Partnership 5: Management of the Partnership & Distribution of Profits and Losses

Summary

This episode of 'Attorneys of Vlogger' delves into partnership management and profit/loss distribution. It explains the rights of partners in management and the rules governing their actions, including scenarios with appointed managing partners and disagreements among them. The video also covers how profits and losses are shared among partners, the impact of agreements, and the distinction between liability to third parties and losses within the partnership. It uses examples to illustrate these concepts, providing clarity on the legal intricacies of partnerships.

Takeaways

• 📜 The video discusses the management and profit/loss distribution in partnerships, emphasizing that this information is for educational purposes and not a substitute for legal advice.
• 🤝 Partners have rights that stem from the partnership contract, including the right to participate in management and share in profits and losses.
• 📝 In the absence of a management agreement, all partners are considered agents of the partnership, and their actions bind the partnership.
• 👤 If there is an agreement appointing a managing partner, they have the authority to execute administrative acts unless acting in bad faith.
• 🔄 A managing partner appointed in the partnership contract cannot be removed without just or lawful cause, requiring a vote from partners with controlling interest.
• 🔄 If the managing partner was appointed after the partnership's creation, they can be removed by partners with controlling interest without modifying the contract.
• 💰 Generally, a managing partner is not entitled to compensation unless specified by the partners in writing or implied by circumstances.
• 🔄 In case of conflict among managing partners, decisions are made by majority vote, and in the case of a tie, the partner with controlling interest decides.
• 🤝 Partners have the right to share in profits and are obligated to share in losses, with the distribution rules depending on whether there is an agreement among partners.
• 🚫 Any agreement that excludes a partner from sharing in profits or losses is void, and only the stipulation is considered non-existent, not affecting the partnership.
• 🏦 Partners are liable for partnership debts according to their capital contributions, and an industrial partner is not liable for losses but can be held personally liable to third parties.

Q & A

What are the rights of a partner in a partnership according to the video?

A partner has the right to an interest in the partnership, which includes the distribution of profits and losses, and the right to participate in management as an agent of the partnership.

What is the default rule for management if there is no agreement on how the partnership should be managed?

If there is no agreement on management, all partners are considered agents of the partnership, and what any one of them may do alone binds the partnership.

What are the implications if only one partner is appointed as a managing partner?

The managing partner may execute all acts of administration despite the opposition of other partners, except in bad faith. If the managing partner was appointed in the partnership contract, their power is irrevocable without just or lawful cause.

Under what conditions can a managing partner be removed from their position?

A managing partner can be removed for just cause with the vote of partners representing the controlling interest. Without just cause, unanimous consent is required, as it represents a change in the will of the parties.

What are the rules for compensation of a managing partner?

Generally, a managing partner is not entitled to compensation, but the parties may expressly grant it in writing or it may be implied from circumstances.

How is the conflict resolved if two or more partners are entrusted with management without specification of their respective duties?

Conflicts are resolved by majority decision. In case of a tie, the partners owning the controlling interest decide, and if still deadlocked, those who vote against the contract prevail.

What is the rule regarding the execution of formal contracts by managing partners?

The execution of formal contracts requires the consent of all managing partners, unless there is immediate danger of grave or irreparable injury to the partnership.

How do the rules for management among partners affect third parties?

The rules for management among partners do not affect third parties. A third party can presume that a partner has the consent of co-partners in the ordinary course of business.

What happens if there is no agreement on the distribution of profits among partners?

If there is no agreement, the industrial partner receives a just and equitable share first, before the capitalist partners divide the remaining profits in proportion to their capital contributions.

How are losses shared among partners when there is no agreement on their apportionment?

If there is no agreement on losses, they are shared in proportion to the partners' capital contributions, unless there is an agreement on profits, in which case the same ratio applies to losses.

What is the effect of a third person's decision on the distribution of profits or losses among partners?

A third person's decision is binding unless it is manifestly inequitable. A partner cannot challenge the decision if they have begun executing it or if they fail to impugn it within three months of gaining knowledge of the decision.