Term
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Definition
| An association of two or more persons to carry on as co-owners of a business for profit. |
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Term
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Definition
| A joint venture is an association of persons with intent to engage in a single business venture for joint profit. |
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Term
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Definition
Revised Uniform Partnership Act.
Partners are free to agree to different in PARTNERSHIP AGREEMENT. |
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Term
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Definition
| A partnership generally is treated as a legal entity distinct from the individual partners. |
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Term
| RUPA: unwaivable provisions |
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Definition
1. Right to access books and records
2. A partner's duty of loyalty and care
3. Power to dissociate a partner
4. Power of court to expel partner
5. Entity wound up if illegal activity
6. Rights of third parties
7. Duty of good faith and fair dealing |
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Term
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Definition
No formal agreement is required to form a partnership, may be implied from conduct
Writing not required, unless partnership by its terms must last longer than a year |
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Term
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Definition
Anyone may be a partner who is capable of entering into a binding contract.
If a would be partner lacks capacity, she is not personally liable for the obligations of the partnership or for breaches of the partnership agreement. |
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Term
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Definition
| Unless the agreement provides otherwise, no one can become a partner in a partnership without the express or implied consent of all partners. |
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Term
| Statement of Partnership Authority |
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Definition
| A partnership may file a statement of partnership authority with the secretary of state. The statement can give constructive knowledge of the extent of the partners' authority to enter into contracts on behalf of partnership. |
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Term
| Proof of Partnership Existence |
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Definition
INTENT OF PARTIES
Sharing of profits raises a presumption of partnership
Other: title to property, designation of entity, extensive activities, sharing of gross returns, sharing loss |
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Term
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Definition
| A subpartner who shares with a partner of a principal partnership profits derived from that partnership is not thereby deemed a partner of the principal partner. |
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Term
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Definition
| Is evidence of an intent not to form a partnership. |
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Term
| Liability of Person Who is Held Out As Partner |
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Definition
| When a person by words or conduct represents herself as a partner or consents to being represented by another as a partner, she will be liable to third parties who extend credit to the actual or apparent partnership in reliance on representation. |
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Term
| No duty to deny partnership |
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Definition
| A person held out by another as a partner is not liable as a partner unless she actually consents to the holding out- mere failure to deny is not a representation. |
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Term
| Liability of a Person Who Holds Out as Partners |
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Definition
When a person, by words or conduct, holds out another person out to be her partner, she thereby creates power to bind (AGENCY).
If representation made by a partner, only representation partners bound |
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Term
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Definition
| Property or money contributed by each of the partners for the purpose of carrying on the partnership's business |
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Term
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Definition
| Partnership property, in the broadest sense, embraces everything that the partnership owns consisting both of the capital contributed by its members and properties subsequently acquired in partnership transactions. |
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Term
| Property deemed to be partnership property |
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Definition
1. Titled in the partnership name OR
2 the instrument transferring title notes the titleholder's capacity as a partner or the existence of a partnership. |
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Term
| Property presumed to be partnership property |
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Definition
| Property is rebuttably presumed to be partnership property if it was purchased with partnership funds, regardless of in whose name it is held. |
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Term
| Property presumed to be partner's seperate property |
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Definition
| i. Property held in the name of one or more partners ii. the instrument transferring title does not indicate the person's capacity as a partner; iii. partnership funds not use to acquire property |
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Term
| Untititled property: common law criteria |
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Definition
1. Acquisition of the property with partnership funds
2. Use of the property by the partnership
3. Recordation in property books
4. a close relationship between property and business
5. Improvement of the property with partnership funds
6. Maintenance of property with funds |
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Term
| Rights of Partner in Partnership Property |
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Definition
A partner is not a co-owner of partnership property and has no interest in property.
Creditors may not reach partnership property to satisfy the personal. |
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Term
| Transferable interest in personal property |
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Definition
Each partnership has a transferable interest in the partnership, which consists of his share of profits and losses.
Absent an agreement to contrary, each partner is entitled to an equal share of the partnership profits and must contribute toward the partnership losses |
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Term
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Definition
| Absent agreement, a transfer of a partner's transferable interest does not entitle the transferee to interfere in management or to inspect partnership books |
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Term
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Definition
On application to a court with jurisdiction, a judgment creditor of a partner may charge the transferable interest of the debtor partner to satisfy the judgment.
