General Partnership
In General: A form of business entity in which 2 or more co-owners engage in business for profit. For the most part, the partners own the business assets together and are personally liable for business debts.
Sharing Profits: In the absence of a partnership agreement, profits are shared equally amongst the partners. A partnership agreement, however, will usually provide for the manner in which profits and losses are to be shared.
Unlimited Personal Liability for Losses: Each Partner is, jointly and severally, personally liable for debts and taxes of the partnerhsip. For example, if the partnership assets are insufficient to satisfy a creditor’s claims, the partners’ personal assets are subject to attachment and liquidation to pay the business debts.
Liability for a Co-partner’s debts: Each general partner is deemed the agent of the partnership. Therefore, if that partner was apparently carrying on partnerhsip business, all general partners can he held liable for his dealings with third persons.
Liability for a co-partner’s wrongdiong: Each partner may be held jointly and severally liable for a co-partner’s wrongdoing or tortious act (e.g. the misapplication of another person’s money or property.
Duration: Technically, a partnership terminates upon the death, disability, or withdrawal of any one partner. However, most partnership agreements provide for these types of events with the share of the departed partner being purchased by the remaining partners in the partnership.
Management and Control: In the absence of a partnership agreement, each general partner has an equal right to participate in the mangament and control of the business. Disagreements in the ordinary course of partnership business are decided by a majority of the partners. Disagreements of extraordinary matters and amendments to the partnership agreement require the consent of all partners
Transferability: Unless otherwise provided in the partnership agreement, no one can become a member of the partnership without the consent of all partners. However, a partner may assign his share of the profits and losses and right to receive distributions ("transferable interest"). Further a partner’s judgement creditor may obtain an order charging the partner’s "transferable interest" to satisfy a judgement.
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