Limited Partnerships

Question 1

Define a limited partnership.

Answer 1

A partnership that has one or more general partners** and **one or more limited partners.

• the general partners are generally liable (joint and severally liable) for the firm obligations
• the limited partners have limited liability–its capital contributions–even if exercises control control (Ga. is minority)
• a limited partner will be liable to a creditor who is misled by the limited partner’s conduct into mistakenly believing she is a general partner

NOTE: you are always liable for your own torts

Question 2

How does one form a limited partnership?

Answer 2

Filing** a **certificate of limited partnership** with the **secretary of state

Pay a fee

Name** must contain the words “**limited partnership**” or the initials “**L.P.”

NOTE: general partnership law generally governs

NOTE: if you fail to file a certificate of limited partnership, all you have is a general partnership. A partner may avoid future liability by:

• filing a certificate of limited partnership; or
• withdrawing

Question 3

What are the rights and obligations of limited partners?

Answer 3

Promise to contribute

• enforceable only if in a signed writing
• partners can agree to reduce or eliminate a limited partner’s promise to contribute–effective even against creditors who relied on the prospective contribution

Right to withdraw

• only if the limited partnership agreement permits it

Question 4

How may a general partnership in a limited partnership insulate her liability for partnership obligations?

Answer 4

By creating a limited liability limited partnership

Question 5

How are limited partnership assets distributed upon dissolution?

Answer 5

First, to all** **creditors, including partner creditors

Second, capital** is returned to **limited partners

Third, profits are split per contributions (unless otherwise agreed)