Operations of Partnerships

operations of partnerships

Operations of Partnerships

 

Two important relationships during the operation of a partnership or Limited liability partnership

  1. Relation of the partners to each other and the partnership
  2. Relation to relying 3rd parties

Duties to each other

Rupa- highest degree of loyalty

Good faith and fair dealing

Having interest adverse to partnership

Sole compensation is from profits

No kick backs allowed

No other deals to get money the company doesn’t get

 

Non-compete

Duty to serve

Duty of care- best interest

Duty to act within actual authority

Duty to account

–           Indemnified- money from personal funds to be repaid back

Other Duties

–          Confidentiality

 

Compensation of Partners

Share of the profits equally unless stated agreement

Agreements can be set up to split the profits in whichever manner decided

 

Management Powers of Partners

Implied authority

Express authority- created by agreement

All partners much agree

Statement of partnership authority can limit authority of a partner

Statement of denial- can deny authority

-must be filed with Secretary of the State

All act as actual authority

 

 

Apparent Authority

third  party has apparent idea that partner can do an act based on authority

Ratification is where partners accepts acts of partners

 

Special Transactions

Power to convey partnership property

Regardless of authority, partner requires all to consent to sell property that is required for business

Trading partnership- has inventory

Non-trading partnership- services

 How do Partnerships  Work

Disagreements

General rule is majority rule

Not majority and must be consensual if  action is not in ordinary course of business

 

Liabilities for Torts and Crimes

Torts-

Respondeat superior

All liable in ordinary course of business

Partners not liable for one partner’s intentional tort

May be able to recover damages from liable partner

 

Crimes

Only illegal one liable

Liable if they know of crime or participate

 

–To be used only as studying guides for school assignments

 

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