McBride Law Blog


Archive for for August, 2017

General Partnerships Part IV: Relationship Between Partners

August 21, 2017

Partners in a general partnership owe a fiduciary duty to the partnership, just like in the context of LLCs.  Partners must act as an ordinarily prudent person, refraining from competing with the partnership, and generally act in good faith.  Moreover, they must put the best interests of the partnership ahead of their own.  So, in the farming partnership case from the previous blogs, the parties owe fiduciary duties to the partnership, which they would not otherwise owe if it was just a farming agreement. … Read the rest

General Partnerships Part III: Liability of Partners

August 18, 2017

Generally, partners are jointly and severally liable, and each partner is personally and individually liable for the full amount of all partnership obligations.  For example, in the farming partnership case we discussed in our previous post, each partner would be liable to any person with a claim against the partnership. For example, if the supplier sues the partnership – each individual partner would be liable if the partnership fails to pay the supplier. Whether they intended to be a partner or not or whether they knew they were exposed to such liability, they are each a partner in a general partnership.Read the rest

General Partnerships Part II: Formation of a General Partnership

August 17, 2017

In the previous post of this series, we talked about general partnership and one of their most fearful characteristics.  So if general partnerships exist, how do courts and others know?

Statutes often state that a partnership is an association of two or more persons to carry on as co-owners of a business for profit whether or not it was intended.  Unlike other business entities such as LLC or corporations, which require the filing of certain forms with the secretary of state, no formalities are required to form a general partnership. … Read the rest

Why Is It Important for Business Owners To Know About a General Partnership?

August 16, 2017

What is a General Partnership? For example, two brothers agree to invest in several tracts of real property to make some money.  One brother who was an engineer and used his engineering skills to increase the value of the properties; the other brother was responsible for obtaining the title and paying taxes using his skills in marketing and administrative services. But they did not use a written agreement.  Later, someone is injured on the property.  Which brother is liable for any costs?… Read the rest

When to Have a Non-Disclosure Agreement

August 15, 2017

When do you need an NDA, a Non-Disclosure Agreements? They protect your intellectual property. In theory, we should always have an NDA anytime we’re talking to anybody about our business. But in the real world, that doesn’t work. One of my good friends is a frequent investor in businesses, he’s built many businesses and every once in a while he’ll talk to people about their business, without signing an NDA. So he will talk to you and he’s very open minded, he’s probably not going to steal your idea, but he won’t sign an NDA.… Read the rest

Investors May Not Be Protected: Investors Need Counsel Too

August 14, 2017

I want to talk about something that’s very serious out there, not often talked about, but it’s underappreciated. Investors, if you’re investing in a company, you need a lawyer too. Why? Because you don’t know how those documents are prepared. Those documents were likely prepared by the company and/or its lawyers. And who are they looking out for? They’re looking out for them. They’re looking at what’s best for their interest.

A lot of times I have clients that are investors.… Read the rest

Custom Allocations for Partners

August 11, 2017

Today we are talking about partnerships, and specifically, how do we allocate profits among the partners? What do we do when all this money’s coming in and we’re greatly successful? How do we divide that up and make everybody happy? The answer is, we get to pick.

Under our state laws, generally we get a lot of discretion in our agreements, whether it be an LLC agreement, a partnership agreement, even in a corporation, by using salaries and other metrics and methodologies of paying, we can get a lot of flexibility in dividing how the money goes among the partners.… Read the rest

Corporate Formalities

August 10, 2017

Today, Shawn talks about corporate formalities, and the huge cost it can have. We’ve seen this over and over again in my career and my legal practice, and it then stretches into my business management and consulting work as well. We need to have good formalities with our entities because it can cause huge problems.

A lot of people get bored with the paperwork and legal documentation required to properly run a company and let me tell you, it’s not a lot of fun.… Read the rest

All postings are intended to be planning tools to familiarize readers with some of the high-level issues discussed therein. No posting is intended to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.