1. 26-2 Creating and Terminating Partnership
By Chelsea Nathan and Carlita Williams
26-2 Creating and Terminating Partnership

2. Goals! Describe how a partnership is formed
Explain how a partnership may be ended

3. Creation of a partnership
“Stronger fences good neighbors make” is the old adage. “the same is certainly true about” good partners’.
These terms and conditions comprise the partnership agreement.

4. Types of partnership
Partnership may be classified according to their purpose and according to the extent of the liability of the partners.

5. Classification by purpose
Classified by purpose partnership are either trading or non-trading.
A trading partnership buys and sells good and services commercially.
A non-trading partnership provides professional and noncommercial assistance such as legal medical or accounting advice

6. General partners
In a general partnership all the partners exercise managerial control over the firm.
As a consequence each general partner has full personal liability for debts of the firm.
A silent partner may be known to the public as a partner but takes no active part in management.

7. A secret partner is not known to the public as a partner yet participates in management.
A dormant partner is neither known to the public as a partner nor active in management.
Nominal partners hold themselves out as partners or let others do so but are not truly partners.

8. Limited partners
In a limited partnership at least one partner must be a general partner must be a general partner with unlimited liability.
However one or more partners may be limited partners.

9. Status of a partnership
Note that partnership is to be distinguished from a joint venture.
A joint venture occurs when two or more persona or firms combine their resources and skills to do a specific project.

10. Status of minors
A minor who enters into a partnership agreement generally has special status. In most states such a partner retains all of the rights all and privileges of a minor.

11. Powers of partnership
Under the UPA a partnership in some respects is legally treated as an entity. This means that it is a distinct real being in the eyes of the law.

12. Termination of a partnership
Dissolution refers to the change in the relationship of the partners due to ht action of one or more of them in ceasing to be involved in operating the business.
Dissolution is normally followed by a winding up period, which concludes with the actual termination or ending of the partnership.

13. When the winding up process is completed, termination of the legal existence of the partnership actually occurs

14. By action of one or more of the partners
If the organization is a partnership at will a partner normally may withdraw at any time without liability to associates.

15. By operation of law
Death of any partner dissolves the partnership.

16. By court decree
Partners, if living usually arrange for dissolution privately.
A court also may act if continuation is impractical or if the firm is losing money continuously and there is little or no prospect for succes.