It depends on the type of
partnership. There are
basically two types of partnerships- general and limited. A general partnership is made
up of people, each of whom is known as a "general
partner." A general
partnership does not need any documents to be filed to be
created. A general
partnership can be deemed to exist by virtue of the actions of the
individuals. General
partnerships are generally managed by the partners equally unless
there is an agreement to the contrary. Each general partner is liable
for the debts of the partnership.
The other type of partnership is a
limited partnership. A
limited partnership is made up of at least one general partner and
limited partners. The
general partner is liable for the debts of the partnership, just as
in the general partnership.
The other partners are only liable up to what they invested in
the partnership, except when the limited partners participates in the
control of the limited partnership. Otherwise, their liability
does not extend to their personal assets.
Even though the limited partners cannot be personally liable
to third parties for partnership debts and obligations, at least one
partner must be a general partner who can be held personally liable. With respect to the rights and
duties among partners, generally a limited partner has few, if any,
duties and obligations to the other partners since the limited
partner does not participate in management. However, a general partner in
a limited partnership has the same rights, duties and liabilities that
a partner has in a general partnership, in reference to all other
partners, whether limited or general.
In order to allow individuals to both
manage the limited partnership yet retain limited liability, a
limited partnership structure has evolved that utilizes a corporation
to serve as the general partner, with the limited partners owning and
controlling the corporation.
A partnership agreement does not
have to be in writing.
However, if the agreement is not in writing, the law deems the
partnership to be a general partnership. Therefore, it is important
that the limited partnership agreement be in writing.
In Pennsylvania, limited partnerships
are governed by the Pennsylvania Uniform Limited Partnership Act.
