LIMITED PARTNERSHIPS (L.P.s)

Question 1

I. FORMATION
A. DEFINITION: 
B. FORMALITIES:
C. NAME: 
D. LAW:

Answer 1

A. DEFINITION: a partnership with one or more general partners [generally liable] and one or more limited partners [liability limited to their investment].

B. FORMALITIES: Must file a certificate of formation with the Secretary of State along with a fee, and must have a written limited partnership agreement.

C. NAME: Must include “Limited Partnership,” “Limited,” or an abbreviation.

D. LAW: General partnership law governs except where L.P. statute is inconsistent.

Question 2

II. LIABILITY OF LIMITED PARTNERS

A. GENERAL RULE:
B. EXCEPTION:

What if, in addition to being a limited partner, Padma was employed by the L.P. as maitress d’?
What if she were also advising the general partner?
What if she also guaranteed a note for the L.P.?
What if she were also an officer or director of the corporate general partner?

What if Padma did all these things and more?

Padma signs for a bank loan on the L.P.’s behalf. Her conduct leads the bank to mistakenly believe she’s a general partner. Can the bank recover from Padma on the loan?
Can other creditors of the L.P. hold Padma liable for the L.P.’s obligations?

Answer 2

no liability on contracts or for the torts of others (“broad shield” statute). but tortfeasor has to be liable

*** A. GENERAL RULE: Limited partners can only lose their capital contributions, unless they participates in control of the business and the person dealing with the LP doesn’t know that the partner was only a limited partner

B. EXCEPTION: Where a limited partner takes part in control. The statute doesn’t say what “control” is, but it does provide certain “safe harbors.”

• Padma can do all of those because within “safe harbors”, without losing the shield
• not sure

C. LIABILITY FOR PARTICIPATING IN CONTROL: RELIANCE TEST creditor by creditor basis

• yes
• only if they relied on her conduct too

D. NO FILING: with the Secretary of State, Joint and several liability (it’s a general partnership!), but a limited partner can avoid FUTURE liability by filing a certificate or withdrawing from the L.P. within a reasonable time after discovering the failure to file.

Question 3

III. RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

Answer 3

III. RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
A. PROMISE TO CONTRIBUTE must be in a signed writing to be enforceable.
B. MAY WITHDRAW ONLY IF THE AGREEMENT PERMITS

Question 4

IV. GENERAL PARTNERS

How does an LLLP differ from an L.P.?

Answer 4

A. GENERAL RULE: JOINTLY AND SEVERALLY LIABLE

B. EXCEPTION: LIMITED LIABILITY / LIMITED PARTNERSHIP (LLLP), which shields general partners from personal liability just like an LLP does.
“FORMULA”: L.P. [shields limited partners] + LLP [shields general partners] = LLLP

-exactly the same, except the liability of the general partners