401E LPSeatwork01B

Question 1

What are the differences between a general and limited partner?

Answer 1

1. The differences between the general partner and limited partner are
   (a) in terms of liability, general partners are liable up to the extent of their separate property while the limited partners are liable only up to the extent of their share in the partnership.
   (b) In terms of management, general partners have an equal right to management of the partnership while the limited partners do not have a share in the management of the partnership and have no rights to take part in controlling the management.
   (c) In terms of contribution,general partners may contribute money, property, or service but the limited partners are only allowed to contribute money and property.
   (d) in terms of the proper party, general partners are proper parties while the limited partners are not.
   (e) In terms of assigning their interest to other persons or assignees,general partners are not allowed to assign their interests while the limited partners are allowed to substitute an assignee.
   (f) in terms of the names in partnership firm name,only the general partners’ name appears in partnership name while the limited partners’ name does not appear except if the limited partner’s surname is also the surname of the general partner or even before he becomes a limited partner, partnership carries its business under the similar name.
   (g) in terms of engaging in business with the same operation of the partnership,general partners are prohibited to avoid fraud and loss of interest, while the limited partners are allowed to engage.
   (h) in terms of dissolution, the death, insolvency, insanity, retirement, or civil interdiction of any general partners dissolves the partnership, on the other side limited partners do not dissolve the partnership.

Question 2

2.What are the reasons and purposes of the law authorizing the formation of Limited Partnerships?

Answer 2

1. it secures capital from others for one’s business and still retains control,
2. share in profits of a business without the risk of personal liability,
3. Associate as partners with those having business skills.