Partnership Rules

Assignee of PTP- Rights to profits, does NOT participate in management

 Original PTR (assignor) remains liable for PTP debts
 PTP interest is freely assignable unless otherwise stated
 May NOT assign rights to PTP property, only profits

Partnership Property- Creditors of individual PTR debts may not claim judgement
against this property for individual debts.

Substitute Partner- Must have ALL other partners agree to substitution

 New PTR only has limited liability for debts arising prior to admission
o Limited to Capital Contribution for previous debts

Formation- Oral or written (only req. if w/in statute of frauds)

 Articles of Partnership
 Filing not required for general partnerships
 Must be in biz for-profit and share in profits
 Sharing in gross revenues does NOT imply existence of a PTP

Agent for single PTR- Liability for agent’s acts is limited to PTR who assigned
agency

Fictitious Name Statutes- no bearing on existence of PTP

 Non-compliance = Fines (nothing more)

Fiduciary Duties owed by PTR’s

 Duty of Loyalty
 Duty of Care (gross negligence)… may be increased in PTP agreement
 Obligation of good faith and fair dealing upon dissolution

Mandatory Rule
- Cannot revoke traditional right to withdraw from PTP
- Can revoke power to withdraw (i.e. the exiting PTR is responsible for
bearing losses related to the dissolution)
- Current and former PTR’s should always have access to PTP records

Lawsuit Liability
- Go after Partnership assets first, then proceed against the individual PTRs

Dissolution of Partnership
- Withdraw/dissociation of a PTR does not automatically terminate PTP
- Partners have the power, but not the right, to dissociated
o Result = Other partners have cause of action vs leaving PTR
o PTR remains liable for PTP debts, as does his estate upon death
o Death -> PTP interest is sold, other PTRs may continue biz as usual
- If only one PTR remains = automatic dissolution of PTP