Key Terms
Under the Uniform Partnership Act
If parties agree to share profits or losses proportionally, a partnership is presumed to exist.
General partnership
All partners participate fully in running the business. Profits and losses split equally even if monetary contributions
Limited partnership
Has two classes of partners.
Silent partner
Shares profits, no active management role, existence is NOT publicly disclosed.
Secret partner
Connection to the business is concealed from the public but MAY participate in management.
Partnership by estoppel
An equitable doctrine. A partnership is implied when someone represents themselves as a partner to a third party who rel
Name
Cannot use "company" or any word implying corporation status. If partners choose a name that excludes their own names, a
Purpose and duration
General or limited? Specific project or ongoing?
Capital contributions
Cash, IP rights, real property, personal property, and goodwill all qualify. Business experience does NOT count as a cap
Profit and loss sharing
Default rule = equal split. Without a written provision, each partner shares equally.
Advances
Cash a partner lends to the partnership during a cash shortage. Could be treated as a personal loan or a capital contrib
Compensation
General partners can receive salary beyond profit sharing if the agreement says so. Must define amount, type, and how it
Fiscal year and accounting
Important because partnerships are flow- through tax entities (profits and losses pass directly to partners, not taxed a
Property
Default rule = all property brought into or acquired by the partnership becomes partnership property. If a partner wants
Dispute resolution
Especially critical with an even number of partners to avoid deadlock causing unnecessary dissolution.