B. Partnerships

General Partnerships, Limited Partnerships, and Limited Liability Partnerships

GENERAL PARTNERSHIP

1. Formation

2. Liability of Partners

3. Ownership

4. Management & Control

1. (i) association of 2+ persons
   (ii) of a business for profit
   (iii) as co-owners

2. All partners are personally liable, jointly and severally.

3. equal ownership

4. equal rights in management and control

PROFIT-SHARING PRESUMPTION

w/r/t general partnerships, profit-sharing creates a presumption that a person is a partner UNLESS the profits were received in payment of a debt, rent to a landlord, wages, etc.

LIMITED PARTNERSHIP

1. Formation

2. Liability of Partners

3. Ownership

4. Management and Control

1. (i) p’ship agreement
   (ii) file a certificate of limited partnership w/ the SoS

2. GPs are personally liable, jointly and severally. LPs are not.

3. equal ownership

4. GPs have full rights in management and control. LPs have none.

LIMITED LIABILITY PARTNERSHIP

1. Formation

2. Liability of Partners

3. Ownership

4. Management and Control

1. file a statement of qualification w/ the SoS

2. The business (not the partners) is personally liable.

3. equal ownership

4. All members have equal rights in management and control.

After dissolution, how does a partner’s authority change w/r/t…

1. Actual Authority?

2. Apparent Authority?

1. Limited to acts appropriate for winding up the business

2. A partnership has apparent authority to bind the p’ship if…
   (i) the partner’s acts would have normally bound the p’ship
   (ii) 3P did not have notice of dissolution

When does a partner have actual authority?

(i) partner expressly received authority from the other partners, OR
a) if acting within the ordinary course of business, need majority approval from partners
b) if acting outside the ordinary course of business, need unanimous approval from partners
c) if p’ship agreement is silent, partner has authority UNLESS…
1) he knows other partners may disagree OR
2) he knows that consultation is appropriate
(ii) partner takes actions reasonably incidental or necessary to achieve his authorized duties

When does a partner have apparent authority?

(i) conduct is within the ordinary course of business, OR
(ii) conduct is the kind carried on by the p’ship

To whom does a partner owe fiduciary duties?

(i) the business
(ii) other partners

When is the DUTY OF CARE breached?

(i) grossly negligent OR reckless conduct, OR
(ii) intentional misconduct, OR
(iii) knowing violation of the law

When is the DUTY OF LOYALTY breached?

(i) competition w/ the p’ship UNLESS agreed otherwise, OR
(ii) having an adverse interest to the p’ship, OR
(iii) failing to account for any profit/benefit AND hold it as a trustee for the p’ship

Ways to End a Partnership

• death of a partner

• end of a definite term OR completion of an undertaking

• dissolution (i.e. withdrawal) of a partner

WRONGFUL DISSOCIATION

(i) dissociation breaches an express provision of the p’ship agreement, OR
(ii) dissociation is done before completion of the agreed upon term or undertaking

WINDING UP

the procedure by which assets are liquidated to pay creditors

TERMINATION

what occurs when the winding up process is complete; marks the (actual) end of the p’ship