General and limited partnerships

A general partnership is an association between two or more partners who associate for a common enterprise, and share the profits and losses from that enterprise. It’s perhaps the simplest of business entities. A partnership may exist even when their is no written or oral agreement to form one. It is merely a vehicle for its owners to use to accomplish their business purposes. This means that all profits and losses are passed directly to the owners and the partners are personally responsible for the partnership’s debts and for claims against the partnership.

All partners must make a contribution to purchase their interest to the partnership, but there are no limitations on what kind of property may be contributed. Partners may participate to the partnership’s management.

A limited partnership is a sort of a hybrid of a general partnership and a corporation. It is similar but slightly different from a general partnership in that there are two different kinds of partners. The owners of a limited partnership are its general and limited partners. A limited partnership has got al least one general owner, at least one limited partner, and at least two different partners. In other words, the same person cannot be both the general and the limited partner. The general partners are responsible for the day-to-day operation and management of the partnership, while the limited partners have much more restricted roles in the management. The bigger the role a partner plays in managing the partnership, the more likely that partner is to be considered a general partner.

The limited partners usually have individual liability for partnership debts and claims against it, while the general partners have joint and several liabilities. All partners must make a contribution to purchase their interest in the partnership. To form a limited partnership, the partners must enter into a written or an oral partnership agreement that is the best way to define everyone’s rights privileges, and duties.

VIII. Ответьте на следующие вопросы к тексту:

1. What is a partnership?
2. Why is the general partnership the simplest form of an organization?
3. Who is responsible for partnership’s debts?
4. Can of the partner be a general and a limited partner in a limited partnership?
5. What is the difference between general and limited partners?
6. What liabilities do the general and limited partners have?
7. Why is it better for the partners to enter into a written or oral agreement?