Limited Partnership Agreement

A business partnership firm is considered to be a basic form of business organization. This form of organization is principally a collaboration between two or more people to conduct an economic activity or business, which is lawful, that yields profit. A business partnership is principally an agreement or a contract which is legally enforceable and a partnership agreement is the conclusive evidence of the existence of a partnership. In legal terms, a partnership is also known as a partnership firm. In some countries and states, registering a partnership firm with the requisite governing body, is mandatory.

Limited Partnership

A regular or general partnership is a bit different from limited partnership, which is basically a variant of the regular partnership. The limited partnership is composed of some general partners and some limited partners. General partners have a very active role in the liability of the firm which is basically is several and unlimited. The general partners are agents for themselves and also for other partners. The personal assets of general partners also come into picture when creditors lawfully make a claim. A limited partner is a partner who contributes capital, but his liability is limited to the scope of the capital. In many cases, the limited partner does not have a power to be an agent and his personal assets, which amount to more than the capital contributed cannot be claimed by the creditors. Though a limited partner rarely participates in the day-to-day working of a partnership, he or she has an important say in some major decisions. The terms of capital contribution, profit distributional and winding up implications are discussed in the agreement.

Limited Partnership Agreement Template

The following is a template for such an agreement. However, I would advise you to consult a lawyer to make the actual agreement properly and error free. The agreement is especially difficult to draft due to the presence of complicated clauses regarding capital of the firm. Apart from that, you can also take a look at a sample agreement, in order to get a better idea regarding the articles and clauses that are usually present in such an agreement.

In the following template, an explanation in italics has been affixed.

Limited Partnership Agreement for proposed name of the partnership firm a recital is usually used on this location and is according to the enactment, law or legislation under which the firm is being conceived. It usually goes as... This document, agreement and contract, drafted in common faith signifies the partnership between name and addresses of the partners follow ____________________ ____________________ ____________________ ____________________ ____________________ from the date of ______ of month ______ of the year _________. The agreement has been signed in good faith and facts which are true to the knowledge of signatories, notary and witnesses, who as of the date were of sane mind, financially solvent, as of the legal age and were under free will and free from any influence. Article 1: Partners and the Firm this article is principally an identification clause, which basically identifies the different people, location, etc. Partners name and addresses of the all the partners, along with some important identification number such as a social security number Partnership Firm this clause includes the purpose of the business and the objectives of the establishment Formation compliance, registration and some formation regulations that have been fulfilled are included in this clause Premises this clause includes the details of the different locations, premises and their ownership Term in this clause the time period for which the firm would exist is mentioned and in which circumstances it may be dissolved is also included Article 2: Capital and Financials this article contains all information related to the transactions of the firm Capital this clause includes the exact amount of contributed capital, which may be in cash or kind Profit and Loss Sharing Ratios in this clause the ratio in which profit and loss is to be shared is included Borrowings, Advances and Salaries this paragraph includes all the empowered borrowing and ending capacities of the partners individually and also a group, plus additional incomes, withdrawals and allowances are also included in this clause Additional this last clause is of absolute importance as it includes some important features such as account numbers and policy and security numbers Liability this is a very important clause since it defines the liability of the partners Article 3: General and Specific Association this is the largest of all articles and is basically a set of provisions. Some of the important aspects that are included in this article, include, the authority and responsibility of the partners, agency and attorney powers, decision-making powers, further capital contrition, etc

An agreement for limited partnership can be really difficult to draft, hence, I would recommend that you seek the services of a lawyer to have a flawless agreement.