Final Exam - partnerships

UPA

• each partner has equal right to possess property for partnership purposes

• partner may not individually assign his right in the partnership property

• individual creditors may not attach or execute on partnership property although partnership creditors can

• upon a partner’s death, deceased partner’s right to the partnership property vest in any surviving partners so surviving partner have right of survivorship to property

Partnership Interst

partner’s have personal property interest in share of partnership’s profits and surplus or return of contributed capital after dissolution

• interest can be assigned or sold, but assignee cannot become parter and participate in partnership without consent of other members. if consented, assignee still does not have right automatic right o management parntership or partnership information

• new assignments of interest do not dissolve partnership

• leaving partner still has partner’s right and duties except for receiving partnership share of profits or surplus

• partner’s creditors can use Charging Order to hold partner’s share of profits and surplus to creditor’s benefit

• decreased partner’s estate includes the partner’s personal property interest

UPA

• each partner has equal right to possess property for partnership purposes

• partner may not individually assign his right in the partnership property

• individual creditors may not attach or execute on partnership property although partnership creditors can

• upon a partner’s death, deceased partner’s right to the partnership property vest in any surviving partners so surviving partner have right of survivorship to property

Partnership Interst

partner’s have personal property interest in share of partnership’s profits and surplus or return of contributed capital after dissolution

• interest can be assigned or sold, but assignee cannot become parter and participate in partnership without consent of other members. if consented, assignee still does not have right automatic right o management parntership or partnership information

• new assignments of interest do not dissolve partnership

• leaving partner still has partner’s right and duties except for receiving partnership share of profits or surplus

• partner’s creditors can use Charging Order to hold partner’s share of profits and surplus to creditor’s benefit

• decreased partner’s estate includes the partner’s personal property interest

Dissolution Process

1. dissolution

2. windup affairs

3. liquidation

Ways to Dissolve Partnership

1. acts of partners

   1. partner’s always hav power to dissolve partnership but may be held liable for actions under partnership agreement

   2. all partners agree to dissolve

   3. terms under partnership agreement have ended or purpose is accomplished

   4. partner at will withdraws from partnership

2. Operation of Law

   1. partner dies

   2. partner or partnership goes bankrupt

   3. partner or partnership becomes illegal after formation

3. Court Order:

   1. partner can apply to court to dissolve partnership based on:

      1. partner's inability to function (incompetency or incapacity)

      2. partner’s breach of duties to partnership

      3. partnership inccurs losses forever

   2. Charging Orders

Partnership WindUp - Things to do

1. paying debts, collecting assets, and finishing contracts

2. give notice to third parties of dissolution to terminate apparent authority of the partners

   1. make sure third parties who have extended credit are given ACTUAL notice

3. other third parties are given actual or CONSTRUCTIVE notice - publishment in newspaper or general circulation

Liquidation:

Partnership can either liquidate assets or continue by remaining partners in which case new partnership is formed. Can continue when:

• dissolution was in violation of partnership agreement

• partner was expelled in accordance with terms of the agreement

• partners agree to continue in which case non-continuing partners or representatives of deceased partners are entitled to be paid the value of their partnership interest subject to claims of creditors

Dissociation

change in partnership due to partner leaving. dissociated partner has no authority but can have apparent authority for 2 years following dissociation

Partner’s Authority:

• general partner’s jointly and severally liable for all debts and contractual obligations of partnership

• partners can also be jointly and severally liable for torts caused by wrongful acts or omission of other partners while acting within scope of partnership business. but they have the right of indemnification against partner who committed the tort

notice and knowledge of one partner binds the whole partnership

one partner can speak for the entire partnership within scope fo his authority

incoming partner liabilites:

only responsible for debt, obligation, and other liability of the partnership incurred after they join. but a new member’s capital contribution can be used to satisfy exsiting partnership debt