Key Terms
Definition
A voluntary association of two or more people who jointly own and carry on a business for profit.
COMPENSATION
Partners have a right to compensation for services IF there is an agreement beyond profit sharing. Especially common in
INTEREST ON ADVANCES
Partners have the right to receive interest on cash advances made to the partnership. An advance is not automatically a
INSPECTION
Every partner has the right to full and complete access to inspect all business records.
INFORMATION
Partners are entitled to receive notices and material information from all other partners. Partners have an affirmative
ACCOUNTING
Partners are entitled to an accounting when:
INDEMNIFICATION
Partners have the right to indemnification for actions of other partners. If a partner commits a tort and the partnershi
CO-OWNERSHIP OF PROPERTY
Partners are co-owners of partnership property with equal rights to possess it for business purposes (unless altered by
FORMATION
Two elements only - common interest + profit/loss sharing. No written agreement required.
PARTNERSHIP TYPES
General, limited (general partners + limited partners), silent, secret, by estoppel.
FIDUCIARY DUTIES
Care (no intentional/reckless conduct), loyalty (no self-dealing), service, obedience, accounting, inform.
DISSOLUTION SEQUENCE
Dissolution -> Winding Up (partial or complete) -> Termination.
ASSET DISTRIBUTION ORDER
Third-party creditors -> Partnership advances -> Partnership capital -> Remaining profits.