PARTNERSHIP
partnership. A voluntary association of two or more persons who jointly own and carry on a business for profit. • Under the Uniform Partnership Act, a partnership is presumed to exist if the persons agree to share proportionally the business’s profits or losses. Cf. JOINT VENTURE; STRATEGIC ALLIANCE. [Cases: Partnership 1. C.J.S. Partnership §§ 1–7, 17.]
collapsible partnership.Tax. A partnership formed by partners who intend to dissolve it before they realize any income. • Any partner’s gain resulting from unrealized receivables or inventory that has increased substantially in value will be treated by the IRS as ordinary income rather than as capital gain. IRC (26 USCA) § 751. Cf. collapsible corporation under CORPORATION. [Cases: Internal Revenue 3931, 3935.] commercial partnership.See trading partnership.
family partnership.A business partnership in which the partners are related. IRC (26 USCA) § 704(e). See FAMILY-PARTNERSHIP RULES.
general partnership.A partnership in which all partners participate fully in running the business and share equally in profits and losses (though the partners’ monetary contributions may vary). [Cases: Partnership 79, 86, 87. C.J.S. Partnership §§ 90, 94–95.] implied partnership.See partnership by estoppel.
limited-liability partnership.A partnership in which a partner is not liable for a negligent act committed by another partner or by an employee not under the partner’s supervision. • All states have enacted statutes that allow a business (typically a law firm or accounting firm) to register as this type of partnership. — Abbr. L.L.P. [Cases: Partnership 371. C.J.S. Partnership §§ 429, 431, 438.]
limited partnership.A partnership composed of one or more persons who control the business and are personally liable for the partnership’s debts (called general partners), and one or more persons who contribute capital and share profits but who cannot manage the business and are liable only for the amount of their contribution (called limited partners). • The chief purpose of a limited partnership is to enable persons to invest their money in a business without taking an active part in managing the business, and without risking more than the sum originally contributed, while securing the cooperation of others who have ability and integrity but insufficient money. — Abbr. L.P. — Also termed special partnership; (in civil law) partnership in commendam. [Cases: Partnership 349–376. C.J.S. Partnership §§ 402–441.]
“Unknown at common law, the limited partnership was derived from the commenda or societe en commandite of continental Europe to permit a person to invest and share in the profits of a partnership business and yet limit one’s liability to one’s investment. It was first recognized in the United States by a New York statute of 1822. It is now recognized by statute in all American jurisdictions.” Henry G. Henn & John R. Alexander, Laws of Corporations § 28, at 86 (3d ed. 1983).
“[T]he two primary characteristics of a limited partnership [are] liability of limited partners only for their agreed contributions, and a hierarchical structure with management in one or more general partners and very little power or authority in the limited partners. Thus, limited partners are typically — although not necessarily — passive contributors of capital…. In this respect they resemble shareholders in a corporation, but, depending on the details of the organizational documents, they may have greater or lesser rights.” 3 Alan R. Bromberg & Larry E. Ribstein, Bromberg and Ribstein on Partnerships § 12.01, at 12:5–12:6 (1999).
master limited partnership.A limited partnership whose interests or shares are publicly traded. See publicly traded partnership.
nontrading partnership.A partnership that does not buy and sell but instead is a partnership of employment or occupation. — Also termed noncommercial partnership.
particular partnership.A partnership in which the members unite to share the benefits of a single transaction or enterprise.
partnership at will.A partnership that any partner may dissolve at any time without thereby incurring liability. Cf. partnership for a term. [Cases: Partnership 259.5. C.J.S. Partnership §§ 303–305.]
partnership by estoppel.A partnership implied by law when one or more persons represent themselves as partners to a third party who relies on that representation. • A person who is deemed a partner by estoppel becomes liable for any credit extended to the partnership by the third party. — Also termed implied partnership. [Cases: Partnership 24. C.J.S. Partnership § 24.]
partnership for a term.A partnership that exists for a specified duration or until a specified event occurs. • Such a partnership can be prematurely dissolved by any partner, but that partner may be held liable for breach of the partnership agreement. Cf. partnership at will.
partnership in commendam.See limited partnership.
publicly traded partnership.A partnership whose interests are traded either over-the-counter or on a securities exchange. • These partnerships are treated as corporations for income-tax purposes. — Abbr. PTP. special partnership. 1. See limited partnership. 2. A partnership formed only for a single venture.
subpartnership. An arrangement between a firm’s partner and a nonpartner to share the partner’s profits and losses in the firm’s business, but without forming a legal partnership between the partner and the nonpartner.
tiered partnership.An ownership arrangement consisting of one parent partnership that is a partner in one or more subsidiary partnerships.
trading partnership.A partnership whose usual business involves buying and selling. — Also termed commercial partnership.
umbrella limited partnership.A limited partnership used by a real-estate investment trust to acquire investment properties in exchange for shares in the partnership. See umbrella-partnership real-estate investment trust under REAL-ESTATE INVESTMENT TRUSTT.
universal partnership.A partnership formed by persons who agree to contribute all their individually owned property — and to devote all their skill, labor, and services — to the partnership. [Cases: Partnership 22. C.J.S. Partnership § 9.]
[Blacks Law 8th]