Exam 37: Partnerships and Limited Liability Partnerships

In a limited partnership, a limited partner has full responsibility for the partnership and for all its debts.

Under no circumstances can a non-partner be regarded as an agent whose acts are binding on the partnership.

In a general partnership, all partners have equal rights in managing the partnership.

Hud and Iggy form Jerry-Bilt Construction to enter into a contract to build one bridge. Under their partnership agreement, Jerry-Bilt is to dissolve when the bridge is built. Iggy signs a contract for the firm to build a second bridge. Jerry-Bilt

Fact Pattern 37-2A Luann and Mace are partners in Networx, a computer peripherals firm. -Refer to Fact Pattern 37-2A. Luann signs a contract with Oleo Chips, a retail component supplier, apparently on Networx's behalf. The contract is binding on

A partner owes to the partnership and the other partners a duty of loyalty.

Withdrawal from a partnership for a term prematurely does not constitute a breach of the partnership agreement.

Jack and Kyra are partners in Law Firm, LLP, a limited liability partnership. Jack supervises Kyra, who negligently fails to appear in court on behalf of Milo, a client. Liability to Milo rests with

Noah and Orin do business as Pest Control Partners. In most states, for the purposes of suing and being sued, Pest Control Partners would be treated as

An assignment of the interest of a limited partner dissolves a limited partnership.

Any event that makes its unlawful for a partnership to continue its business will result in dissolution.

A partner's profit from a partnership is taxed as income to the firm.

On a partner's dissociation, his or her duty of loyalty to the partnership ends.

A sharing of profits from the ownership of property creates a presumption that a partnership exists.

Fact Pattern 37-1A Desi starts up eSites, an Internet service, and leases office space in a building owned by Fred. The lease requires Desi to pay Fred a base rental of $1,250, plus 10 percent of eSites’ profits, each month. The term is two years. Desi hires Gwen to work at eSites’ tech support desk at an hourly wage of $12.50, plus a commission of 10 percent of the profits. The term is also two years. -Refer to Fact Pattern 37-1A. Desi and Fred are

Fact Pattern 37-1A Desi starts up eSites, an Internet service, and leases office space in a building owned by Fred. The lease requires Desi to pay Fred a base rental of $1,250, plus 10 percent of eSites’ profits, each month. The term is two years. Desi hires Gwen to work at eSites’ tech support desk at an hourly wage of $12.50, plus a commission of 10 percent of the profits. The term is also two years. -Refer to Fact Pattern 37-1A. Desi and Gwen are

International Exports, L.P., is a limited partnership, with $100,000 in declared but unpaid profits. International's creditors include Friendly Credit Corporation for $5,000 and Gwen, one of International's limited partners, also for $5,000. When Harry, one of International's general partners, decides to retire, the other general partners vote to liquidate and dissolve the firm. The limited partners, who are not asked their opinions, want International to continue in business and file a suit against the general partners to compel this result. Can the court order International to continue If not, what is the priority of the distribution of International's assets on its dissolution

Venture Capital, LP, is a limited partnership. Its limited partners include more than 150 sophisticated investors and investment professionals. A Venture limited partner loses his or her limited liability if he or she

Sally and Tom decide to go into business, selling discounted merchandise through their Web site "e-Buy." They sign a partnership agreement that requires Sally to contribute $12,000 and Tom to contribute $8,000 in capital to start the firm. The agreement also states that only Sally will have the authority to bind the partnership in deals with third parties, but the agreement says nothing about the management of the firm or a division of profits. Without Sally's knowledge, Tom tells United Computer Products, Inc., that he represents the firm and signs a contract with United to buy hard drives for resale on e-Buy. In the first year, e-Buy makes a profit of $50,000. What are the partners' rights with respect to the management of the firm Is the partnership bound to the contract with United Do the partners split the first year's profits If so, how much is each entitled to

Corbin, a partner in Doctors Medical Clinic, applies for a loan with Evermore Bank allegedly on Doctors' behalf but without the authorization of the other partners. Evermore knows that Corbin is not authorized to take out the loan. Corbin defaults on the loan. Liability for its unpaid amount is imposed on