Charging order becomes a lien on interest. |
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Term
| Right to participate in managment |
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Definition
Absent an agreement, all partners have equal rights in the management of partnership business.
Ordinary business = majority of all partners
Outside ordinary course of business = all partners |
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Term
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Definition
Partners owe the partnership and other partners two fiduciary duties: loyalty and care.
Partners must discharge these duties in good faith and fair dealing. |
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Term
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Definition
| i. account for profits, property, opportunties, or other benefits; ii. refrain from a dealing with the partnership on behalf of an adverse interest; iii. refrain from competing with partnership. |
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Term
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Definition
| A partner's duty of care to the partnership and the other partners is limited to refraining from engaging in a grossly negligent, reckless, or intention misconduct. |
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Term
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Definition
| Each partner is deemed to have an account that is credited or charged, with a net amount equal to the partner's contribution, plus or minus the partner's share of any profits or losses, less liabilities. |
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Term
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Definition
Absent agreement, a partner is not entitled to renumeration except for reasonable compensation for serivces rendered in winding up partnership.
It is implied that each partner will devote his entire time and energy to partnership business. |
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Term
| Indemnification and other repayment |
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Definition
The partnership must identify partners for payment reasonably made and obligations reasonably incurred by a partner in carrying on the business of the partnership.
Similarly, partners are entitled to additional contributions beyond amount agreed upon. |
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Term
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Definition
Partnership books must be kept at the partnership's chief executive office and every partner has a right to inspect and copy them.
Upon demand, each partner must provide complete and accurate information. |
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Term
| Partner liability: procedure |
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Definition
To reach a partner's personal assets, there also must be a judgment against the partner.
Actions may be brought against the partnership and the partners in same action. |
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Term
| Partnership: apparent authority |
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Definition
| The act of any partner for apparently carrying on in the ordinary course the partnership business or business of the kind binds the partnership unless partner had no authority AND person with whom partner was dealing new or received notification that partner had no authority. |
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Term
| Apparent authority: knowledge |
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Definition
Subjective knowledge- what the person actually knew.
A notification is effective with attention or upon delivery. |
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Term
| Transfers of partnership property: interest indicated |
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Definition
If property is held in the name of the partnership, any partner may execute an instrument transferring the property in the name of the partnership.
If the transferring partner did not have actual or apparent authority to make transfer, the partnership can recover the property from the intitial transferee. |
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Term
| Transfers of partnership property: no interest indicated |
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Definition
| Initial transferee takes title free of partnership interest if gave value without notice that property was partnership property and without authority to transfer. |
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Term
| Partnership: actual authority |
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Definition
Partner's reasonable belief.
Actual authority can be granted either in the partnership agreement or by consent of the parties. |
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Term
| Statement of authority: non real property |
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Definition
If a statement of authority is filed with the SOS granting a partner authority to enter into non real property transactions, grant is conclusive
However, statement of authority does not provide constructive notice of limitations |
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Term
| Statement of authority: real property |
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Definition
| Unlike the rule for personal property, a person will be considered to know of a limitation on a partner's authority to transfer real property if the limitation is filed with the SOS and recording office. |
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Term
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Definition
A partner has notice of a fact with:
1. actual knowledge
2. is notified of the fact
3. has reason to know
Notice effective upon delivery
A partner's notice of a fact imputes immediately to the partnership. |
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Term
| Partner: contract liability |
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Definition
| Partners are liable on contracts made by a partner in the scope of the partnership business. |
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Term
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Definition
Partners are liable for any torts committed by a partner or by an employee of the partnership in the ordinary course of the partnership business or with authority.
Includes frauds. |
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Term
| Nature of partners' liability |
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Definition
All partners are jointly and severally liable.
A judgment is not personally binding on a person unless she has been served. |
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Term
| Nature of partners' liability: creditor attachment |
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Definition
A judgment creditor may not levy or execute against a partner's individual assets to satisfy a partnership obligation unless:
1. same claim and debt is unsatisfied
2. partnership is bankrupt 3. agreement 4. veil piercing 5. directly liable. |
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Term
| Extent of partner's liability |
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Definition
Entitled to indemnification from partnership.
