Partnership Speed

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Partnership Speed
2015-07-23 01:49:26
speed MD
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  1. Partnership Definition.
    An association of two or more people who go into business as co-owners to make a profit.
  2. Who can form a partnership?
    An individual or an entity, so long as there is capacity to contract.
  3. Do the people need to intend to form a partnership?
    No, just intend to do business together.
  4. SOF and partnership
    No writing required.
  5. Presumption of Partnership.
    When people intend to share profits, there is a presumption of a partnership.
  6. Exceptions to presumption of partnership
    • receipt of money for payment of:
    • (1) debts,
    • (2) wages or other compensation,
    • (3) rent,
    • (4) annuity, retirement or health benefits,
    • (5) interest related to loans or
    • (6) goodwill payments.
  7. Joint venture.
    A partnership for a limited time and a specific purpose to which the rules of partnership apply.
  8. Purported Partner.
    A purported partner is someone who is not a partner, but it treated as a partner for purposes of liability.
  9. Purported partner and estoppel
    • (1) representation that a person was a partner,
    • (2) representation made by the purported partner or with the purported partner’s consent,
    • (3) a third party reasonably relied on the representation, and
    • (4) the third party suffered damages in reliance.
  10. Purported Partner - Representation to 3rd parties.
    • Representation must be made by actual partner or purported partner – a statement by a third party is insufficient to hold the partnership or purported partner liable.
    • There is no duty to deny the representation by the third party.
    • Purported partner which is held out in a public fashion is liable to the relying party, even when the purported partner does not know the identity of the third party.
    • When a partner consents to a purported partners’ representation, then the purported partner is treated as an agent of the consenting partner.
  11. Liability for partnership
    Each partner is personally liable for the debts and obligations of the partnership.
  12. Partnership agreement
    • A document which governs the partnership actions.
    • Agreement will control any conflict with Partnership Act.
  13. Partner as an Agent.
    • A partner is an agent of the partnership.
    • Must have (1) there is authority for the partner’s act, and (2) the acts are done in the ordinary course of business.
  14. Accounting to the partnership for conduct.
    Duty of loyalty
  15. Engaging in deals adverse to the partnership’s interest.
    violation of duty of loyalty
  16. Competing with the partnership.
    violation of duty of loyalty
  17. Can the partnership agreement eliminate the duty of loyalty?
    • no, but it may be limited by
    • (1) agreement that certain actions will not violate the duty of loyalty or
    • (2) set up a safe harbor process so transactions which might breach the duty of loyalty can be approved.
  18. Reckless or negligent acts by partners
    Violate the duty of care to other partners
  19. Carry out their duties with reasonable diligence.
    Duty of care.
  20. Carry out their duties in good faith and fair dealing.
    Duty of care.
  21. Partnership Profits and Losses.
    Default assumption that partners split profits and losses equally, and that partners split losses in proportion to their share of the profits.
  22. Partnership account
    • Required.
    • Calculates (contributions – liabilities) + (profit – distributions – share of profits/losses).
  23. Demand for distribution
    • A partner cannot demand a distribution
    • A partnership is not required to make a distribution to its partners during the life of the partnership.
  24. Partnership Interest.
    A partnership interest is a partner’s right to receive profits, losses and distributions.
  25. Transfer of partnership interest
    • Permitted unless restricted by agreement.
    • Transfer in whole or in part, but not the right to share in management or access partnership records.
  26. Can a creditor can enforce a judgment against a partner’s interest?
  27. Partnership Property.
    • Property which is acquired by the partnership
    • Even when only one partner contributes, provided:
    • (1) it is in partner’s capacity and
    • (2) name of partnership is on the title.
  28. When a question of PShip property
    Intent of the partners will control.
  29. Two Presumptions of Partnership Property
    • (1) if purchased with partnership assets, then partnership property
    • (2) if acquired in a partner’s name without partnership assets and no mention of partnership on the title, then it’s not partnership property.
  30. New Partner.
    New partners can join by unanimous consent of the other partners.
  31. Right to manage the affairs of the business
    Each partner has the equal right
  32. Deciding issues in ordinary course of business
    Ordinary business decisions are decided by majority vote.
  33. Deciding outside the OCB
    Things outside the ordinary course of business must have consent of all of the partners.
  34. Remuneration.
    Partner entitled to compensation for services only when winding up the business.
  35. Right to share of profits
    A partner is entitled to have his account credited with his share of the profits.
  36. Reimbursement for Contributions
    • If a loan or an advance, partner entitled to reimbursement with interest.
    • No right to capital contribution.
  37. Indemnification.
    A partnership must indemnify a partner for a liability incurred in the ordinary course of the partnership’s business.
  38. If a partner uses partnership property...
    the partner must compensate the other partners for personal benefit derived from partnership property.
  39. Partner's access to books and records
    During normal business hours.
  40. Partnership v. Partner.
    Breach of the partnership agreement or violation of a fiduciary duty.
  41. Partner v. Partnership.
    To enforce rights under the partnership agreement or Partnership Act.
  42. Suit for Accounting.
    Partner may sue at any time.
  43. Dissociation.
    • When a partner ends his association with the partnership.
