Partner financial rights

1
Partner financial rights
Firm property Statute UPA 8, RUPA
204 Agreement 3.1 Allocations Statute UPA
18(a), RUPA 401(b) Agreement 4.2 Distributions S
tatute UPA 38 and 402, RUPA 701, Agreement 4.4,
10.3 807 Compensation Statute UPA 18(c), (d),
(f), RUPA Agreement 3.5, 4.3 401 (d), (e) and
(h) Capital accounts Statute RUPA
401(a) Agreement 3.4
2
Partnership property
3
Partnership accounting (Darr)
Revenues Expenses Profit
(loss) Depreciation? Lease
accrual
Drawing account
Assets Cash contributions4500 Building Value?
Liabilities Construction loan (building
cost) CapitalAssets-liabilities(23,600) Darr
1500 9366 (7866.66) Rung 1500 9366
(7866.66) Stephens 1500 9366 (7866.66)
4
Loss-sharing

• X contributes 1,000
• Y contributes 10,000 worth of labor
• Revenues minus expenses (1,000)
• Firm liquidates value of assets 0
• Result
• Both walk away empty-handed?
• X receives 500 from Y?

5
Kessler

• Agreement Kessler (capital) gets 60, and
  Antinora (labor) gets 40 of profits on sale of
  house no mention of loss
• Sale price 420,000 Cost 498,917.
• Trial court Kessler gets 420,000 (capital)
  Antinora pays Kessler 40 of loss (78,917
  85,440 "interest") 65,742.80.
• Appellate court Kessler gets only 420,000
  capital.
• Evaluating the result
• Was the result consistent with the statutory
  default rule?
• Did the parties have a contrary agreement?
• Any other basis for the result?

6
Problem

• (1) A straight payment to Antinora without a
  profit or loss percentage.
• (2) Charging some or all of capital loss to
  Antinora
• (3) Charging capital loss to Antinora under
  specific circumstances (e.g. if exceeds spending
  limit).
• (4) Charging capital loss to Kessler to balance
  Antinoras contribution of services.
• (5) Crediting Antinoras services to his capital
  account.