This is just a quick rundown of a general partnership. If you want a more detailed analysis of business law related articles check here.
A General Partnership is made up of a 2 or more people who decide that they want to enter into an agreement and create a business to make some money. Literally, that is nearly the exact words of the legal definition. It is presumed that if you and another person agree to do something legally together for some money, it’s a general partnership. Each partner is entitled to equal control in a business, and each retains one vote for making decisions.
A general partnership tends to have the same liabilities as other partnerships and is bound by the theory of agency. This basically means each partner is liable for the other partners problems, as long as it is associated with the business. Of course, it wouldn’t be fair under the eyes of the law if new partners were liable for old partners debts, so the law says that new partners to a partnership are not liable for pre-existing debts. But any capital the new partner brings in can be used to pay off such debts.
A partner may never self-deal, obtain secret profits, or avoid paying the other partners their shares. However, a partner does have the ability to transfer the rights of their profits. This is usually hard to do but if they are liquid enough they can be transferred.
When it comes to deciding whose property is who’s in a partnership it depends on who bought what and what the purpose was fore. If a partner’s own personal assets were used to purchase partnership property than those assets are still theirs. However, if partnership assets were used to purchase property than that property is owned by the partnership.
If the partners have not made an agreement that sets forth how the partnership will be dissolved, it will be terminated by either partner whenever they tell the other partner. The partnership will still be liable on all outstanding debts. When a dissolution starts a winding up of the business occurs. So, all outside parties who the partners owe debt to will be paid, then the partners will be returned all their capital (money they put in the business) then anything left over after taking away all the losses will be profits for the partnership.