Partnership 4: Rights of Partners

Summary

This episode of 'Attorneys of Vlogger' delves into the intricate dynamics of partnerships, exploring the relationship between partners and the partnership entity. It outlines the responsibilities and rights of partners, including property rights, reimbursement, sub-partnership contracts, access to partnership books, and the right to information. It also touches on the use of the partnership name and the implications of including a deceased partner's name in the firm's title, offering a comprehensive guide for those interested in the legal aspects of business partnerships.

Takeaways

• 📜 The video discusses the relationship and rights within a partnership, emphasizing the distinction between partners' individual rights and the partnership as a whole.
• 🤝 Partnerships create a contract that binds the partners together and outlines their mutual responsibilities and duties, including the partnership's obligation to refund amounts disbursed by partners on its behalf.
• 🏦 Partners have property rights which include rights to specific partnership property, equity rights, and the right to participate in management, highlighting the separate legal personality of the partnership from its partners.
• 💼 Partners cannot individually assign their interest in specific partnership property due to the co-ownership and the need to preserve the partnership's assets for creditors.
• 👥 Every partner is considered an agent of the partnership and is entitled to reimbursement for amounts advanced to the partnership and indemnification for management risks.
• 🔍 Partners have the right to access and inspect the partnership's books, which is not absolute and must be used for partnership purposes only.
• 🗣️ Each partner has the right to demand and receive true and full information about the partnership, which is already implied by the right to inspect books.
• 📊 The right to a formal account of partnership affairs may be demanded under certain circumstances, such as wrongful exclusion or when it is just and reasonable to do so.
• 🔄 The right to dissolve the partnership under certain conditions is a partner's right, which will be discussed in a future episode.
• 🔖 The use of a firm or partnership name is regulated by law, and non-partners cannot acquire partnership rights simply by having their name included in the firm name, but they may be subject to partner liability towards third parties.

Q & A

What is the primary focus of the video script on partnerships?

The video script focuses on the relationship of the partnership to the partners and the rights of the partners themselves.

What are the responsibilities of a partnership towards its partners?

The partnership is responsible for refunding amounts disbursed by the partner on behalf of the partnership, along with corresponding interest, and for answering obligations contracted by the partner in good faith for the partnership's interest.

What are the three main property rights of a partner as mentioned in the script?

The three main property rights of a partner are the right in specific partnership property, the interest in the partnership or equity rights, and the right to participate in management.

Why can't a partner assign his interest in specific partnership property?

A partner cannot assign his interest in specific partnership property because the property belongs to the partnership, and the partner's beneficial interest in the property cannot be determined until after liquidation.

What does the term 'sub-partnership' refer to in the context of the video script?

A sub-partnership refers to an agreement between a member of a partnership and a third person for the division of profits owing to the member from the partnership enterprise, separate from the main partnership.

What are the conditions under which a partner can demand a formal account of partnership affairs?

A partner can demand a formal account of partnership affairs if they are wrongfully excluded from the business, if it is stipulated in a partnership agreement, if a partner has derived unauthorized profits, or under other circumstances that are just and reasonable.

What is the significance of the partnership's firm name according to the script?

The firm name is important as it represents the partnership's identity and must be used in all communications. It can include the names of one or more partners, but non-partners cannot use the partnership name without becoming liable as partners to third parties.

What are the implications of a partner using specific partnership property for personal profit without consent?

If a partner uses specific partnership property for personal profit without consent, they must account for the said profit to their co-partners.

How can a partner's interest in the partnership be affected by creditors?

A partner's interest in the partnership can be subjected to attachment by creditors through a charging order, which allows the share in surplus to be seized after firm debts are paid and equities to the partners are adjusted.

What is the right of a partner to reimbursement and indemnification for risks in consequence of management?

A partner has the right to be reimbursed for amounts advanced to the partnership and indemnified for risks incurred in the management of the partnership, provided the actions were done in good faith and on behalf of the partnership.

What is the role of the managing partner or the partner assigned to keep records in the partnership?

The managing partner or the assigned partner has the duty to keep true and correct records of the firm's accounts, and these books should be open to inspection by other partners at all times, within reasonable hours on business days.