in partnership name. A partnership may sue or be sued in its name.

Profits/Losses Proportion

Absent an agreement to contrary, partner shares equally in partnership profits and must contribute to the losses in proportion to his share of profits.

Renumeration

Absent an agreement to the contrary, partner has no right to renumeration for services rendered to partnership except for reasonable compensation for services performed in winding up the partnership business. When a partner has impliedly or expressly promised to devote time to the partnership business and fails to dos, she may be charged in an accounting for damages caused to the partnership.

Who May Wind UP

All living partners have a right to participate in winding of partnership business except partners who have wrongfully dissolved the partnership and bankrupt partners. If all partners have died, the legal rep of last surviving parties may wind up.

Right to Participate in Managmenet

All partners have equal rights in management of partnership business absent an agreement to the contrary. Decisions involving ordinary business can be controlled by a majority vote of the partners, but matters outside the ordinary course of business require unanimous consent of the partners.

When approval of limited and general partners is needed for a decision

Approval of all general and limited partners is required to i) amend the partnership agreement ii) covnert the partnership to a llllp iii) dispose of all or substantially all of the LP's property outside the usually and regular course of partnership's activities iv) admit a new partner v) compromise a partner's obligation to make a contribution or return an improper distribution.

Partner's Power to Bind Partnership After Dissolution

Can be bound by act of a partner appropriate for winding up the partnership business. The partnership will also be liable for other acts if the party with whom the partner dealt did not have notice of dissolution. Such liability can be limited by filing a statement of dissolution with secretary of state; all persons are deemed to have notice of dissolution 90 days after notice is filed.

Formation of Partnership- Capacity

Capacity- anyone who is capable of entering into a binding K may be a partner. A would be partner who lacks capacity is liable only to extent of his capital contribution, but partnership with such person is not void; it will continue to exist until steps are taken to dissolve it.

Diassociation

Change in relationship caused by partner ceasing to be associated. Does not cause dissolution or winding up of partnership business necessarily.

Transfer of partner's interest

Does not give transferee rights with regard to operation of the partnership. It merely entitles the transferee to receive profits to which the transferring partner would otherwise be entitled. A partners may not sell his partner status (may not make another a partner) without the unanimous consent of the other partners.

Partnership Property

Everything the partnership owns, including both capital and subsequently acquired in partnership transactions.

Liability of General Partner

General partner of a limited partnership is jointly and severally liable for all obligations of the limited partnership. A general partner may also be a limited partner and ahve rights of a limited partner, but such a dual capacity does not relieve general partner of his duties as a general partner.

Properly filed limitiation of authority to transfer real property

Gives purchasers constructie knowledge of lack of authority, but filing a limtiation does not give constructive knoweldge of limtiation with regard to any other transaction.

Statement of Authority

Grants or limits partner's authority to enter into transactions on behalf of the partnership. The statement must be filed iwth the SOS or for real property, with the county recorder. A grant of authority in a properly filed statement of auhtoirty is conclsuive in favor of a bona fide purchaser for value.

Partnership Interest in the Partnership

Has a transferable interest in partnership, consists of his share of partnership profits, losses, and distributions. Interest is 1) Treated as personal property 2) Transferable without dissolving the partnership and 3) Attachable.

Transfer of Partnership Property- Partnership Interest Not Indicated

If the partnership interest is not indicated in instrument transferring property, the transfer may be made by those in whose name property is held. If transferee gives value without notice or lack fo authority, she takes free of partnership interest.

Events Causing Dissolution (RUPA)

In a partnership at will 1) Notification by any partner of express will to withdraw as partner. 2) In a partnership for a definite term or particular undertaking i) expiration of term or completion of undertaking, ii) consent of all partners to dissolve, iii) within 90 days after partner's death, bankruptcy or wrongful dissociation of at least half of the remaining partners wishing to dissolve.

Events Causing Dissolution (judicial decree) (application of partner)

Issuance of a judicial decree by application of a partner that i) economic purpose of partnership is likely to be frustrated ii) partner has engaged in conduct making it not reasonably practicable to carry on business iii) business cannot be practicably carried on in conformity with the agreement.

Nature of Liability

Liability is joint and several (one or more partners will be sued) for all obligations of partnership, whether in tort or contract. A judgment is not personally binding a partner unless she has been served and creditor has exhausted partnership assets or exhaustion is excused by agreement or court order or because partnership is bankrupt.

Records Office

Limited partnership must maintain in its state of organization, an office with records of the certificate, any partnership agreements, partnership's tax returns for three most current years. Partnership agreement or some record must contain the amount and description of each partner's contribution, special rights of partners regarding distributions etc.

Agent for Service of PRrocess

Limited partnership must maintain in state an agent for service of process.

Proof of Partnership Existence (Intent)

Look to the intent of parties. If they intend to carry on a business as co-owners, there is a partnership even if they did not subjectively intend to be partners. Where intent is not certain, courts consider some factors.

Dissociated Partner's Power to Bind Partnership

May be bound by act taken within two years after dissociation if 1) act would have bound partnership before dissociation and ii) the other party to transaction a) reasonably believed the disassociated partner was still a partner and b) did not have notice of dissociation.

