ch 37- partnerships

What is the legal definition of a partnership?

A partnership is "an association of two or more persons to carry on as co-owners a business for profit."

What does the Uniform Partnership Act (UPA) govern?

The UPA governs the operation of partnerships in the absence of an express agreement, aiming to reduce controversies in partnership law.

What are the key elements that must be present for a partnership to exist?

A partnership exists when there is intent to associate as partners, sharing of profits, and carrying on a business as co-owners.

Under what circumstances might a partnership not exist despite joint ownership?

A partnership does not exist if there is no intent to carry on business as co-owners, or if the sharing of profits is merely a return on investment or payment for services.

Explain the difference between treating a partnership as an entity versus an aggregate for tax purposes.

For tax purposes, a partnership can be treated as an entity (separate from its partners) or as an aggregate (partners are jointly and severally liable for tax obligations).

What are the requirements for forming a partnership?

A partnership can be formed orally or in writing, with or without filing with the recorder's office, but it should include terms like parties, capital, profit/loss sharing, management, etc.

What is a 'partnership for a term'?

A partnership for a term is one where the agreement specifies the duration of the partnership.

What is 'partnership by estoppel'?

Partnership by estoppel occurs when a third party reasonably and detrimentally relies on the representation that someone is a partner, even if they are not.

List some rights of partners in a partnership.

Rights include management, interest in the partnership, compensation, inspection of books, accounting, property rights, and assignment of partnership interest.

What are the fiduciary duties of a partner?

Partners owe duties of care and loyalty to the partnership and other partners. The duty of care limits gross negligence or misconduct, while the duty of loyalty requires partners to account for any benefit derived from the partnership business.

What was the significance of the Meinhard v. Salmon case regarding partnerships?

This case emphasized the fiduciary duty of loyalty, where a partner must act with the utmost good faith towards the partnership.

How does tort liability apply in a partnership?

Partners can be held liable for torts committed by the partnership or another partner under the doctrine of apparent authority and joint and several liability.

What events can cause the dissociation of a partner?

Events include voluntary notice by the partner, an agreement trigger, expulsion by other partners or by court, death, or incapacity.

What is the impact of wrongful dissociation on a partner?

Wrongful dissociation can result in the partner being liable for damages caused by the dissolution and can impact their duty of loyalty and care.

What are the steps involved in the winding up and distribution of partnership assets?

Steps include giving notice to creditors, ceasing future business, completing transactions, preserving assets, paying off debts, and distributing remaining assets according to priority.