Partnership law governs the legal framework under which partnerships operate. A partnership is a business structure where two or more individuals or entities share ownership, management, profits, and liabilities. Partnership law defines the rights, duties, and obligations of partners, as well as the procedures for forming, operating, and dissolving partnerships. It typically covers areas such as partnership agreements, capital contributions, profit-sharing, decision-making, dispute resolution, and liability for debts and obligations. Partnership law may vary depending on the jurisdiction and can be influenced by statutory law, common law principles, and partnership agreements. It aims to provide clarity, fairness, and stability in the relationships between partners and facilitate the efficient operation of partnership businesses.
Legislation which governs the conduct of a partnership and which should be used where no partnership deed has been written.
A partnership is a business structure in which two or more individuals or entities join together to carry on a business for profit. Partnerships are governed by partnership agreements and relevant partnership laws.
There are several types of partnerships, including general partnerships (GP), limited partnerships (LP), limited liability partnerships (LLP), and limited liability limited partnerships (LLLP). Each type has different characteristics and legal requirements.
A general partnership is the simplest form of partnership where all partners share equally in the management, profits, and liabilities of the business. Each partner has unlimited personal liability for the debts and obligations of the partnership.
A limited partnership consists of one or more general partners who manage the business and have unlimited liability, and one or more limited partners who contribute capital but have limited liability, meaning their personal assets are protected from partnership debts.
A limited liability partnership is a partnership in which all partners have limited liability for the debts and obligations of the partnership. LLPs are often used by professionals such as lawyers, accountants, and architects.
A partnership agreement is a legal document that outlines the terms and conditions of the partnership, including the roles and responsibilities of each partner, profit-sharing arrangements, decision-making processes, and procedures for resolving disputes.
Partnerships are pass-through entities for tax purposes, meaning that profits and losses are passed through to the individual partners who report them on their personal tax returns. Partnerships themselves do not pay income tax.
Partners have a fiduciary duty to act in the best interest of the partnership and each other. They have the right to participate in the management of the business, share in the profits, and have access to partnership records and information.
A partnership can be dissolved voluntarily by the partners through mutual agreement or involuntarily due to circumstances such as death, bankruptcy, or legal action. Dissolution typically involves winding up the partnership’s affairs and distributing assets to creditors and partners.
Partners in a general partnership have unlimited personal liability for the debts and obligations of the partnership. In limited partnerships and limited liability partnerships, partners’ liability is limited to their investment in the partnership, except for any personal guarantees they may have provided.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 29th March, 2024.
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