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.
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.
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 creditorís claims, the partnersí personal
assets are subject to attachment and liquidation to pay the business debts.
Liability for a
Co-partnerís 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-partnerís wrongdiong: Each partner may be held jointly and severally
liable for a co-partnerís wrongdoing or tortious act (e.g. the misapplication
of another personís money or property.
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.
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
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 partnerís judgement
creditor may obtain an order charging the partnerís "transferable interest"
to satisfy a judgement.
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