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Tagged Posts: partnership agreement’

When a Business Partner Withdraws: Interpretation of Payout Provisions Under a Partnership Agreement

August 9, 2016

As you know, we write and speak frequently about various issues involving business partnership, including the four Ds (death, disability, divorce, and disagreement).  Although many business owners starting a new venture would like to think that they are somehow immune from the four Ds, the odds are that most, if not all, businesses are bound to experience at least one of them if they are around long enough (really, who can avoid death?).  Disagreement, in particular, can precipitate the withdrawal of one or more business partners at an unexpected time, and when that happens, figuring out the financial aspect of the breakup can be messier than you would want.… Read the rest

A Texas Lottery Club Dodges Being Considered a General Partnership

August 2, 2016

In our previous blog series on general partnership, we talked about what general partnership is, how it is formed, and why it is important for business owners to know about it.  We mentioned that one of the most peculiar features of a general partnership is that it can be formed inadvertently and that, once formed, each partner is personally liable for the partnership’s obligations.  In a subsequent blog series “Can I Be Held Liable as Partner When in Fact I am Not?Read the rest

Can I Be Held Liable As Partner When in Fact I Am Not? (Part 3)

October 22, 2015

Branscome v. Schoneweis.

In Branscome v. Schoneweis, Schoneweis and Woodrum, brothers-in-law, were associated in the operation of a livestockyard called Tallula Cattle Company (“Tallula”).[1] Schoneweis was the owner (providing the initial working capital) and Woodrum was the manager (entitled to an equal share of commissions on the sale of all cattle) of the livestockyard (market agency business), while at the same time, both men continued as individuals in the business of buying and selling livestock in commerce (dealer business).… Read the rest

Can I Be Held Liable as Partner When in Fact I Am Not? (Part 2)

October 17, 2015

Cox Enterprises, Inc. v. Filip.

In Cox Enterprises, Inc. v. Filip, Filip was owner of Trans Texas Properties and Elliott was not. [1] One of its employees filled out a credit application to obtain newspaper advertising services for the business and falsely listed Elliott as an owner.[2] The employee had no authority to make such representation and Elliott did not hold himself out to the advertising company as having any ownership interest.[3] The advertising company relied on the employee’s representation that Elliott was an owner and rendered its services to the business on credit, but made no effort to verify the accuracy of the representation.… Read the rest

Can I Be Held Liable as Partner When in Fact I Am Not? (Part 1)

October 13, 2015

Partnership by Estoppel.

We often hear the word “partner” thrown around to refer to a variety of business relationships—co-owners, collaborators, coworkers, business associates, and even suppliers and customers . . . you name it.  As we explained in our previous blog series on general partnership (available here), it is not the label, but the intent to do what in law constitutes a partnership (e.g., agreement to share profits, right to participate in control of the business, etc.), that controls the question of whether there is a general partnership. … Read the rest

General Partnerships

August 4, 2015

Relationship Between Partners

We have discussed fiduciary duties in the context of LLCs in our previous posts.  Just like LLC managers, partners in a general partnership owe fiduciary duty to the partnership.  Thus, partners must act as an ordinarily prudent person would, refrain from competing with the partnership, and generally act in good faith.  Additionally, they must put the best interests of the partnership ahead of their own.  So, in the farming partnership case above, 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

July 28, 2015

Liability of Partners

Generally speaking, partners are jointly and severally liable, and each partner is personally and individually liable for the entire amount of all partnership obligations.  For example, in the farming partnership case we discussed above, each partner would be liable to any person with a claim against the partnership, e.g., if the supplier sues the partnership – each individual partner would be liable if the partnership fails to pay the supplier, because they are each a partner in a general partnership (as opposed to a farming contract), whether they intended to be a partner or not or whether they knew they were exposed to such liability. … Read the rest

General Partnerships

July 21, 2015

Formation of a General Partnership

In Post 1 of this series, we talked a little about general partnership and one of their most dreaded 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.  Unlike other business entities such as corporations or LLCs, which require filing of certain forms with the secretary of state, no formalities are required to form a general partnership. … 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.