When does Partnership Exists?

1. Sharing of profits and losses
2. A joint ownership of business
3. An equal right to be involved in management of business

All of the above creates a presumption that partnership exists 

Undivided Share/Interest

• Equal share and interest.  
• One partner cannit go and sell the boat on Partnership's behalf
• Can sue the partnership entity but not collect individually

Partnership: Flow through (Pass through)

Taxation

• Pass through taxation and not tax paying entity
• Entity does not pay taxes on its income - instead owners pay individual taxes on their distributive share

• Can be written, implied in conduct or oral (unless violates SOF)
• Contains information about duration of partnership
• Partnership for a term
• Partnership at will

Act of any partner for carrying on in the ordinary course of the partnership or business of the partnership

Lingering Apparant Authority: Outgoing partner can be bound for 1 year if the act would have bound PRTS before dissociation

Joint & Several Liability:

• Joint: Third party must sue all of partners as a group, but each partner can be held liable for the full amount as well.
• Several: Third party also has the ability to sue one or more of the partners individually
• Even if one partner did not participate in action that gave rise to legal action

• Partners are fiduciaries and general agents of one another and the partnership
• EX - One partner cannot accept offer without conferring with partner. Partner who accepts offer would be breaching fiduciary duties

1. Duty of care: limited to refraining from grossly negligent or reckless conduct or knowingly violating the law (Partner not liable for simple negligence or genuine errors in judgement)
2. Duty of loyalty: requires partner to account to the partnership for "any property, profit or benefit" derived by the partner in conduct of partnership's business or from use of its property  

• If partner's dissociation does not result in a dissolution -- dissociated partner's interest in the partnership must be purchased by the partnership or remaining partners

• Collecting, liquidating and distributing PRTNR assets
• After dissolution  - PRTNR still continues under sole purpose of winding up
• Partners still have fiduciary obligation to each other during this process

Severally legally binding clauses in a business PRTNR that controls following:

• Who can buy a departing partner's share of business
• What events will trigger a buyout (most of time - death, disability, retirement or leaving company)
• What price will be held for a partners interest in PRTNR

Buy out price = Hypothetical Liquidation as of the date of dissociation

Limited Liability Partnerships

(LLP's)

Hybrid form of business designed for mostly professionals (usually in accounting, architecture and law).