Chapter 34

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  1. Entrepreneuralship
    • a person who forms & operates a new business by themselves or with others
    • ex: sole proprietorship, partnerships, corps
  2. Sole Proprietorship
    Most common

    Pros: easy, owner makes all management decisions, owns all profits, easily transferable/sold, taxes reported on owners personal taxes (not taxed at business level)

    Cons: limited capital to personal funds, legally responsible for contracts & torts made by employees or them, bear risk of loss, unlimited personal liability (creditor recover claims against the business from sole proprietors personal assets)
  3. General Partnerships (criteria)
    • 2 persons or more
    • carrying on business activities
    • owners share management responsibility and profits equally
    • for profit
    • agreement can be oral or written
  4. General Partnerships (rights of GP)
    • Right to participate in management decisions (each person has one vote regardless of contributions)
    • Right to share profits equally (share profits equally and losses)
    • Right to compensation (not entitled to receive profits for service) and Reimbursement
    • Right to Return of loans and Capital (partner makes loan for partnership becomes a creditor and entitled to repayment)
    • Right to Information
  5. General Partners (duties)
    • Duty of loyalty (breaches:self deal, usurp, compete, secret profits, breach of confidentiality, misuse of property)
    • Duty of Care (reasonable person standard)
    • Duty to Inform
    • Duty of Obedience (adhere to provisions of partnership)
  6. Defense to duty of Care
    • if fully informed of decision (not negligent)
    • and no intent to injure partnerships even though it was injured
  7. UPA and RUPA
    • Governing bodies for partnerships
    • UPA more than one year
    • RUPA Less than one year
  8. Partnership by Estoppel
    if one acts like a partner to a third party than is held responsible for it
  9. Jointly Liable
    liable for contracts and debts entered within partnership
  10. Third must do what to recover damages for contract liability
    name the partnership and all partners as defendants in lawsuit to receive recovery if not cannot collect against any of the parties
  11. Antecedent Debts
    new partner id liable for existing debts and obligations only to the extent of their capital contributions.
  12. Incoming parties
    liable for debts and obligations incurred by the partnership after becoming a partner
  13. Dissolution of GP
    • Partnership for term (fixed duration) dissolved before term wrongful dissolution
    • Partnership at will (partnership with no fixed duration can dissolve at any time)
    • Winding up (liquidation distribution of assets and distributing claims against partnership)
    • Notice o dissolution must be given to third party
  14. Dissolution of assets in order
    • 1.) Creditors
    • 2.) Creditors (partners)
    • 3.) Capital Contributions
    • 4.) Profits
  15. Outgoing partners from partnerships
    responsible for debts from time of dissolution and prior
  16. Tort liability
    liable if act committed while person in the partnership business or with authority of partners.
Card Set:
Chapter 34
2012-04-24 20:06:13
Business Law

Small Business Entrepreneurs & General Partnerships
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