1.1.2. General Partnerships
A general partnership (partnership) is an agreement between two or more parties to jointly own a business. Typically, a partnership agreement involves a contract among individuals, although it may sometimes involve both individuals and companies. The general partners (called members) agree to a percentage of ownership based on their capital investment in the enterprise and the services they provide. They will agree on how they will divide the management responsibilities, how to share profits and losses, and how the partnership will dissolve when the partnership ends. Disputes are generally resolved by majority vote, though some decisions, such as admitting a new partner or deciding to terminate, require unanimous consent.
Members jointly own property, equipment, and copyrights. As a result, each one is jointly and severally liable for all the debts and contracts of the partnership. Joint and several liability means that each partner is responsible for the entire amount of the business’s debt or damages. If one member is sued for damages by a client, every member is responsible for payment.
Partnership agreements generally will describe which members have certain authorities and responsibilities. All members contribute capital, time, and expertise, unless otherwise agreed by contract. The partnership therefore may have passive partners who invest their capital and retain the right to inquire ab