General partner

Definition

A general partner is a member of a partnership who has unlimited liability for the debts and obligations of the partnership. They also play an active role in managing the business and have authority to make decisions on behalf of the partnership.

5 Must Know Facts For Your Next Test

1. General partners are personally liable for all debts and legal actions against the partnership.
2. They have equal rights in the management and control of the business unless stated otherwise in a partnership agreement.
3. General partners can bind the partnership through their actions, making them agents of the firm.
4. Profits and losses are typically shared equally among general partners unless a different arrangement is specified.
5. A general partner's withdrawal, death, or incapacity can lead to dissolution of the partnership unless provisions are made to continue.

Review Questions

• What level of liability does a general partner have in a partnership?
• How do general partners influence decision-making within a partnership?
• What happens when a general partner withdraws from the business?

Related terms

limited partner:

A partner whose liability is limited to their investment and who does not participate in day-to-day management.

partnership agreement:

A written document that outlines the terms and conditions under which a partnership operates.

joint liability: The shared responsibility among partners for debts and obligations incurred by the business.