BSEN 395 Lecture 5: Chapter 16

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A business where the sole owner is responsible for the management, debts and liabilities of the business: simplest form of business, unlimited personal liability, limited ability to raise capital, may require registration or license. Partnership-a legal relationship between two or more parties for the purpose of carrying on a business with a view to a profit. Does not include organizations not in business for profit charities, social clubs, sports groups. Today mix of common law and statute. Most re(cid:272)e(cid:374)t develop(cid:373)e(cid:374)t is the (cid:862)li(cid:373)ited lia(cid:271)ilit(cid:455) part(cid:374)ership(cid:863) or llp. Sharing of profits and losses (default rule is equality- can be modified by agreement: **one person may put 90% of the investment but profits and losses would still be distributed equally** Co(cid:374)tri(cid:271)utio(cid:374) of (cid:272)apital (cid:894)differe(cid:374)t (cid:272)apital (cid:272)o(cid:374)tri(cid:271)utio(cid:374)s do(cid:374)"t (cid:272)ha(cid:374)ge default rules o(cid:374) equal sharing of profit and losses) Each partner has active participation in management. Partners have fiduciary relationship to each other partner (utmost good faith; corporate opportunities; duty to account)

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