ch 37- partnerships

Partnership

• “an association of two or more persons to carry on as co-owners a business for profit”

• Uniform partnership act

  • governs the operation of partnership in the absence of express agreement and has done much to reduce controversies in the law relating to partnerships

  • requires intent

  • writing

Elements of a partnership

• when does a partnership exist

• when does a partnership not exist

  • joint ownership and sharing profits

Entity v. Aggregate and Taxes

• prior identification

• joint and severally liable

• tax treatment

Partnership formation

• has to be written or oral

• file with the recorders office

• terms

  • parties

  • capital

  • profits/losses

  • management

  • accounting

  • dissociation

  • arbitration

• partnership for a term

  • agreement specifying the duration of partnership

• partnership at will

  • no specified date

• partnership by estoppel

  • third person has reasonably and detrimentally relied on the representation that a non-partner was part of partnership

Rights of Partners

• management, interest, compensation, inspection, accounting, property rights, assignment

Duties and liabilities

• fiduciary duties

  • a partner owing to the partnership and to the other partners are the duty of care and the duty of loyalty

    • duty of care: limited to refraining from “grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law.”

    • duty of loyalty: requires a partner to account to the partnership for “any property, profit, or benefit” derived by the partner in the conduct of the partnership’s business or from the use of its property

• meinhard v. salmon

• tort liability

  • apparent authority

• joint and several liability

  • incoming partner

Dissociation of partner

DEFINE

• events causing dissociation:

  • notice

  • agreement trigger

  • expelled → others/court

  • death/incapacity

• Wrongful dissociation of partner

  • effect

• impact of dissociation

  • participation

  • duty of loyalty

  • duty of care

Partnership termination

• agree to dissolve

• operation of law

• judicial decree

Winding up and distribution of assets

• notice to creditors

  • no future business

  • complete transactions

  • preserve assets

• pay debts

• priority

Buy-sell agreements

define

• timing

• limited liability partnerships