Limited Partnership

General Partnership

Forms of business organization

Text III.

(partnership)

Business activities can be operated under various forms, such as sole proprietorships, partnership, limited company, etc. In deciding under which form the business should be operated, one must consider various essential elements such as nature of the trade, capital investment, knowledge and ability to operate the business, etc. in order to be successful.

There are two different types of Partnership, i.e. General Partnership and Limited Partnership. The general rules governing all two forms of partnership are basically the same but the liabilities of the partners differ significantly, depending upon the type of the partnership.

A general partnership is a private contractual relationship among the partners and is defined as a partnership in which all partners are, jointly and unlimitedly, liable for all of the obligations. Each partner must contribute either money, property or services to the partnership. If the partnership contract does not specify the devising of profits or losses, the share of each partner in the partnership's profits and losses is in proportion to his or her contribution.

All partners are bound by the acts done by any of them in the ordinary cause of the business of the partnership. No partner may acquire an individual right against a third person by virtue of a transaction in which his own name did not appear individually.

A partner who has withdrawn from the partnership still remains liable for the obligations incurred on account of the partnership before his or her withdrawal. A new partner is liable for all the partnership obligations incurred prior to his or her becoming a partner. All partners in general partnership have equal right in the management of the partnership.

Limited partnership has two type of partners, i.e. those with a limited liability and those with unlimited liability. For the limited partner the liability is limited to the amount of their contribution to the partnership. The general partners are jointly and unlimitedly liable for all obligation of the partnership. The law requires that there must be at least one unlimited liability partner, general partner, in a limited partnership.

A limited partnership must be managed by the general partners only. Unlike a partner in a general partnership, a limited partner in a limited partnership may carry on any business even if it is in competition with the partnership. A limited partner may transfer his or her interest in the partnership without consent of the other partners. The death of a limited partner or his or her bankruptcy or incapacity does not give right to the dissolution of limited partnership.

Дата добавления: 2017-01-14