May also require other partners to contribute their pro rata shares of the payment. |
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Term
| Liability of incoming partner |
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Definition
Admitted into existing partnership is not personally liable for any partnership obligation incurred before admission.
Of course, contributed capital is at risk |
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Term
| Liability of outgoing partner |
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Definition
| An outgoing or dissociated partner remains liable on all obligations incurred by the partnership while a member unless there has been payment, release, or novation. |
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Term
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Definition
| A change in the relationship of the partners caused by any partner ceasing to be associated in the carrying on of the business. |
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Term
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Definition
| 1. Notice of will to withdraw; 2. happening of agreed upon event; 3. expulsion of partner by agreement, vote, or judicial decree; 4. partner bankruptcy; 5. death of partner; 6. appointment of receiver 7. termination of entity. |
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Term
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Definition
A partner will be deemed to have wrongfully dissociated if the dissociation is in breach of an express term of the partnership agreement.
A partner who wrongfully dissociates is liable to the partnership for any damages caused by the dissociation. |
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Term
| Consequences of dissociation |
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Definition
When a partner dissociates, the partner's right to participate in management ceases.
The partner's duties of care and loyalty generally are also terminated, except with respect to matters arising before the dissociation. |
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Term
| Purchase of dissociated partner's interest |
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Definition
Partnership must purchase the dissociated partner's interest based on the grater of (i) the partnership's liquidation value or (ii) the value of the partnership business as a going concern.
Interest must be paid from the date of association.
If partner wrongfully dissociates, partner is not entitled to payout until term expires. |
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Term
| Dissociated Partner's Power to Bind |
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Definition
Partnership and partner will be bound for a period of two years after dissociation
predicated on other party's reasonable belief
Statement of authority can resolve issue, but is not effective until 90 days after filing |
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Term
| Dissociated Partner: Liability |
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Definition
Pre dissociation: remains liable. However, if creditor knows of dissociation and materially alters nature of payment, dissociated partner is released from liability.
After Dissociation: two year rule with 90 day statement of authoirty exception |
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Term
| Events causing dissolution |
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Definition
| i. notification in partner at will; ii. 90 days after dissociation, majority of partners vote to wind up; iii. consent; iv. express term; v. event; vi. unlawful to continue; vii. judicial decree |
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Term
| Judicial decree by application of partner |
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Definition
a. economic purpose of the partnership is likely to be frustrated;
b. partner has engaged in conduct making it not reasonably practicable to carry on business;
c. the business cannot practically be carried on in conformity with agreement |
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Term
| Issuance of judicial degree on application of transferee |
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Definition
a. after the expiration of the term or completion of the undertaking if the partnership was for a definite term or particular undertaking
b. at any time if partnership was a partnership |
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Term
| Partner's Power to Bind Partnership After Dissolution |
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Definition
| A partnership will be bound by a partner's act after dissolution if the act is appropriate for winding up the partnership. |
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Term
| Partnership Continues After Dissolution |
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Definition
| RUPA considers a partnership to continue after dissolution until the winding up of business is completed. |
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Term
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Definition
1. All partners
2. Remaining Partners
3. Legal Representative
Partner wrongfully dissolving partnership cannot wind up. |
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Term
| Partners may waive dissolution and continue business |
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Definition
| May decide by unanimous vote to continue the business. |
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Term
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Definition
Limited liability partnership.
The major advantage of operating as an LLP is that the partners are not personally liable for the LLP's obligations.
LLP must be approve by whatever vote is necessary to amend the partnership agreement or all partners. |
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Term
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Definition
1. Name and address of the partnership
2. A statement that the partnership elects to be an LLP
3. A deferred effective date
LLP must also file annual report |
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Term
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Definition
| Must include limited liability partnership in name. |
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Term
| Certificate of limited partnership |
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Definition
Must be filed with SOS
1. Name
2. Name and address of agent for service process
3. name and business address of each general partner
4. whether the limited partnership is a L.L.L.P. |
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Term
| LP: amendment to certificate |
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Definition
1. Admission of a new general partner
2. withdrawal of a general partner
3. appointment of a person to wind up the LP
Update false information promptly |
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Term
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Definition
| A limited partnership must also maintain in its state of organization an office with such records as the certificate of LP, any partnership agreements, the limited partnerhip's tax returns, name and address of each general partner. |
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Term
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Definition
Can contain the name of any general or limited partner
Must include L.P. or limited partnership |
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Term
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Definition
Nothing in ULPA requires partners to make contributions in exchange for partnership interest
But, a partner has no interest without contribution.
