Chapter36 - PARTNERSHIP DEFINITION AND STATUS Default rules...

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PARTNERSHIP: DEFINITION AND STATUS Default rules that get thrown upon you Partnership: An agreement by two or more persons to carry on, as co-owners, a business for profit. Courts often look to the following to determine whether a partnership exists: (1) sharing of profits and losses; (2) joint ownership of the business; and (3) equal right in the management of the business. The Uniform Partnership Act (UPA) provides that “persons,” for purposes of a partnership, includes corporations , although some states’ partnership statutes exclude corporations from owning partnership interests. A partnership, while treated as an aggregate of the individual partners for federal income tax purposes, may be treated as a separate entity for other purposes, such as bringing and defending lawsuits, bankruptcy, and ownership of property. Ch. 33: Sole Proprietorships and Partnerships - No. 1 West’s Business Law (8th ed.)
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PARTNERSHIP FORMATION Partnership Agreement: A written agreement – sometimes called “Articles of Partnership” – that sets forth the rights and obligations of each partner with respect to the partnership. Partnership Duration: The partnership agreement may specify the duration of the partnership in terms of a date or the completion of some undertaking. A partnership whose term is so limited is a partnership for a term . Any dissolution of the partnership prior to the term, without the consent of all of the partners, will leave the partner or partners responsible for the dissolution personally liable for any resulting losses. A partnership agreement silent as to duration implies a partnership at will . The partnership may be dissolved by any partner at any time without incurring liability. Partnership by Estoppel: Whenever a third party has reasonably and detrimentally relied on the representation, by a partner, that a non-partner was part of the partnership, the non-partner is deemed to be the partnership’s agent and the partnership is liable for his or her acts. Ch. 33: Sole Proprietorships and Partnerships - No. 2 West’s Business Law (8th ed.)
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MANAGEMENT & VOTING RIGHTS Under the UPA, (1) all partners have equal management rights ; (2) each partner has an equal vote , regardless of the
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