Lecture 16 Blaw 3312 -001
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This 3 page Class Notes was uploaded by loveena Cherukunnathu on Friday October 30, 2015. The Class Notes belongs to Blaw 3312 -001 at University of Texas at Arlington taught by John D Dowdy in Summer 2015. Since its upload, it has received 59 views. For similar materials see Law II in Business at University of Texas at Arlington.
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Date Created: 10/30/15
Lecture 16 102915 Chapter 37 Partnerships and limited liability partnerships Partnerships PE Partnership operation 2 Duties powers and liabilities of partners a Fiduciary duties Partners owe each other fiduciary duties like agent does to principal O O O Partnership is not an entity A partner is an agent to each partners and they are also an agent to the partnership Partnership is an extension to the principalagent law b General agency powers c Joint liability d Joint and several liability If the partnership gets sued there is a lawsuit it will be under the partnership name entity type of treatment 0 If the partnership is made out of 4 partners they are all going to get the invitation to the party they are going to get sued individually The partnership is going to be liable as a defendant The judgement will be against his partnership and will be against individual partner First going to look at partnership assets If there are sufficient enough partnership to satisfy that judgement then all the money damage will be paid off from the partnership If the partnership asset is not sufficient then the partners have a joint and serval liability tort Who pays it all off are titled for contribution of the other partners Each of them will bear a proportion of the check e Liability of incoming partner 0 What if they add someone else to the partnership Any liability after he jointed he is fully liable Prior debts is covered with the contribution to capital PF Termination of partnership 0 What if someone withdraw retire any debt predated to the retirement he is liable for 0 Debt is incurred after that partner leaves the partnership He is responsible for old and new debt because there was no proper notification refer back to principal agent law 0 The guy who retires needs to give a notice to everyone that he has done business with Dissolution 0 Any change in the partnership membership dissolves the partnership sometimes it s just a technical dissolution 0 Example partner dies the next day remaining partners continue the business technical dissolution 0 Sometimes the dissolution of partnership is the first step in terminating the partnership Maybe out of business or change form of doing business 0 The general public has to know that they are terminating partnership you publish a notice in the newspaper if the business name changes include all that information Winding Up 0 Sometimes partnership decide to just quit o The partnership dissolves when there are still executory contracts Partnership just have to collect the money have nothing else to do 0 Example A construction business Business partners who are in the building business They have projects are uncompleted they are required to finish that projects 0 There is still a job on remodeling one wing of the hospital And another that involves finishing up some homes Those are working progress that they are obligated to do 0 They are dissolved but need to finish what they are obligated to do 0 Thy got these remaining operations for these winding up process 0 A continued limited form of agreement exist to finish their work 0 Took away the general agency authority each one had But they still have the executory contracts they have to finish Distribution of assets 0 Assume that the partnership has dissolved and the lining up has taken place 0 Sold all the equipment and everything Maybe even the business itself All they have is cash Who gets paid first 0 First creditors get paid first Hopefully there is enough cash to satisfy all of them o If there isn t enough cash its insolvent 0 Second partner that is a creditor is paid 0 Third partners contribution to capital some may have more contribution than others 0 The left over after all this if any are profits Partners divide that equally 0 They might be fighting over it 0 Example 2 partners one sued other one for accounting A sue for accounting Example A B C D partners S 50K 40K 30K 5K contribution to capital S 4OK 15K 7626K 7626K 7626K 7626K profits divided up S During their business a down turn happened the partnership winds up in a crash crunch A advance money in taxes to keep partnership in float 40K During the course of employment with the company car D crashes into someone 15k Partnership cash on hand 500k assets Who gets paid first 80K to creditors A gets his 40K back partner as creditor Contribution to capital paid back 305 profits 7625K each for partners D caused the money to go out of balance Tort debt Partnership is entitled to be dividend of 15K that was caused by D s tort So that s knocked off 375K divided into it Everything should be balanced between the partners after creditors everything else goes to creditors
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