Test: an benefit to partnership. If partner fails to make promised contribution, partners may seek money in lieu of benefit. |
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Term
| Liability of general partners |
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Definition
| Except as provided by statute, a general partner is jointly and severally liable for all obligations of the limited partnership. |
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Term
| LP: liability of incoming partners |
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Definition
| A person who becomes a general partner of an existing LP is not personally liable for an obligation that the limited partnership incurred before he became a general parner. |
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Term
| Liability of limited partner |
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Definition
| A limited partner is not personally liable for an obligation of the limited partnership solely by reason of being a limited partner |
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Term
| One who erroneously believes herself to be a limited partner |
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Definition
Issue: general partner honestly believes she is a limited partner.
Can avoid being held liable if makes proper filing or withdraws from future equity participation
BUT, will be bound to innocent third party |
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Term
| Duties of General Partner |
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Definition
| A general partner owes the limited partnership limited fiduciary duties of care and loyalty similar to those owned by a partner is a general partnership. |
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Term
| Duties of a Limited Partner |
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Definition
Generally, a limited partner owes no fiduciary duty to the partnership and thus, is free to compete with the partnership and have interests adverse to partnership.
Of course, still bound by good faith and fair dealing. |
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Term
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Definition
Based on contributions (not equally)
A limited partnership may not make a distribution if after making the distribution the limited partnership would be unable to pay its debts as they become due or the assets would be less than the sum of liabilities. |
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Term
| LP: Liability for Improper Distributions |
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Definition
General partner = personally liable
Limited partner = if limited partner KNOWS distribution is improper may be forced to return |
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Term
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Definition
A partner may maintain a derivative action to enforce a right of limited partnership if:
i. makes a demand on general partners to bring action and they do not within reasonable time or
ii. demand would be futile. |
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Term
| Proper plaintiff for derivative action |
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Definition
1. Who was a partner at time of conduct or
2. whose status as a partner devolved upon him by operation of law or pursuant to the terms of the partnership agreement from someone who was a partner at time |
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Term
| General partners: management rights |
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Definition
Generally, majority of general partners
Exceptions:
1. amendment of the partnership agreement; 2. amendment of certificate of limited partnership 3. sale, lease, exchange, or other disposition of all assets; 4. admitting a new limited or general partner; 5. compromising a partner's obligation to make contributions |
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Term
| Limited partners: management rights |
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Definition
Limited partners may participate in management. Participation does not lead to derivative liability.
Limited partners have a right to information. |
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Term
| Limited partnership: disassociation |
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Definition
A limited partner has no right to dissociate before termination of the limited partnership.
After dissociation, a limited partner is treated as a transferee of the limited partner's transferable interest.
Loses all voting, management, and inspection rights. |
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Term
| Limited partnership: dissolution in general |
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Definition
| 1. Happening of an event specified in the partnership agreement 2. consent of all general partners and limited partners 3. after disassociation of a general partner with majority vote 4. ninety days after dissociation of last limited partner. |
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Term
| Limited Partnership: conversion and merger |
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Definition
| A limited partnership may convert to or merge with another form of business entity upon the consent of all partners and filing of a certificate |
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Term
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Definition
Entity eligible to be taxed like a partnership while offering its owners the limited liability that shareholders of a corporation enjoy.
LLC receives partnership tax treatment unless LLC requests corporate treatment |
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Term
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Definition
| Control most aspects of LLC business and management. |
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Term
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Definition
1. A statement that the entity is an LLC
2. Name of the LCC (which includes LLC)
3. Street address of registered office and agent
4. Names of all of the members |
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Term
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Definition
Presumed to be by all members
Can me member managed or manager managed
Managers owe LLC duties of care and loyalty similar to director |
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Term
| LLC: sharing of profits and losses |
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Definition
| Profits and losses of an LLC are allocated on basis of contributions |
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