    • Can be triggered by:
    • (1) a partner’s notice of desire to dissociate,
    • (2) a partner’s expulsion from the partnership,
    • (3) a partner’s person bankruptcy,
    • (4) a partner’s death or
    • (5) a partner’s termination.
  44. Power of partner to dissociate
    Unilateral power and cannot be blocked by the partnership agreement.
  45. Dissociation and end of partnership
    Dissociation does not automatically dissolve the partnership.
  46. Wrongful Dissociation in unlimited partnership
    Only if it breaches an express provision of the partnership agreement.
  47. Wrongful Dissociation in P for definite term
    • Wrongful if:
    • (1) the partner withdraws from the partnership without proper notice,
    • (2) the partner is expelled by the court, or
    • (3) partner files for bankruptcy.
  48. Dissociation and management of Pship
    Ended, except winding up affairs.
  49. Dissociation and fiduciary duties.
    Terminates them
  50. Partner's interest on dissociation
    A partnership must buy out a dissociated partner’s interest.
  51. Actual authority after dissociation
    Dissociation terminates the partner’s actual authority to bind the partnership.
  52. Statement of dissociation
    • Filed with state.
    • Public notice of dissociation effective 90 days from notice.
    • Ends apparent authority.
  53. Partner’'s Actual authority.
    A partner's reasonably belief that the partnership has authorized her to act through express words or conduct or through implied authority, the partner can bind the partnership.
  54. Partner’s Power to Bind Partnership - Apparent authority.
    • When a third party reasonably believes that the partnership has authorized the partner to act, the partner can bind the partnership.
    • 3P's actual knowledge a defense
  55. Partner’'s Authority to Transfer P'ship Property
    • A partner has the authority to transfer property so long as the property is held in the partnership’'s name or held in a partner'’s name.
    • A partnership can take action to recover property transferred without authority.
  56. Statement of authority.
    • Form filed with the state
    • Clarifies the limited nature of a partner’s authority.
  57. Tort liability and Partnership
    A partnership is vicariously liable for tortious acts of its partners committed in the ordinary course of business.
  58. Contract liability and Pships
    The partnership may be sued for failing to meet obligations.
  59. Joint and several liability of Pship
    Partners are jointly and severally liable for all partnership obligations.
  60. Collecting judgments against individual partners
    Go after the individual partner's assets.
  61. Collecting on judgments against a partnership.
    Generally, a plaintiff must collect against partnership assets before collecting against the assets of personal partners.
  62. Exhaustion not required to collect against individual partners when
    • Plaintiff already has a judgment against the partnership.
    • (1) partnership is in bankruptcy,
    • (2) partner has consented to the action or
    • (3) partner is independently liable for the action.
  63. Direct execution of judgment against individual partner
  64. (1) the partnership’s assets are clearly insufficient to satisfy a claim,
    • (2) when exhaustion would be burdensome, or
    • (3) it is equitable to go after individual partners.
  65. Partnership Liability for Crimes.
    • Partnership can be convicted of a crime.
    • Conviction does not extend to individual partners.
  66. Dissolution of the Partnership.
    • When the partners seek to end the partnership.
    • Followed by winding up.
  67. Dissolution - indefinite term
    Dissolution is triggered when a partner gives notice.
  68. Dissolution - definite term
    • In a partnership for a definite term, dissolution is triggered through:
    • (1) death/bankruptcy and partners decide not to continue,
    • (2) when the partners agree to dissolve, or
    • (3) when the term expires.
  69. Dissolution - any term
    • (1) events occur as indicated in the partnership agreement,
    • (2) all/substantially all partnership activity becomes unlawful and is not cured within 90 days, or
    • (3) judicial decision that it is not reasonably practicable to carry on the business.
  70. Partnership at will
    If partners continue to do business after the partnership expires, there is a presumption of a partnership at will.
  71. Winding up of a partnership.
    After dissolution, a partnership only exists for the purposes of winding up the business.
  72. Who can participate in winding up
    Any partner who has not wrongfully dissociated
  73. Disposing of property (WU)
    The partner winding up the partnership may dispose or transfer any partnership property
  74. Discharge of Liabilities (WU)
    The partner winding up the partnership may discharge liabilities
  75. Distribution of asset (WU)
    The partner winding up the partnership may distribute the assets of the partnership to satisfy partner’s account.
  76. Binding effects during wind up
    • Acts which are necessary to wind up
    • Acts that would bind the partnership under apparent authority.
  77. Statement of dissolution.
    Notice to be filed with the state which provides notice of dissolution and limits liability to 90 days after the filing.
  78. Priority in winding up.
    Creditors are first in line for assets. Remaining assets are distributed to the partners.
  79. Mergers.
    • A merger is a combination of the partnership with another entity which results in one surviving entities.
    • A merger requires approval by all general partners.
  80. Where to file articles of merger
    An Articles of Merger must be filed with the state.
  81. Partner’s liability after merger.
    Draws a dividing line after that date.
  82. Conversions.
    • A partnership can convert to another entity provided that the partnership follows the rules to form the new entity.
    • Decision to convert must be approved by all partners.