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Partnership - Coggle Diagram

- - - - Binding K's: As an agent, the partner can commit the partnership to binding contracts with third parties.
      - 2 Fiduciary Duties: the duty of loyalty and the duty of care.
      - Property: All property acquired by a partnership is partnership property and belongs to the partnership, not to the individual partners.
      - Management: Each partner has equal rights in the management and conduct of the partnership.
        
        Ordinary Biz
        
        A majority of the partners can make a decision as to a matter in the ordinary course of the partnership’s business,
        
        Acting individually, a partner has the actual authority to commit the partnership to usual and customary matters, unless the partner has reason to know that: (i) other partners might disagree; or (ii) for some other reason consultation with fellow partners is appropriate.
        
        Special Biz
        
        A decision as to a matter outside the ordinary course of the partnership’s business requires the consent of all partners.
  - - - Actual Authority
        
        A partner’s act that was authorized by the partnership binds the partnership. Actual authority includes both express authority and implied authority.
      - Apparent Authority
        
        Even if a partner's act was not authorized by the partnership, it is binding if it was performed in the ordinary course of business
        
        In addition, the third party with whom the partner was dealing cannot hold the partnership liable when that party knew or had received notification that the partner lacked authority.
    - - AKA, each partner is individually liable for the entire amount of the partnership's obligation
        
        Partner is entitled to indemnification by the partnership for any payments made on the partnership's behalf
        
        Partner can seek contribution from other partners for any payments made on theri behalf
  - - - A partner is not entitled to remuneration for services performed for the partnership UNLESS
        
        The partners agree to pay a partner for her efforts.
        
        Partner renders services in winding up the business of the partnership
- - - - Individual
      - Legal entity
        
        Corporation
        
        LLC
        
        Turst
        
        Estate
        
        Another partnership
    - - At least 2 persons must intend to carry on a biz for profit as co-owners
      - Don't need specific intent to form a partnership :warning:
        
        In fact, co-owners specific intent NOT to form a partnership does not prevent the association from being a partnership
    - - Only necessary agreement to create a partnership = agreement to conduct a for-profit biz as co-owners
        
        Can be implied if parties haven't entered into a written/oral agreement
      - Can Be Written OR Oral
        
        But, partnership agreements are subject to SOF, which requires contracts that cannot be performed in 1 year to be in writing :warning:
    - - Key test applied to ascertain whether a business arrangement is a partnership
        
        Did the partners share profits? :warning:
        
        If YES
        
        Such arrangement is presumed to be a partnership
  - - - An association of 2 or more persons to carry on as co-owners of a biz for profit
        
        Key test: intent of the parties & sharing profits = prima facia evidence of a partnership
        
        Owners haven't filed paperwork with the state to create a specific entity
        
        AKA :forbidden: writing requirement
        
        All owners (general partners) are personally liable for biz debts
        
        Each individual partner can be sued for the full amount of any business debt (though that partner can, in turn, sue the other partners for their share of the debt)
    - - Must be at least 1 General & 1 Limited partner
        
        Limited partner
        
        Contribute capital & share in profits
        
        Liability is limited to their contributions
        
        AKA not liable for business debts that exceed their initial investment.
        
        Take no part in control or management of the biz
        
        General partner
        
        Manage the biz & are personally liable w/o limitation for partnership obligations
      - Formation
        
        File certificate of limited partnership w/ Secretary of State & annual reports
    - - Formation
        
        Formed by filing a statement of qualification with the state
      - All partners = limited liability partners
        
        All owners of a LLP have limited personal liability for biz debts
        
        NO general partners
- - - - If the dissociation = wrongful, partner may be liable to the partnership for wrongful dissociation
        
        So when a partner is dissociating, we ask "Did the partner have a right to dissociate?"
        
        Dissociation does not necessarily cause the dissolution of the partnership and the winding up of its business, however, it does have a variety of other consequences for both the partner and the partnership.
        
        Biz can stay alive if partners choose to do so
- - - - The first step in the termination of a partnership
        
        Dissolution of partnership at will
        
        A partnership at will is an open-ended partnership that does not have a fixed termination based on a period of time or particular undertaking.
        
        It is dissolved when a partner chooses to dissociate from the partnership by giving notice of her withdrawal
        
        Dissolution of partnership for a term or undertaking
        
        A partnership for a definite term or particular undertaking is dissolved when:
        
        The term expires or the undertaking is completed;
        
        If partners continue the biz after term expires or undertaking is completed.. . . there is a presumption that they have agreed to continue the business.
        
        The partnership is then transformed into a partnership at will; the rights and duties of the partners remain the same as they were.
        
        All partners agree to dissolve the partnership; or
        
        A partner is dissociated due to death, bankruptcy, or other circumstance, and within 90 days of such occurrence, at least half of the remaining partners agree to dissolve the partnership.
    - - A partnership that has dissolved continues only to wind up its business
        
        Liquidating assets
        
        Distributing cash to entitled parties
        
        Costs of sale
        
        Outside creditors
        
        Inside creditors
        
        This is when a partner contributes cash to keep a failing biz afloat
        
        Capital
        
        Profit