LEGL 4400 EXAM 2: Ch. 30 - 33

What is a partnership?

An association of 2+ persons carrying on a business as co

Entity theory vs. aggregate theory?

Entity: partnership is separate from partners, Aggregate: partnership = group of individuals

Is a written partnership agreement required?

No, but strongly preferred.

What are the 3 elements required to form a partnership?

1. Association (2+ persons with capacity) 2. Business for profit 3. Co

Partnership capital vs. property?

Capital = contributions by partners ; Property = all partnership assets

What is fiduciary duty?, Duty of loyalty, fairness, and good faith.

Examples of fiduciary duty violations?

Competing with partnership, Taking opportunities, Conflicts of interest, Sharing confidential info

Duty of obedience?

Follow partnership agreement + decisions.

Duty of care?

Avoid gross negligence, misconduct, or illegal acts.

Do partners have rights to partnership property?

Yes, for partnership purposes only.

What is a partner’s transferable interest?

Share of profits/losses + right to distributions.

Can a partner transfer their interest?

Yes, but transferee is NOT a partner.

What is a charging order?

Court lien on a partner’s interest for creditors.

How are profits shared?

Equally unless agreed otherwise.

Are partners paid for services?

No (unless agreed).

When can partners withdraw capital?

Only upon withdrawal or liquidation.

What is indemnification?

Reimbursement for expenses/loans made to partnership.

Who manages the partnership?

All partners equally (default rule).

What is delectus personae?

No new partner without consent of all partners.

Do partners have access to information and how much?

Yes, full access.

Can partners sue?

Yes

What liability do partners have for contracts?

Joint and several, unlimited personal liability.

Joint vs. several liability?

Joint = group liable, Several = individually liable

Types of authority?

Express (written/explicit), Implied (based on role), Apparent (reasonable third

When does apparent authority bind the partnership/

When acting in ordinary business AND third party unaware of lack of authority.

What is partnership by estoppel?

Non partner treated as partner if they present themselves as one.

Are partners liable for torts and how?

Yes, jointly and severally if in ordinary course.

Are partners liable for crimes of others?

No, unless they participated or authorized.

When does notice bind the partnership?

When a partner knows or should know a fact.

Liability for old debts?

Limited to capital contribution.

Liability for new debts?

Unlimited.

What is dissociation?

Partner leaves partnership.

Wrongful dissociation?

Leaving in violation of agreement.

Effect of dissociation?

Ends management rights.

What is dissolution?

Partnership begins winding up.

Does dissolution end the partnership immediately?

No, it continues until winding up is complete.

What is winding up?

Finish business, Collect debts, Distribute assets

Order of distribution?

1. Creditors 2. Partner loans/accounts

Can partnership continue after dissociation?

Yes, with buyout of leaving partner.

Dissociated partner liability?

Still liable for old debts and up to 2 years for new ones (if no notice)

Structure of LP?

At least 1 general + 1 limited partner.

Liability differences?

General: unlimited, Limited: limited to investment

When do limited partners lose protection?

If they participate in management.

Who controls LP?

General partners.

Profit sharing?

Based on agreement or contributions.

What causes LP dissolution?

Expiration, General partner withdrawal, Court order

What is an LLC?

Hybrid entity with limited liability + flexible management.

Formation Key document?

Operating agreement.

Profit distribution?

Based on agreement or contributions.

Types of management?

Member, Manager

Are members personally liable?

No (with limited exceptions).

Causes of LLC dissolution?

Member withdrawal, Expiration, Agreement, Court order

Key attributes of corporations?, Separate legal entity, Limited liability, Perpetual existence, Transferable shares, Centralized management

Public vs. private?

Public = government, Private = owned by individuals

Closely held vs. publicly held?

Closely = few owners, Publicly = widely traded

Who is a promoter?

Person organizing corporation.

Are promoters liable on contracts?

Yes, unless novation.

Articles of incorporation?

Main legal document.

Bylaws?

Internal rules.

Corporation de jure vs. de facto?

De jure = properly formed, De facto = defective but treated as valid

When can courts ignore corporate protection?

Fraud, Wrongdoing, Avoiding law

What are ultra vires acts?

Acts beyond corporate authority.

Corporate tort liability?

Yes (respondeat superior).

Criminal liability?

Yes, for certain acts.