Can either buyout the departing partners and continue

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can either buyout the departing partner(s) and continue in the business or wind up the business and terminate the partnership. A partner always has the power to leave a partnership but may not have the right. What does that mean? In other words, a partner can leave, or quit, the business at anytime, but the partner may not have the right---she may have breached the partnership agreement/contract (See, we tie everything together). Rightful Dissociation A partner, in a partnership at will, serves notice that she intends to withdraw. The partners agree in advance on an event that causes dissociation. A partner dies or becomes incompetent. A partner is expelled by the other partners. Wrongful Dissociation A partner violates the partnership agreement. A partner in a term partnership withdraws before the end of the term. A court expels a partner in a term partnership because her behavior is harmful. A partner in a term partnership becomes bankrupt. TERMINATION OF A PARTNERSHIP There are three steps: Dissolution, winding up and termination. Dissolution (See above) 8
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Winding up: During the winding up process, all debts of the partnership are paid, the remaining proceeds are distributed to the partners. Termination: This happens automatically once the winding up is finished, the partnership is terminated. The partnership is not required to do anything official. Limited v. General Partnerships Have general (active management) and limited (money-only) partners. In a limited partnership, only the general partners are personally liable. Formation of limited partnerships require a filed certificate of limited partnership. What are Professional Corporations? Most states let professional incorporate. In many states, PCs provide more liability protection than a partnership What is a joint venture? Partnership for a limited purpose Other Forms of Organizations Business trust An unincorporated association run by trustees for the benefit of investors Cooperatives Group of individuals or businesses that join together to gain the advantages of volume purchases or sales. Franchises are business entities or organizations, which are a compromise between starting one’s own business as an entrepreneur and working for someone else as an employee Overview of Partnerships Association of two or more persons to carry on as co-owners a business FOR PROFIT forms a partnership Partnerships are governed by Uniform Partnership Act (UPA) Is it a partnership? Following factors help determine if an association is a partnership: Partners share profits Partners share management of business 9
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Partners usually share losses Charitable businesses are not partnerships Partnership by Estoppel Applies if Participants tell others that they are partners, or they allow other people to say, without contradiction, that they are partners A third party relies on this assertion Third party suffers harm Liability to outsiders Partners with actual or apparent authority may bind the partnership
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  • Fall '14
  • JosiahShowalter
  • Corporation, Types of business entity, partner, partnership agreement, tax status of a partnership

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