Business Associations Outline

Business Associations Outline - 1 Business Associations...

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Business Associations Outline I. Introduction: A. The subject in general B. The statutes C. The role of agency law in business associations D. Introduction to Business Forms 1. The proprietorship 2. The General Partnership 3. The Limited Liability Partnership (LLP) 4. The Traditional Limited partnership 5. The Limited partnership with a Corporate General Partner 6. The Limited Liability Limited Partnership 7. Limited Liability Companies (LLCS) 8. The Corporation II. The Partnership: An association of two or more person to carry on as co-owners of a business for profit. A. The need for a written agreement B Sharing of profits and Losses Rule: Profit sharing is prima facia evidence of the existence of a partnership. (Beware if it is re-payment for a loan) Note: Note that the parties need not have the intent to for a partnership; only an intent to form a relationship that the law deems to be a partnership. Case(s) Richert v. Handly Case Name: Richert v. Handly Citation: Supreme Court of Washington, 1958 53 Wash.2d 121, 330 P.2d 1079. Facts: Two partners went into business together for the purposes of cutting timber and selling the lumber. Plaintiff fronted the money for the lumber and Defendant supplied machinery and tractor (at a fee). The venture was a loss. P sues for recovery of his upfront money. Procedure : Returned from a previous order of the court for determination of specific facts. 1 1
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Issue: 1) Are losses to be shared equally among the partners if no pre- existing agreement is made on the matter of losses? /Will a partner who makes a capital contribution be able to recover money from the other partner in a losing venture? 2) Is the defendant entitled to his compensation for his work in the partnership? Holding: 1) Yes, partners must share equally in profits and losses in the partnership barring any agreement. 2) No, a partner only payment (unless an agreement states otherwise) is out of the profits of the partnership. Rule: UPA (1914) 18(a), 18(f). 18(a): Each partner shall be repaid his contributions, whether by way of capital or advances to the partnership property and share equally in the profits and surplus remaining after all liabilities, including those partners, are satisfied; and must contribute towards the losses, whether of capital or otherwise, sustained by the partnership according to his share in the profits. 18(f): No partner is entitled to remuneration for acting in the partnership business, except that a surviving partner is entitled to reasonable compensation for his services in winding up the partnership affairs. Rationale: Partners share the risks and rewards of a partnership equally. Disposition: Judgment reversed judgment in favor of Appellant for $10,781.11. C. Law Firm Partnerships
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Business Associations Outline - 1 Business Associations...

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