General partnership

	Email		Print
	Bookmark		Link

General partnership

In the commercial and legal parlance of most countries, a general partnership or simply a partnership
Partnership

A partnership is a type of business entity in which partners share with each other the profits or losses of the business undertaking in which all have invested....
, refers to an association of persons or an unincorporated company with the following major features:

It is a partnership in which partners share equally in both responsibility and liability.
nerships have certain default characteristics relating to both (a) the relationship between the individual partners and (b) the relationship between the partnership and the outside world.

Discussion

Ask a question about 'General partnership'

Start a new discussion about 'General partnership'

Answer questions from other users

Full Discussion Forum

Characteristics

Partnerships have certain default characteristics relating to both (a) the relationship between the individual partners and (b) the relationship between the partnership and the outside world. The former can generally be overridden by agreement between the partners, whereas the latter generally cannot be.

The assets of the business are owned on behalf of the other partners, and they are each personally liable, jointly and severally

Joint and several liability

Where two or more persons are Liability in respect of the same liability, in most common law legal systems they may either be:* jointly liable, or...
, for business debts, taxes or tort

Tort

Tort law is the name given to a body of law that addresses, and provides remedies for, civil wrongs not arising out of contractual obligations. A person who suffers legal damages may be able to use tort law to receive compensation from someone who is liability, or "liable," for those injuries....
ious liability. For example, if a partnership defaults on a payment to a creditor, the partners' personal assets are subject to attachment and liquidation to pay the creditor.

By default, profits are shared equally amongst the partners. However, a partnership agreement will almost invariably expressly provide for the manner in which profits and losses are to be shared.

Each general partner is deemed the agent

Agency (law)

Agency is an area of commercial law dealing with a contractual or quasi-contractual tripartite, or non-contractual set of relationships when an Agent is authorized to act on behalf of another to create a legal relationship with a Third Party....
of the partnership. Therefore, if that partner is apparently carrying on partnership business, all general partners can be held liable for his dealings with third persons.

By default a partnership will terminate upon the death, disability, or even withdrawal of any one partner. However, most partnership agreements provide for these types of events, with the share of the departed partner usually being purchased by the remaining partners in the partnership.

By default, each general partner has an equal right to participate in the management and control of the business. Disagreements in the ordinary course of partnership business are decided by a majority of the partners, and disagreements of extraordinary matters and amendments to the partnership agreement require the consent of all partners. However, in a partnership of any size the partnership agreement will provide for certain electees to manage the partnership along the lines of a company board.

Unless otherwise provided in the partnership agreement, no one can become a member of the partnership without the consent of all partners, though a partner may assign his share of the profits and losses and right to receive distributions ("transferable interest"). A partner's judgment

Judgment

A judgment , in a legal context, is synonymous with the formal decision made by a court following a lawsuit. At the same time the court may also make a range of court orders, such as imposing a sentence upon a Guilt y defendant in a Criminal law matter, or providing a Legal remedy for the plaintiff in a civil law matter....
creditor may obtain an order charging the partner's "transferable interest" to satisfy a judgment.

Separate legal personality

There has been considerable debate in most states as to whether a partnership should remain aggregate or be allowed to become a business entity with a separate legal personality.

In the United States

United States

The United States of America is a Federal government constitutional republic comprising U.S. state and a federal district. The country is situated mostly in central North America, where its Contiguous United States and Washington, D.C., the Capital districts and territories, lie between the Pacific Ocean and Atlantic Oceans, Borders of the U...
, section 201 of the Revised Uniform Partnership Act (RUPA) of 1994 provides that "A partnership is an entity distinct from its partners."

