Key Terms
Definition
A partnership is a voluntary association of two or more people who jointly own and carry on a business for profit.
Two required elements to form a partnership
1. A common interest to conduct business together 2.
Order of priority
1. Third party creditors 2.
Marshaling of assets
An equitable doctrine for a fair distribution of a debtor's assets among multiple creditors.
Partnership
Voluntary association of two or more people jointly owning and carrying on a business for profit.
General Partnership
All partners manage fully; equal profit/loss sharing regardless of contribution amounts.
Limited Partnership
General partners manage and hold unlimited liability; limited partners invest only, capped liability.
Silent Partner
Shares profits; no management role; identity NOT disclosed.
Secret Partner
Identity concealed; CAN manage; existence unknown to public.
Partnership by Estoppel
Implied partnership created by representation and third-party reliance; estoppel partner liable for credit extended.
Fictitious Name Statement
Public notice of partner identities required when partnership name does not include partners' actual names.
Flow-Through Tax Entity
Profits and losses pass through to individual partners; the partnership itself is not taxed.
Fiduciary Relationship
Relationship of trust and confidence creating legal duties between parties.
Dissolution
The legal end of a partnership (does not end it immediately — winding up must follow).
Winding Up
Liquidation process; assets to cash, debts paid, remainder distributed.