Key Terms
Main purpose
Allow people to invest without managing the business and without risking more than the amount invested.
DEFAULT RULE
All property brought into or acquired by the partnership becomes partnership property. If a partner wants to keep proper
Right to manage
All general partners have an EQUAL right to manage the partnership's business. This includes the right to enter contract
Right to compensation
Partners may receive compensation for services ONLY if there is an agreement for compensation beyond profit sharing. Not
Right to interest on advances
Partners are entitled to receive interest on cash advances made to the partnership. An advance is NOT automatically a ca
Right to inspect records
Every partner is entitled to FULL AND COMPLETE access to the partnership's business records. Partners must notify other
Right to accounting
Partners are entitled to an accounting when:
Right to indemnification
Partners may be indemnified by the partnership for actions of other partners. Example: if the partnership is sued becaus
Right to co-own property
Partners are co-owners of partnership property. Unless altered by agreement, partners have an equal right to possess par
Duty of care
Obligation to refrain from intentional and reckless misconduct. Simple negligence does not breach this duty in partnersh
Duty of loyalty
Obligation to put the partnership's interests above personal interests. Source of the duties of service, obedience, acco
Three stages
DISSOLUTION, WINDING UP, TERMINATION.
Sequence
Dissolution -> Winding Up -> Termination
Partnership
Voluntary association of two or more people who jointly own and carry on a business for profit.
General partnership
All partners participate fully in management and share equally in profits and losses, regardless of contribution amount.