A Partnership Agreement Quizlet
A Partnership Agreement Quizlet is an online document that contains a set of defined terms and conditions that relate to a partnership agreement. Further, a Partnership Agreement Quizlet makes solid definitions of the various aspects that ought to be in a partnership agreement. This is done through brief definitions and explanations. The following terms are a brief representation of the terms that a Partnership Agreement Quizlet could contain.
- Definition of a Partnership
A Partnership Agreement Quizlet begins by defining a partnership. A partnership is an association of two or more persons to conduct business for profit as co-owners. A person is defined to include an individual, corporation, business trust, estate, partnership, association, trust, government, joint venture, government subdivision, instrumentality, or other commercial or legal entity. The businesses conduct include occupation, profession and trade.
A Partnership Agreement Quizlet also provides that partnerships could be of various types. The first type is general partnership where the partners have no limited liability. Hence, they are personally responsible for the debts incurred by the partnership. The second type is the limited partnership where the partners are categorized into general partners and limited partners. The general partner is personally liable for the debts incurred by the partnership while the limited partners are entitled to limited liability. Hence, they are not personally liable for the debts incurred by the partnership and their role is only provision of capital.
Lastly, the limited liability partnership has some of its characteristics resemble that of a limited liability company. Hence it is considered a separate entity from its partners thus they are not personally liable for the debts of the partnership.
- Formation of a Partnership
A Partnership Agreement Quizlet also includes the fact that a partnership could be formed either by an individual or a corporation. Any person that has the legal capacity to contract could form a partnership. Further, there is no need to have a specific intention to form a partnership.
A Partnership Agreement Quizlet also provides that a partnership is based on an agreement between partners. Further, there are no specific statutory conditions or formalities regarding formation. A partnership contract could be oral and may be implied form the parties’ conduct. Additionally, a partnership may be formed unintentionally or by mistake. It may also be established for a certain term, specific undertaking, or at will.
- Capacity
A Partnership Agreement Quizlet could also include and elaborate the persons that have the capacity to enter into a partnership. Any person that can enter into a contract has the capacity to form a partnership. Such include a natural person, partnership, and corporation. Hence a minor and persons of unsound mind can not enter into a partnership. If they do, the partnership and partnership agreement will be considered null and void.
- Partnership vs Joint Venture
A Partnership Agreement Quizlet also differentiates a partnership from a joint venture. Joint ventures are quite similar to partnerships. The general rule is that a joint venture is describes as an association that contemplates a single transaction or a pattern of related transactions compared to a partnership. This is generally the carrying on of a business. However, terming themselves joint venturers or partners is not adequate.
- Test of Partnership
A Partnership Agreement Quizlet also includes the various conditions that have to be met for a partnership or partnership agreement to exist. When establishing whether a partnership was formed, courts with competent jurisdiction will consider various factors:
- The intent of the parties to enter into a partnership relationship, notwithstanding its name. An express partnership agreement is the best indicator of the intent.
- Presence of a partnership agreement.
- Provision on co-ownership of a business for profit.
- Whether the partnership agreement was only implied.
- Other factors such as the evidence of sharing profits, management of the health practices of the partnership, type and number of services provided by the parties, and the record title to personal or real property used by the entity.
- Receipt of a share of the profits by partners which serves as prima facie evidence of one being a partner of a business.
- When does a Partnership Exist?
A Partnership Agreement Quizlet defines instances when a partnership is deemed to exist. The existence of a partnership is pegged on the relevant statutory definition of a partnership. As a general rule, the partners should include in their agreement the date from which the parties will consider their mutual responsibilities and rights to have taken effect. The name of the partnership should also be stated. The firm name may be different from the trade or business name and both should be stated in the partnership agreement.
A Partnership Agreement Quizlet also provides that an agreement should also outline how much financial capital every partner contributes. It should also include the possibility of future increases in contributions if they are anticipated.
- Co-ownership
A Partnership Agreement Quizlet defines co-ownership as instances when two or more people share profits hence the presumption of a partnership relationship. Hence the question is whether there is sharing of control.
- Power of Representation/Management
Management or the power of representation is a core part of a partnership agreement hence its inclusion in a Partnership Agreement Quizlet. A partnership agreement should include the determination of partners along with their respective power of representation. It should also outline the various remuneration for the several categories of partners.
- Liability of Partners
A Partnership Agreement Quizlet also outlines the liability of a partner. For liability of a purported partner to be imposed, certain elements must be established. They include representation which may be in writing, oral, or implied conduct. Hence a partner in actual or purported partnership. The purported partner must also consent or make the representation. Thirdly, a third party should have reasonably relied on the partnership representation.
- Duty to Deny
A Partnership Agreement Quizlet also defined the “No Duty to Deny” concept that is included in a partnership agreement. A person held out by another as a partner is under no duty to deny the representation. Being named by another in a partnership statement is not adequate to create liability on a partner. Further, the failure to file or amend a dissociation statement does not create liability as a partner. A Partnership Agreement Quizlet also provides that is not a defense that the purported partner was not aware he was held out as a partner to a third party. Holding out a purported partner as an actual partner, the partner is deemed an agent of the person making the representation.
- Consequences of a Partnership
Further a Partnership Agreement Quizlet outlines the consequences of forming a partnership. An ordinary partnership is not considered a separate legal entity from its partners hence it partners are liable for the debts incurred by the partnership. However, a limited liability partnership is considered a separate legal entity from the members hence limited liability.
- Partnership Agreements
The most significant section of a Partnership Agreement Quizlet is one that explains a partnership agreement. A partnership agreement serves as a set of rules and guidelines that govern the operations of a partnership. Partnership agreements do not necessarily have to be in writing. However, it is advisable that they are reduced to writing for enforceability in the event a dispute arises.
However, a Partnership Agreement Quizlet should be keen to state that if there is no partnership agreement, the state law governs the partnership with default rules. Nonetheless, where one exists, the written agreement remains in control. Some of the mandatory state laws that govern the partnership include liability to third partners, access of partners to records and books, and fiduciary duties.
- The Duty of Loyalty/Fiduciary Duties
A Partnership Agreement Quizlet also includes the aspect of the fiduciary duty or duty of loyalty among the partners. Partners are bound not to compete with the partnership business, advance interests that are averse to the partnership or seize partnership opportunities.
- Limitations on the Duty of Loyalty
A Partnership Agreement Quizlet is also keen to include the restrictions on the duty of loyalty. As a matter of state law, a partnership can not eliminate the duty of loyalty. It could limit the fiduciary duty by giving it a different definition. However, the definition should not be fundamentally unreasonable. The safe harbor is that if a partner makes full disclosure of all the material facts, the remining partners could ratify it.
- Duty of Care
The duty of care is also included in the list of definitions in a Partnership Agreement Quizlet. The duty of care denotes that partners can not engage in reckless or negligent conduct, intentional misconduct, or violations of the existing laws. Further, a partnership agreement should not unreasonably reduce the duty of care.
- Profits and Losses
The division of profits and losses is generally determined by a partnership agreement hence included in a Partnership Agreement Quizlet. Where no partnership agreement exists, profits are divided equally and losses follow profits. Regarding distributions, the partners do not have the right to demand distributions but could agree initially as per the partnership agreement.
- Transfer of Partnership Interests
Transfer of the interest of a partnership is a core part of a partnership agreement hence the need to define it in a Partnership Agreement Quizlet. The default rule is that a partner has the right to transfer partnership interests. When a new partner is introduced, every existing partner should consent.
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