Liquidating business partnership

If, however, a person receives a share of profits as repayment of a debt, wages, rent, or an Annuity, such transactions are considered "protected relationships" and do not lead to a legal inference that a partnership exists.

Each partner has a right to share in the profits of the partnership.

This led to the creation of a new property interest known as a "tenancy in partnership," a legal construct by which each partner co-owned partnership property.

An aggregate approach nevertheless led to confusion as to whether a partnership could be sued or whether it could sue on its own behalf.

The UPA generally opted for the aggregate theory in which individual partners ("an association") comprised the partnership. 14.-The free and personal choice of the contracting parties is so essentially necessary to the constituting of a partnership, that even executors and representatives of deceased partners do not, in their representative capacity, succeed to the state and condition of partners; 2 Ves.

Under an aggregate theory, partners are co-owners of the business; the partnership is not a distinct legal entity.

In addition to sharing in the profits, each partner also has a right to participate equally in the management of the partnership. Hence joint tenants or tenants in common of lands, goods, or chattels, under devises or bequests in last wills or testaments, and deeds or donations inter vivos, and inheritances or successions, are not partners.

Moreover, partners must contribute equally to partnership losses unless a partnership agreement provides for another arrangement. Joint owners of ships are not, in consequence of such ownership, to be considered as partners.

Some courts took a technical approach to the aggregate theory and did not allow a partnership to sue on its own behalf.

In addition, some courts would not allow a suit to go forward against a partnership unless the claimant named each partner in the complaint or added each partner as an "indispensable party." The RUPA generally adopted the entity approach, which treats the partnership as a separate legal entity that may own property and sue on its own behalf.

Every state has adopted some form of the UPA as its partnership statute; some states, however, have made revisions to the UPA or have adopted the Revised Uniform Partnership Act (RUPA), which legal scholars issued in 1994. 6; although a community of interest necessarily exists between them and the surviving partners, until the affairs of the partnership are wound up.

The authors of the initial UPA debated whether in theory a partnership should be treated as an aggregate of individual partners or as a corporate-like entity separate from its partners.

Certain conduct may lead to the creation of an implied partnership.

You must have an account to comment. Please register or login here!