Chapter 34 Business Law

Entrepreneur

Person who forms and operates a new business either by himself or herself or with others

Uniform Partnership Act

Model act codifying consistent partnership law
– Formed with little or no formality

General partnership agreement

Written agreement signed by partners
– No formalities are necessary

Duty of loyalty

Partner should not act adversely to the interests of the partnership

Duty of care

Obligation to use same level of care and skill that a reasonable person would use
– Breach of duty of care is negligence

Duty to inform

Provide all information relevant to affairs of the partnership
– Other partners are imputed with knowledge of all notices

Duty of obedience

Adhere to provisions of partnership agreement and decisions

Action for an accounting

Formal judicial proceeding in which court is authorized to:
– Review partnership and partners’ transactions
– Award each partner his or her share of partnership assets

Tort liability

Unlimited personal liability for debts and obligations of partnership

Joint and several liability

For torts and breaches of trust
 Plaintiff can sue each partner separately
 Plaintiff can recover entire amount from all liable partners

Contract liability

Unlimited personal liability for contracts of partnership

Joint liability

For contracts and debts of partnership
 Plaintiff must name all partners as defendants in a lawsuit

Liability of incoming partners

Liable to debts and obligations only to extent of capital contribution

Liability of outgoing partners

Liable for debts and obligations incurred at time of dissolution
– Not liable for new debts and obligations incurred after dissolution

Partnership for a term

Partnership created for a fixed duration

Partnership at will

Partnership created with no fixed duration

Winding up

Liquidation of partnership assets
– Distributing the proceeds to satisfy claims against the partnership

Wrongful dissolution

Partner withdraws from partnership prior to the expiration of the term

Notice of dissolution

Third parties, who have:
– Dealt with the partnership, must be given actual notice of dissolution
– Not dealt with the partnership but have knowledge of it, must be given actual or constructive notice
– No knowledge of the partnership, do not have to be given notice

Right of survivorship

A rule that provides that, on the death of a general partner, the deceased partner’s right in specific partnership property vests in the remaining partner(s); and
– The value of the deceased general partner’s interest in the partnership passes to her beneficiaries or heirs