Exam 2 Study Guide
Exam 2 Study Guide BSL304
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This 12 page Study Guide was uploaded by Zohar Peleg on Monday March 2, 2015. The Study Guide belongs to BSL304 at The American University of Rome taught by Dr. Turner in Fall2014. Since its upload, it has received 199 views. For similar materials see Corporate Law in Business Law at The American University of Rome.
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Date Created: 03/02/15
10062014 Exam 2 Study Guide Ch31 Formation and Internal Relations of General Partnerships Factors affecting choice of a business association 0 Ease of formation 0 Need or no need of formalities Taxa on 0 Pass thru where the owners pay taxes on all business pro ts on their individual tax returns 0 Double taxation Taxation once to entity and once to owners External liabilitv o Tort and contract liability 0 Unlimited liability Management amp control 0 of shareholders or owners transferabilitv 0 some businesses owners can freely transfer their nancial interest but not mgt interest 0 some can transfer entire interest freely continuity 0 death bankruptcy or withdrawal of an owner results in dissolution of business 0 can be high or low sole proprietorship an unincorporated business consisting of one person who owns amp completely controls the business no formality pass thru taxation personal liability little gov regulation interest is freely tansferable general partnerships consists of 2 or more ppl who coown a business for pro t no formality unlimited liability control by all partners under RUPA deathwithdrawal of P doesn t mean that business must dissolve joint venture composed of ppl who combine their property money efforts skill and knowledge for the purpose of carrying out a certain business for pro t 0 ex join research conducted by corps Limited Partnership Consists of at least one general P and at least one limited P o Formed by lling a limited partnership 0 Unlimited liability 0 Equal rights for general p s not limited p s Death or other causes of general P dissolves pship 0 Limited p s have no right to dissolve pship Limited liability company LLC 0 Provides limited liability to all of its owners and allows all of its members to participate in mgt of business Limited liability partnership LLP 0 General pship that limits liability of its partners for some or all the pship s obligations Same laws governing general pships Limited Liability Limited Partnership 0 Limited pship in which the liability of general partners have been limited to the same extent as in LLP Corporation o Is a legal entity separate amp distinct from its owners 0 Formed by ling articles within state Taxed as separate entity 0 Board of directors manages Death etc of shareholder doesn t dissolve corp Business trusts Used for asset securitization like mortgages Legal entity partnership Pship is a legal entity Assets duciary relationship p s are agents can sue or be sued Legal aggregate pship Can t sue or be sued o Lacks continuity of existence 0 When p s stops being a part pship dissolves Partnership agreement 0 Should include o Firm name Nature amp scope of business Duration Capital contributions Division of pro ts amp sharing of losses should be split equally Managerial rights amp duties who s doing what Limitations on authority Other variations from RUPA Methods determining value of a P s interest OOOOOOOO Partnership capital 0 Total and property that p s contribute and dedicate to use in business 0 P s equity in pship o No min Partnership property 0 Property acquired by a pship Could belong to pship or to p Partner s Duties Fiduciary duty Duty of obedience Duty of care 0 Reasonably o RUPA Covers reckless and intentional conduct Doesn t cover simple negligence Partner s Rights 0 Interest in pship property 0 Right to use property for business 0 Non transferable 0 Interest in bship itself 0 P s economic interest in pship O 0 Right to distributions Transferable Right to distribution 0 00000 Are payments to pship P s have equal rights in pro tslosses Right to return a capital getting paid Right of payment of advances Right of indemnificationreimbursement Right to compensation unless provided in agreement O 0 Right to participate in mgt Equal mgt Under RUPA need majority vote of all p s for ordinary course need unanimous vote for things outside ordinary course amp to amend pship agreement 0 Right to choose associates 0 Aka delectus personae 0 Need consensus to admit new p 0 Enforcement rights 0 Cases Inspection disclosure take legal action accounting 0 In Re KeyTronics 0 00000 0000 King under quotWashcoquot is a sole proprietorship that sells carwash systems King offered customers quotquickpayquot system Wascho bought out Quipay system from Datakey King asked Wilson to design a key for him Wilson was never paid for his work Oral agreement between King Wilson and Datakey to form a corp Came up with their corp name quotSecure Data Systemsquot Wilson refered to King as his partner Wilson sued on ground of quotwinding upquot and accounting Court found that no pship existed bc no speci c agreement happened 0 Thomas v Llloyd O O O 0 Thomas and Lloyd fell in love They bought a farm together and operated a cattle business there Court found that the real estate was not a pship asset Issue at hand court s refusal to acknowledge farm real estate as a pship asset Enea v Superior Court of Monterey County 0 O O O O Wil Daniels and Claudia Daniels formed a general pship called 3D Pship s soe asset was a building converted into of ces Enea 3D s client sued bc D s occupied property while paying lessthanfair value Breach of duciary duty to plaintiff A pship is a duciary relationship and p s can t take advantages for themselves at the expense of the pship Ch32 Operation and Dissolution of General Partnerships Joint and several liability All of p s may be sued jointly in one action or that separate actions can be held against them Actual express authority of partner 0 Written or oral 0 P s are liable after entering into contract Actual implied authority of partner o Is deduced from nature of pship terms of agreement or relation of 9395 Apparent authority of partner 0 Authority that a 3rd person in view of circumstances conduct of parties and a lack of knowledgenoti cation maybe believe to exist Partnership by estoppel Nonpartner holds himself out or allows himself to be held out as a partner Tort liability o Pship is liable for torts of partners committed within quotscope of pship businessquot Liability of incoming partner Incoming p isn t liable for antecedent debts But is liable to subsequent debts Dissociation Occurs when p ceases to be an associate in carrying out the business 0 P can always choose to dissociate Occurs when 0 P dies 0 P withdraws at will 0 Court determines p s lack of capacity Wrongful dissociation When it breaches pship agreement 0 Prior to expiration of term pship 0 EX 0 P expelled by court order 0 P les for bankruptcy P s rights amp obligations upon dissociation Can t participate in mgt amp control 0 Duty not to compete terminates Can participate in winding up unless it s wrongful Liable for obligationsliabilities that happened before dissociation Actual authority terminates 0 Must have notice to 3rd party 0 Actual notice Gives 3rd party notice of P leaving o Constructive notice Stmt of dissociation effective after 90 days Dissolution Occurs when RUPA requires pship to terminate Occurs by 0 Pship at will notice of dissociation by a P 0 Term pship expiration 0 Operation of law subject matter is illegal court order like P misconduct impractical to carry out business transferee petitions the court Effects of dissolution 0 Actual authority terminates o Apparent authority terminates ONLY IF there s notice 0 Either constructive or actual Liability is not discharged Winding up Happens when pship stops doing new business upon dissolution and liquidates assets coects debts asses iabiities Termination Fiduciary duties still exist expect the duty not to compete Distribution of assets Happens during winding up Creditors are paid Return of capital contributions Distribution of partners equal unless indicated otherwise Dissociation without dissolution Buyout of dissociated p Cases 0 RNR Investments Limited Partnership v Peoples First Community Bank 0 Conklin Farm v Leibowitz Horizon CMS Healthcare Corp v Southern Oaks Health Care Inc 0 Warnick v Warnick
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