Partnerships
| Author | Anna Nemesh |
| Pages | 579-581 |
Page 579
The Uniform Partnership Act (UPA) defines a partnership as "an association of two or more persons who operate as coowners a business for profit." The creation, organization, and dissolution of partnerships are governed by state law. Many states have adopted the UPA. Partnerships that are created under the UPA are referred to as general partnerships. Business partners are fiduciaries to each other under the UPA. The law recognizes the partnership to be all of the partners acting together and does not recognize it as a separate distinct entity. It is a form of business enterprise.
General partnerships are distinguished from other types of entities. It is an association between two or more people who are seeking a profit. The partners share ownership, profits, losses, and liability. The partners decide who will manage the day-to-day affairs of the partnership. Each shares equally in the profits, losses, and liability for damages that may be incurred by employees or members of the partnership. Equal shares are assumed by the partners unless there is a written agreement that designates it differently.
Common law partnerships, joint ventures, and business trusts are examples of for-profit unincorporated associations. Nonprofit associations include benevolent associations, religious entities, and other organizations/associations that are organized for charitable, humanitarian, or educational purposes. A nonprofit organization focuses upon providing services to the general public, often while relying on government grants, private grant money, and/or donations from businesses or individuals—such as, for example, the American Red Cross. Non-profit organizations have to register with the government as they do not have to pay taxes because of the benefits they contribute to society. They do not make any profits from this type of business and are usually run by a board of directors.
A partnership can be created by an express agreement or can be created on an informal basis based upon a handshake agreement. In civil law, partnership is a contract between individuals who agree to carry on an enterprise, combine their assets, and share the profits.
There are two types of partners. General partners have joint liability depending upon circumstances whereas liability of limited partners is limited to their investment in the partnership.
Page 580
As stated previously, general partnerships can be formed with little formality. As more than one person is...
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