CPA PSHPS-1 - PARTNERSHIPS (GENERAL) I. DEFINITION 1. The...

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PARTNERSHIPS (GENERAL) I. DEFINITION 1. The Revised Uniform Partnership Act (RUPA) defines a P/S as “two or more persons carrying on a business for profit.” The persons “carrying on” the business must be co-owners. “... for profit” is to distinguish from not-for-profit (i.e., charitable, religious) organizations that do not have a profit-making motive. 2. A P/S is viewed as an AGGREGATE of its members. Unlike a CORPORATION, it is not viewed as a separate person. A P/S is only viewed as an entity: a) for purposes of owning (taking title to) P/S property. and/or b) when acting as an employer (for purposes of administering employment laws.) II. RULES OF AGENCY APPLY Because ALL PARTNERS are legally held to be AGENTS of one another as well as AGENTS of the PARTNERSHIP, ALL the rules of agency law apply!! III. FORMATION 1. MUTUAL CONSENT is generally the only element necessary to create a P/S. All Ptnrs must consent to be the Ptnrs of ALL others. 2. No Filing required!! 3. A written K is usually not necessary, unless the agreement between the partners is for more than one year and/or if the P/S business purpose is primarily to sell real property. (Statute of Frauds applies) 4. the sharing of business decisions and profits is fairly conclusive proof that a P/S exists, even if the persons involved did not intend to create a P/S, and never actually consented to be partners. 4. P/S BY ESTOPPEL: if a person leads a 3rd party to believe that another is their partner, and the 3rd party relies on this misrepresentation, then the person may be held liable as a partner even if they are otherwise in fact not. 5. Fictitious Name Filings: unlike a Limited (ltd.) P/S and a Corporation, a Gen’l P/S does not usually have to file w/the state UNLESS the P/S is using a fictitious name . Most states require that where a P/S’s name does not reflect the identity of the Ptnrs, a certificate must be filed w/the state that identifies who the partners/owners are. (Usually under a state’s Doing Business As (DBA) filings.) IV. CONTRACT LIABILITY
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1. ALL Ptnrs have apparent authority to conduct P/S business by virtue of their status as Ptnrs. This is true even if they do not have actual authority to conduct certain acts. 2. Since all general Ptnrs have apparent authority to conduct P/S business, any Ptnr’s business related agreements will bind the P/S and the O/Ptnrs individually. 3. No ONE Ptnr EVER has the APPARENT AUTHORITY to do the following: a) any act that makes it impossible to carry on the business (i.e., disposing of “goodwill”) b) confessing a judgment (admitting to civil liability for all the partners) c) submitting a P/S claim to binding arbitration d) selling or assigning P/S property. 4.
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CPA PSHPS-1 - PARTNERSHIPS (GENERAL) I. DEFINITION 1. The...

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