lecture 8 - Lecture#8 Wednesday March 2 2016 5:23 PM...

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Unformatted text preview: Lecture #8 Wednesday, March 2, 2016 5:23 PM Business Organiza ons Sole Proprietorships Unlimited liability Partnerships Partnership subsists where two or more persons carry business in common with a view to profit So if the public or 3rd party perceives that a company is a partnership, then that company is a partnership Have unlimited liability Partners are en tled to only claim money on the profits. NOT money paid to employees because those are liability obliga ons to other people. NOTE: Each partner acts as an agent for the other partners in the partnership If two people operate a restaurant together that is not incorporated by sharing the work and expenses while jointly making decisions together is a good example of a partnership Partnerships can be created: Inadvertently Can be decided by the courts if the conduct of people in a business can be perceived as a partnerships. Thus, partnerships can be created by accident This is why people have to be careful when they do business together and be able to dis nguish whether or not they are in a partnership or not By contract Note: A court may find that a partnership exists even where the par es clearly state in their agreements that they are not partners A single one off thing cannot be considered a partnership What makes you a partner of a business Joint contribu on to capital, losses and gains E.g 2 partners with 2 million debt it total means the debt is divided into 2 partners Par cipa on in management Sharing of profits and losses Partnership Agreement Partnership Act comes into place when a partnership agreement is not made within the par es Partnership Act comes under common law Partnership Act comes with its own rules: No partner has a right to have his/her own salary Each partner has an equal share of the profits Make more notes on this Fiduciary Du es( Partnerships ) Partners in the business have to act in the best interests of the company and the partners that are in the business New business opportunity gains are shared towards other partners The losses could be levied upon the partner that tried the opportunity for his own gain Limited Partnerships You can have an unlimited number of partners However, you must have someone who controls the other partners. Hence General partner The General partner has unlimited liability and are involved in management General partners typically hire management to do this work The Limited partner has limited liability BUT are not involved in management Limited Liability Partnerships( Prof won't ask ques ons about it) You have to put that in the name of your company (e.g Collins Barrow LLP) You will not have this shared liability of your personal assets unless you commit negligence Corpora ons Limited Liability meaning that shareholders can only lose the amount they invested into the corpora on Seminar Ques ons 1) The law would see Madi as a partner of the company because she already did work for the company with the goal of making profits Madi also agreed to making a capital contribu on Madi has already taken money from this business 2a) The court will see whether the work being done was being done for profit or not 2b) Dave is en tled for the share of the profits since this is a partnership Part I A) Advantage of the partnership is that she has addi onal exper se to work with More ideas to work with B) Mariyln could be a limited partner Mariyln wouldn't be able to make decisions for the business Ci. Cannot par cipate in management There must be at least one general partner in this limited partnership Part II A) Partners owe fiduciary duty to each other ...
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