1. PARTNERSHIPS, CORPORATIONS AND THE VARIANTS LECTURE 3, PGS. 108-160 Business Organizations

2. Aggregation vs Entity Theories Commonlaw (Aggregation)  Partners held undivided but separate interests in property  Partnership was not an entity distinct from its partners  Withdrawing partner entitled to piece of each asset (as is her estate)  Unanimous consent to admit new partner  Partnership meant one exact constellation of partners. Any change resulted in dissolution. Lec. 3, pp.108-160 Corporations Prof. McCann

3. Aggregation or Entity Theories Lec. 3, pp.108-160 Corporations Prof. McCann Under Uniform Partnership Act, 1997  Partnership is an entity distinct from the partners  Withdrawing partner has no interest in partnership assets but only right to receive pro rata share of the value of assets  Entity may continue on despite withdrawal or death of partner

4. Under UPA, Modern P/S a Hybrid Still an aggregation of partners in sense that:  Each partner individually (jointly and severally) liable for debts  Pass through entity, invisible to taxing authorities – each partner pays on her own income from the partnership Lec. 3, pp.108-160 Corporations Prof. McCann

5. Under Entity Theory Lec. 3, pp.108-160 Corporations Prof. McCann CAL. CORP. CODE § 16502 : California Code - Section 16502 The only transferable interest of a partner in the partnership is the partner's share of the profits and losses of the partnership and the partner's right to receive distributions. The interest is personal property.

6. Types of Partnerships Lec. 3, pp.108-160 Corporations Prof. McCann General Limited Limited Liability Partnership

7. General – One for all and all for one. Lec. 3, pp.108-160 Corporations Prof. McCann Partner

8. Limited Partnership Lec. 3, pp.108-160 Corporations Prof. McCann Ltd No liability Bullet-proof Ltd Teflon Outta’here Ltd Who? Me? There must be a mistake.

9. Limited Liability Partnership Lec. 3, pp.108-160 Corporations Prof. McCann Response to problem that an attorney cannot shield herself from liability for her own negligence (so cannot be a limited partner in a limited partnership) BUT doesn’t want to incur liability for negligence of other attorneys (as would be true in general partnership). (NOTE: For similar reasons, LLC form is not available to professionals in California and other states.)

10. Formation Lec. 3, pp.108-160 Corporations Prof. McCann UPA (1997) § 202; CAL. CORP. CODE § 16202 (a)Except as otherwise provided in subdivision (b), the association of two or more persons to carry on as co-owners a business for profit forms a partnership, whether or not the persons intend to form a partnership. (Emphasis added.) * * *

11. Meinhard v Salmon Lec. 3, pp.108-160 Corporations Prof. McCann The punctilio of an honor the most sensitive

12. RECAP OF PARTNER LIABILITY Restatement of Agency  A Principal is liable for torts of employee if they are committed within the course and scope of employment  “Course and scope” requires that there be some intent in the mind of the agent to serve the purposes of the principal  NO REQUIREMENT of actual or apparent authority. Uniform Partnership Act  Partnership is liable if partner is carrying on in the usual way the business of the partnership and has actual or apparent authority (UPA § 305)  NO REQUIREMENT that the partner is motivated to benefit the partnership Lec. 4, pp.108-160 Corporations Prof. McCann

13. Dissociating Partner Lec. 3, pp. 75-119 Corporations Prof. McCann Within Rights Under Agreement  Share as per agreement or per UPA  Price if all assets sold as of date of dissociation at greater of liquidation value or going concern value, with interest In Violation of Agreement or Wrongful  Same less  Value of Goodwill (discretionary)  Offsets for damage caused by wrongful dissociation  Any other amounts owed by departing partner

14. Goodwill Lec. 3, pp. 75-119 Corporations Prof. McCann Defined as “the expectation of continued public patronage”

15. The End Game of a Partnership Lec. 4, pp. 119-154 Corporations Prof. McCann Dissolution (or Dissociation)  An event triggers the end of the partnership Winding Up  The affairs of the partnership are concluded  Assets liquidated or earmarked for distribution  Taxes paid  Creditors paid  Partners are paid Termination  All affairs are wound up

16. Services are Not Property Lec. 4, pp. 119-154 Corporations Prof. McCann 401 (a) Each partner is deemed to have an account that is: (1) credited with an amount equal to the money plus the value of any other property, net of the amount of any liabilities, the partner contributes to the partnership and the partner's share of the partnership profits; and (2) charged with an amount equal to the money plus the value of any other property, net of the amount of any liabilities, distributed by the partnership to the partner and the partner's share of the partnership losses.