General

Question 1

What is a partnership?

Answer 1

An association of two or more persons who have agreed to co-own an ongoing business for profit.

Partnerships are recognized as distinct legal entities separate from their partners.

Question 2

What are the two types of partnerships based on duration?

Answer 2

At will and for a definite term or undertaking.

‘At will’ partnerships can be dissolved at any time, while those for a definite term have a specified duration.

Question 3

What are the roles of general partners in a partnership?

Answer 3

Agents of the partnership, co-manage the business, share in profits and losses, generally exposed to personal liability.

General partners have significant responsibilities and risks within the partnership.

Question 4

What is the role of limited partners in a limited partnership?

Answer 4

Passive investors, not agents of the partnership, do not participate in management, not generally exposed to personal liability.

Limited partners primarily invest capital and have limited involvement in operations.

Question 5

What characterizes a general partnership (GP)?

Answer 5

Consists only of two or more general partners.

All partners in a GP share equal responsibility and liability.

Question 6

What defines a limited partnership (LP)?

Answer 6

Consists of at least one general partner and one limited partner.

This structure allows for both active management and passive investment.

Question 7

What is a limited liability partnership (LLP)?

Answer 7

Any partnership other than a limited partnership that is eligible to become an LLP.

In an LLP, general partners are shielded from personal liability risks typically associated with partnerships.

Question 8

True or False: Limited partners have the same liability exposure as general partners.

Answer 8

False.

Limited partners are generally not exposed to personal liability for the partnership’s debts.