In England & Wales, a partnership does not have separate legal personality; although the English & Welsh Law Commission

Law Commission

A Law Commission or Law Reform Commission is an independent body set up by a government to conduct law reform; that is, to consider the state of laws in a jurisdiction and make recommendations or proposals for legal changes or restructuring....
in Report 283 proposed to amend the law to create separate personality for all general partnerships, the British government has decided not to implement the proposals relating to general partnerships. The Law Commission's proposal to confer separate legal status on limited partnerships will be taken forward . In Scotland

Scotland

conventional_long_name = ScotlandAlba|common_name= Scotland|image_flag = Flag of Scotland.svg|flag_width = 130px...
partnerships do have some degree of legal personality. The Limited Liability Partnerships Act 2000 confers separate personality on LLPs.

While France

France

France , officially the French Republic , is a country whose Metropolitan France is located in Western Europe and that also comprises various Overseas departments and territories of France....
, Luxembourg

Luxembourg

Luxembourg , officially the Grand Duchy of Luxembourg , is a small landlocked country in western Europe, bordered by Belgium, France, and Germany....
, Norway

Norway

Norway , officially the Kingdom of Norway, is a constitutional monarchy in Northern Europe that occupies the western portion of the Scandinavian Peninsula....
, the Czech Republic

Czech Republic

The Czech Republic , is a landlocked country in Central Europe. The country borders Poland to the northeast, Germany to the west, Austria to the south and Slovakia to the east....
and Sweden

Sweden

Sweden , officially the Kingdom of Sweden , is a Nordic countries on the Scandinavian Peninsula in Northern Europe. Sweden has land borders with Norway to the west and Finland to the northeast, and it is connected to Denmark by the ?resund Bridge in the south....
also grant some degree of legal personality to commercial partnerships, other countries such as Belgium

Belgium

* A small German-speaking Community of Belgium exists in eastern Wallonia. Belgium's linguistic diversity and related political and cultural conflicts are reflected in the history of Belgium and a complex Communities and regions of Belgium....
, Germany

Germany

Germany , officially the Federal Republic of Germany , is a country in Central Europe. It is bordered to the north by the North Sea, Denmark, and the Baltic Sea; to the east by Poland and the Czech Republic; to the south by Austria and Switzerland; and to the west by France, Luxembourg, Belgium, and the Netherlands....
, Switzerland

Switzerland

Switzerland is a landlocked Swiss Alps country of roughly 7.7 million people in Western Europe with an area of 41,285 km?. Switzerland is a federal republic consisting of 26 states called Cantons of Switzerland....
, and Poland

Poland

Poland , officially the Republic of Poland , is a country in Central Europe. Poland is bordered by Germany to the west; the Czech Republic and Slovakia to the south; Ukraine, Belarus and Lithuania to the east; and the Baltic Sea and Kaliningrad Oblast, a Russian Enclave and exclave, to the north....
do not allow partnerships to acquire a separate legal personality, but permit partnerships the rights to sue and be sued, to hold property, and to postpone a creditor’s lawsuit

Lawsuit

In law, a lawsuit is a civil action brought before a court in which the party commencing the action, called the plaintiff, seeks a legal remedy or equitable remedy....
against the partners until he or she has exhausted all remedies against the partnership assets.

In December 2002 the Netherlands proposed to replace their ordinary partnership, which does not have legal personality, with a public partnership which allows the partners to opt for legal personality.

Japan

Japan

Japan is an island country in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, People's Republic of China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south....
ese law provides for Civil Code , which have no legal personality, and Commercial Code which have full corporate personhood but otherwise function similarly to partnerships.

The two main consequences of allowing separate personality are that one partnership will be able to become a partner in another partnership in the same way that a registered company can, and a partnership will not be bound by the doctrine of ultra vires
Ultra vires

Ultra vires is a Latin List of Latin phrases that literally means "beyond the powers". Its inverse is called intra vires, meaning "within the powers"....
but will have unlimited legal capacity like any other natural person

Natural person

In jurisprudence, a natural person is a human being perceptible through the senses and subject to physical laws, as opposed to an Legal person, i.e., an organization that the law treats for some purposes as if it were a person distinct from its members or owner....
.

General partnership

Characteristics

Separate legal personality

See also