General Partnership- A voluntary association of two or more persons to carry on a business for profit.

Personal Liability- Liability for business debt that extends beyond what is invested in a business to include an individual’s personal assets.

UPA- Uniform Partnership Act, a model for partnership legislation in about one-fifth of the states.

RUPA- Revised Uniform Partnership Act, a model for partnership legislation in about four-fifths of the states.

Interest in the partnership- A partner’s right to profits (or share of losses).

Joint and several liability- the principle that each partner and the partnership are liable to pay all of a debt or obligation.

Marshaling of assets- Partnership theory requires creditors to first exhaust partnership assets before pursuing partners’ individual assets.

partnership agreement- an agreement by two or more persons to do business together as a partnership, may be oral or written.

General Agency- the authority of a partner to act for and bind the partnership and other partners.

Statement of authority- Document filed with the secretary of state providing notice or partners who are authorized to act for partnership.

Statement of denial- a document filed with the secretary of state denying information in the statement of authority.

Recitals- Introductory clauses in agreements set forth bias for agreement.

Partnership at will- a partnership with no specific term.

Non-compete clause- Clause in an agreement restricting signatory from competing with another during and after parties relationship terminates.

Wrongful dissolution- Departure from a partnership in breach of the partnership agreement.

Dissociation- Departure by a partner from a partnership.

Statement of Dissociation- Document filed with the state to identify dissociating partner and to limit the period for which partners will be liable for dissociating partner’s acts.

Pass-Through Tax Status- The tax status of a partnership in which all income is passed through to partners who pay taxes at their individual rates (after a 20% deduction and subject to certain income thresholds and other restrictions)

Check the box- Method by which businesses may elect how they wish to be taxed, namely as a corporation.

Joint Venture- A type of partnership formed to carry out a single enterprise.

A general partnership agreement may be written or oral; written is preferable to provide certainty in the event of a dispute.

The persons in a general partnership may be natural persons, partnerships, or corporations.

Partners in a general partnership have the disadvantage of personal liability, meaning their personal assets can be reached by creditors.

In 1914 the Uniform Law Commission approved the UPA.

in 1997 the UPA was revised and became known as the RUPA, and was revised in 2011 and 2013.

Property that is contributed to the partnership belongs to the partnership.

Partners should agree on the value of the property or have an expert appraise it.

Partners in a general partnership have three types of property rights; rights to specific partnership property, an interest in the partnership, and rights to participate in management.

A partner’s only personal property is their share of profits, known as distributions and losses.

RUPA 501 states individual partners cannot transfer property, and their creditors can not seize it.

The right to profit is a personal property right, a partner may transfer their own profits, and a creditor can seize their personal profits.

RUPA 502- the only transferable interest of a partner is that partner’s share of profits and losses and right to receive distributions.

Under RUPA, a partner’s rights are divided into two parts economic rights (transferable to others) and governance rights ( rights to manage the entity, non-transferable.)

Governance rights are transferable with all other partners’ consent unless the partnership agreement provides otherwise, known as the “pick you Partner principle.”

Partners have the right to participate in governance or management of the partnership, usually at a partnership meeting.

Advantages of general partnerships include east of formation, flexible management, ease of raising capital, pass through taxation.

A general partnership generally doesn’t require filings with a state or local agency or a written agreement.

Flexible Management- management in a general partnership can be shared or appointed.

Ease of Raising Capital- Partnerships can raise capital by requiring additional contributions from their memes or by admitting new partners, and other partners can help bear losses.

Pass-Through Taxation. Partnerships do not pay federal income tax; the individuals take a 20% deduction on their share of the taxable business income and pay tax on their respective share of partnership profits.

General partnerships have three primary disadvantages; unlimited personal liability, lack of continuity, and difficulty in transferring Partnership interest.

The partners have joint and several liability meaning each partner is entirely liable for all obligations, and a creditor can sue all partners for wrongful acts or pick which partners to sue.

A wealthy partner may be sued fully even if his interest is only 10%, the partners will have to figure out how he’s to be reimbursed on their own.

Partners may attempt to protect themselves with insurance or make an agreement that they will not take personal assets to satisfy partnership debts.

RUPA 307- Creditors must first exhaust partnership assets before attacking the personal assets of an individual judgment debtor partner.

the 1996 amendments to RUPA provide that a general partnership may become a limited liability partnership to eliminate a partner’s personal liability.

Lack of continuity in a partnership means that a partnership cannot survive the death or withdrawal of a partner unless specified in an agreement.

RUPA attempts the help with the lack of continuity in a partnership by providing that partnerships no longer dissolve every time a partner departs.

Difficulty in transferring partnership interest if a new partner receives the transfer’s share of profits, they are not entitled to manage the business.

A general partnership may operate under a fictitious name but must file a fictitious name statement.

Forming a general partnership is easy because the essence of the partnership is a voluntary agreement to conduct business for profit.

Partnerships must comply with licensing requirements specific to their business.

if the business makes sales, it must acquire a sales tax permit and comply with laws relating to social security, tax withholding, and workers’ compensation.

A general partnership may operate in a state other than the one in which it was formed in most instances.

Partners owe each other fiduciary duties and deal with each other in good faith.

RUPA- 103 partners may not eliminate duties of good faith and fair dealing inherent in every contract.

A partnership agreement may identify certain activities that do not violate the duty of loyalty, but cant exonerates a partner from liability for bad faith, wilful or international misconduct, or knowingly violating the law.

Partners may eliminate or change may UPA AND RUPA provisions in their agreement.

A partnership agreement can not limit a partner’s access to books and records.

Due to the risk inherent in this partnership principle that partners are agents of the partnership and thus their acts bind the partnership, RUPA 303 allows the partnership to file an optional statement of authority with state officials to provide public notice of which partners have authority to perform certain acts including transferring real estate.

Regardless of initial and future capital contributions, each partner has one vote in managing matters unless they decide otherwise because all partnes have queal rights in the management of the business (UPA 18 [e] , RUPA 401).

A Majority vote is required for decision-making in a general partnership.

UPA 9 states that unanimous approval is required for performing any act that makes it impossible to continue the business, disposing of goodwill of the business, and submitting a partnership claim to arbitration.

RUPA 401 provides that for any act not in the ordinary course of business, any amendment to the partnership agreement must be authorized by all partners.

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