Flashcards
Partnerships-PA
Cards in this deck (55)
- 1What is the definition of a partnership?Association of two or more people that are co-owners of a business for-profit.
- 2How do you create a partnership?Express Agrement or
Implied:
1. Intent to enter into a business as co-owners for-profit;
2. Share in profits and losses; and
3. Mutual right of control of the business. - 3What is prima facie evidence of a partner?Anyone that receives a share of business profits.
EXCEPTIONS: Profit received for wages, rent, consideration for sale of asset, repayment of principal or interest on debt. - 4What is partnership property?Property held in partnership's name.
Note: There is also interest in the partnership itself, which is personal. - 5What else constitutes partnership property?Depends on the INTENT of the parties.
1. property acquired for the partnership business;
2. property bought with partnership funds;
3. acquired in the name of one of the partners, if its carried on the books of partnership;
4. property improved by the partnership or which the partnership covers expenses such as taxes, repairs or insurance - 6Can a partner possess partnership property for personal use?No, not without consent of other partners.
- 7Can a partner's interest in PP be attached in claim or judgment?NO, unless the claim or judgment is against the partnership.
- 8What happens to partnership property on the death of a partner?Vests in the surviving partners.
- 9What is the partner's parnership interest?The partner's interest in her share of partnership PROFIT or SURPLUS. This is considered personal property.
- 10Can a partnership right be transferred? If so, what rights does transferee get?Yes they can, and also sold. Assigmee only receives profits of assigning partner.
Partnership is not dissolved, and assignee NOT entitled to interfere in control, or require any information from partnership books. - 11Can creditor of partner get assignment of her interest? If not, what does creditor need to do?No, creditor can't, they need to seel charhing order, and court may appoint receiver to get partner's profits for debt.
- 12What rights does partner always have and can't waive?1. Duty of loyalty and care to each partner and to the partnership;
2. Liabilities to third-parties for partership obligations;
3. Right to an accounting. - 13Absent evidence, what is partner's presumed share in profits? Losses?Equally in profit
Losses are shared in proportion to share in profits.
Every manager has an equal right in management and control of business. - 14How are disputes decided in ordinary course of business? How many votes needed for overrule partnership agreement? For new partner?Ordinary disputes decided by majority.
No act in contravention of the partnership agreement, and no person can become a partner, without unanimous vote. - 15What is an accounting? When does it occur? When can you demand?Legal proceeding to determine and resolve all transactions and financial matters in connection with a partnership. Occures upon dissolution and winding up of partnership affairs. May also demand when wrongfully excluded from business, or other reasonable reason like fiduciary breach.
- 16What duty do partners have to each other?Fiduciary duty to partnership and each other:
Duty of honesty, good-faith, fair dealing, trust confidence, to indemnify for losses of business. - 17What if partner breaches duty?Parners are entitled to accounting, partner is liable for lost profits.
- 18Does partnership have to indemnify partners?Yes, for debts and personal liabilities in connection with the business.
- 19Do partners have to contributed?Yes, amounts necessary to meet partnership obligations and debts in proportion to his or her partnership interests.
All partners have rights to access and inspect books. - 20Are partners automatically entitled to distribution of partnership profits?No. Amount of any cash distributed to a partner (draw) is determined by majority of partners. Difference between allocation of profits and distribution of cash.
- 21If you do more work in partnership, do you get compensated for it?No.
- 22Is partnership bound by partners act with third parties?Yes. All partners are agents of the corporation, partnrship is bound by act of any partner actions in the usual course of business in partnership.
- 23What is Express Actual Authority?Conferred by written, however express authority can slo be implied by other partners.
- 24What do you always need unanimous consent for (besides before)?1. Disposition of partnership property to creditors;
2. Disposing of business assets;
3. Confessing a judgment;
4. Submitting claims to arbitration
5. Other act which makes it impractical to carry on partnership - 25What is Implied Actual Authority?Authority which partners have for usual, customary and ordinary things to accomplish express responsibilities.
- 26What is Apparent Authority? Ratification?TO protect third parties, when you act without actual authority, a partnerhip may still be bound if third party reasonably believed actor was authorized to act on partnership's behalf.
Ratification: unathorized partner's acts may bind partnership if co-partners subsequently ratify - 27What is partnership by estoppel?A person who represents themselves as partner is liable to person who in good-faith extended cedit to partnership based on representation.
- 28When are partners liable for partnership by estoppel?Careless or intentionally cause third party to believe she is partner OR knowing of such belief did not take action notify third party.
- 29Are all partners liable for wrong acts of one?Yes, partners Jointly and severally liable to third parties, when a partner is acting in the regular course of partnership business, even if they're innocent.
Contract Liability: Partners are JOINTLY liable under UPA for debt and obligation of partnership. - 30What is action is brought against partnership name?Judgment only entitled plaintiff to partnership property.