Dissociated Partner's Liability to Other Parties

May be liable for obligations incurred by partnership within 2 years after dissoc if i) when entering the transaction the other party reasonably believed diss partner was still a partner and ii) did not have notice of partners diassociation. D partner can cut short this period of liability by filing notice of dissociation with the secretary of state; all persons are deemed to have notice of a dissociation 90 days after notice is filed.

Name- limited partnership

May contain name of any partner (general or limited) and must contain words limited partnership or abbreivation LP unless limited partnership is LLLP (limited liability limtied partnership)

Deriative Action (LP)

May maintain action to enforce right of a limtied partnership if 1) partner first makes demand on general partners to bring an action to efnroce the right and general partners do not bring action within a reaosnable period of time or dmeand would be futuiile. A deriv may be maintained only by a person who is a partner at the time that action is commenced and i) who was a partner when the conduct giving rise to the action occurred. ii) whose status as a partner devolved upon him by operation of law or pursuant to terms of partnership agreemetn from a person who was a partner at the time of the conduct.

Civil Liability

Partners liable for all contracts entered into by a partner in scope of business or with authority of partnership. Liable for all torts committed by partner or employee of partnership within ordinary course of business or authority of partnership.

Order of Distribution

Partnership assets are reduced to cash and partnership liabilities are paid 1) first to creditors then 2) partners account (capital expenses). When a partenr is forced to pay more than his share of partnership debts, he is entitled to contribution from other partners to equalize their shares

Partnership Capital

Property or money contributed by each partner for the purpose of carrying on partnership's business.

Limited Liability Partnership

RUPA allows creation. Partners not personally liable for LLPS oblgiations

Notice

RUPA, partner has notice of a fact when i) partner has actual knowledge of fact ii) is notified of fact iii) has reason to know of the fact based on surrounding circumstances. Notification is effective not only if and when it comes to a partner's attention, but also when it is delivered to a place of business held out by partners as place for receiving communications.

Duty of Obedience

Requires partner to obey all reasonable directions of the partnership and not act outside the scope of his or her authority.

Duty of Care

Requires partner to refrain from engaging in negligent, reckless, unlawful conduct or intentional misconduct.

Governing Law

Revised Uniform Partnership Act (RUPA) provides a default set of rules. Partners are free to agree through a partnership agreement, to abide by different rules for governing the relationships among themselves. RUPA will only govern those issues not provided for in the parternship agreement. Certain RUPA provisions cannot be waived (duty of loyalty, right of a court to expel a partner)

Consequences of Disassociation

Right to participate in management ceases. Leaving partner's interest may be bought out by liquidation or going concern value, indemnify against predissociation liabilities, as well as postdiassociation liabs not incurred by his acts.

Disassociation of LP

Same as general. Limtied partner has no right to disassociate before termination of a limtied partnership. A general partners right to diassociate is similar to right of a partner to diassociate in general partnership.

Proof of Partnership Existence- Factors

Sharing of profits raises rebuttable presumption of partnership (payment of a debt, services rendered, rent payment, annuity or other retirement benefit, interest on a loan, sale of goodwill of business). Additional factors= property held in joint tenancy, parties designate their relationship as a partnership, venture undertaken by parties requires extensive activity, sharing of gross returns

Right to Distributions- Limited Partnership

ULPA provisions for distribution similar to that of coprorations. Distriubtions are made on the basis of partner's contributions (proportion to value of each partners contribution) and limtied partnership may not make a distribution if after making the distribution the limtied partnership would be unable to pay its debts as they become due or limtied partenrships total assets would be less than sum total of its liabilities, including sums needed to satisfy superior preferential rights upon dissolution.

Property Presumed to be Partner's Separate Property

Under RUPA if 1) held in name of one or more partners 2) instrument transferring title does not indicate person's capacity as a partner or mention the existence of a partnership 3) partnership funds were not used to acquire the property, the property is rebuttably presumed to be separate property, even if the property is used for partnership purposes.

Property Presumed to be Partnership Property

Under RUPA, rebuttably presumed to be partnership property if it is purchased with partnership funds, regardless of in whose name title is held. Partnership funds includes not only the partnership's cash but also partnership's credit.

Formation of Partnership- Consent

Unless otherwise agreed, no one can become a partner without the express or implied consent of all partners.

Rights upon dissolution

Upon dissolution, a partner is entitled to a settlement of her accoutn (profits and capital contributions)

Dissolution of Partnership at Will

When a partnership is formed with no particular undertaking or definite term, it is said to be a partnership at will. Can be dissolved at any time by express will of any partner without penalty.

Purported Partners (Liability of Person Held Out as Partner)

When a person by words or conduct represents himself as a partner or consents to being represented by another as partner, he will be liable to third parties who extend credit to actual or apparent partnership in reliance on the representation.

Liability of Person Who Holds Another Out as Partner

When a person holds another out as partner, he thereby makes that person his agent to bind him to third parties (If there is a partnership, only those partners who know or consent to this holding out will be bound)

Criminal Liability

Will not be criminally liable for crimes of other partners committed within scope of partnership business, unless the other partners participated in commission of crime as principals or associates.

LLP liability

a partner in an LLP is not personally liable for obligations of the partnership, whether arising in K, tort, or otherwise. A partner remains personally liable for her own wrongful acts and if partnership assets are insufficient to indemnify her for an obligation she incurred on behalf of LLP, she forfeits rights to receive contributions from other partners in exchagne for being relieved fo obligation to contribute to their personal liability.