Partnership
Partnership, in law, a form of business organization in which two or more persons jointly own the business, share in its profits, and are personally liable for the payment of its debts. A partnership also is called a copartnership. Each of the owners is called a partner (or copartner). Persons who join established partnerships may be admitted as junior partners by the senior partners. There are two kinds of partnerships:
A General Partnershipis created by private contract. Each of the partners agrees to contribute money, property, or special talents to the enterprise in return for a fixed share of the profits. The actions of any partner are binding on the others, and each partner has unlimited liability—that is, all personal assets are pledged to the payment of the firm's debts. If a partner withdraws or dies, or becomes bankrupt or incompetent, the partnership may have to be dissolved. Unless the original contract provides otherwise, a new contract is required for the firm to continue as a partnership.
A Limited Partnershipcontains one or more partners whose liability is limited to the amount of their investment—provided they take no active part in the operation of the business. As a general rule, a limited partnership contract must have the approval of state authorities.
Any partnership may contain one or more partners whose position is in some way exceptional. Thus, a silent partner is publicly identified with the firm but takes no active part in its management. A secret partner is an active manager whose identity is hidden. A dormant, or sleeping, partner is both inactive in the management and publicly unidentified. A special partner is under legal limitations of some sort. A liquidating partner has the duty, when necessary, of dissolving the firm.