- 31What are new partners liable for?All obligations of partnership arising before their admission. However, liability can only be satisfied out of partnership assets.
- 32What are outgoing partners liable for?Third-party that extended credit while partner was member of partnership
- 33What is dissolution? When do it occur?Change in relationship of partners caused by any partner ceasing to be associated in partnership
Happens in withdrawal, death, or bankruptcy of a partner. - 34When is partnership terminated?All partnership affaird have been wound up. Winding up is the peroid time time after dissolution but before termination.
- 35What is a rightful dissolution?1. End of finite term or end at-will if no term;
2. Bona Fide expulsion of partner;
3. Death of any partner;
4. Bankruptcy of partner or partnership - 36What is wrongful dissolution? Who is liable?1. Violation of partnership agreement;
2. Willful or persistent breach;
3. wrongful explusion
Any partner that wrongfully dissolved the partnership is liable to tht others for damages for breach - 37Can a partnership be dissolved by court?Yes. Upon application of a partner and the court finding:
1. Incapcity or Incompetence of another partner;
2. Not reasonably practical to carry on partnership business. - 38What happens to partnership at dissolution?Terminates the authority of any partner to act as an agent for the partnership except for winding up.
Must provide notice of dissolution in area where partnership carries on its buisiness and a legal periodical. - 39Can you continue partnership after dissolution? After Wrongful dissolution?1. If provided by agreement;
2. After wrongful dissolution, other partners may continue partnership business. WRONGFUL PARTNER STIL ENTITLED TO BUY OUT! Amount of damages against him will be subtracted. - 40What can partner do after rightful dissolution?Partner can demand a liquidation of the partnership. THis is a forced sale of partnership assets, which are first used to satisfy partnership liabilities.
Surplus distributed to partner according to their interest. - 41What does estate of deceased partner get?Partner's interest in partnership property vests with surviving partners. However executor can demand cash of value of decedent's partnership interest.
Contingent fees that are pending have no value. - 42What if there is outstanding creditors among disssolution?If partnership does not have it, each parnter must contributed based on their partnership interest the amount necessary to satisfy obligations.
- 43What is the priority of payment in dissolution?1. Creditors;
2. debts owed to partners;
3. Capital contributions of partners;
4. Amounts owed to partners based on their profit share percentage - 44What is a limited partnership?Formed by one or more persons and having one or more general partners, and one or more limited partners. There MUST be at least one general partner (can be corporation).
- 45What do you need to create LP?Unlike general partnership, LP needs to file a certificate of LP with state. No written agreement required. Need: 1) partnership name; 2) address of its general office; 3) name and address of each general partner.
- 46Is limited partner ever liable?YES. WHen limited partner participates in control of the business, loses limited liability. They are liable to the person they transact with.
- 47What are liabilities in LP?General partners: Liable for wrongful acts, breach of trust, and other debts and obligations of partnership under same rules as regular partnership.
Limited Partners: Not liable for LPs liabilities, expenses, judgments and other debts an obligations. - 48How does LP share profits, losses and distributions?Based on PROPORTION of partner's contribution as stated in partneship records. UNLIKE GENERAL PARTNERSHIP WHO SHARE EQUALLY!!
- 49May limited partner assign interest?Yes, and it does not dissolve the LP. Similar to before, the assignee does not become limited partner and is only entitled to distribution assignor would get.
- 50When does limited partnership dissolution occur?1. end of definite term;
2. Consent of all partners;
3. Withdrawal of general partner
a. UNLESS at least one general partner remains and agreement permts continuation; OR
b. unless all partners agree in writing within 180 days to continue partnership business and to appoint one or more general partners - 51What is partnership tax considerations?Unlike corporations, partnership are a pass-through entity, and not a taxable entity, does not file federal income tax, only information returns. Partners are taxed individually on profits. Each partner responsibble for paying tax on their property, whether or not they receive it.
- 52LLP and LLCAlternative business forms that offer best of both worlds: 1. limited liability and 2. tax benefits of pass through entity.
Pennsylvania LLC's taxed like a corporation for state law purposes. - 53Profits and Losses of LLC?Based on operating agreement, otherwise each member gets equal share.
- 54Can LLC member sue on behalf of the LLC?Unless otherwise in LLC agreement, only if authorized to do so by the vote of members who are entitled to vote and who do not have interest in the outcome.
- 55When is LLC dissolved?Similar to partnership:
1. At a previously specified time;
2. Unanimous written agreement or consent of all members; OR
3. Upon a member's termination of membership (death, bankruptcy, retirement, explusion, etc.)
a. UNLESS at least a majority in interest remaining member vote or consent to continue business of the LLC within 180 days.
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- Flashcards on Partnerships-PA, created by Saeed Rizvi on 14/07/2016.
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- Saeed Rizvi
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