General partnership

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A general partnership, the basic form of partnership under common law, is in most countries 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.

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 express agreement between the partners. Whilst the latter is in general hardly varied, a careful draft would oust certain kinds of third party liability. A clause can contain that only the negligent partners can be sued and it is the wrongdoers that pay damages to victims only.

Subject to contrary agreement, the assets of the business are owned on behalf of all partners, and they are each personally liable, jointly and severally, for business debts, taxes or tortious 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 in accordance with the proportion of capital contribution amongst the partners. However, a partnership agreement will almost invariably expressly provide for the manner in which profits and losses are to be shared in accordance with that proportion. Liability, on the other hand, will not be shared equally unless express provisions indicate such possibility.

Each general partner is deemed the agent of the partnership. Therefore, if that partner is apparently carrying on partnership business, all general partners can be held out as partners for his dealings with third persons.

This page was last edited on 3 January 2018, at 12:31.
Reference: https://en.wikipedia.org/wiki/General_partnership under CC BY-SA license.

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