Racoma, John Iverson C.
AC1532
Type of General
Partner
1. Rights in partnership
Rights property: Whatever properties
contributed to the partnership
by the general partners, or
whatever the partnership has
acquired throughout the
operation of the business
partnership, belong to the
general partnership as a whole.
The general partners have no
right to individually own or use
any specific asset of the
partnership property. These
are for the sole use of the
partnership business only and
not by individual partners.
2. Rights in partnership interest:
Every individual partner has a
personal property interest in
the general partnership. This
interest consists of his or her
right to his or her share of the
profit and surplus.
3. Rights to indemnification and
contribution: The general
partnership shall indemnify or
protect every partner for
whatever expenses incurred on
behalf of the partnership. If a
partner pays more than his or
proportionate share of the
debts of the partnership, he or
she has the right to
reimbursement from other
partners.
4. Rights to inspect books and
records: Having investments on
the general partnership
business, each partner has the
right to inspect and have a
Limited
1. Right to vote: The General
Partnership Act provides
limited partners with the legal
right to vote in an without
incurring liability. They are
allowed to vote for the
dissolution of the limited
liability partnership business
or the disposal of its assets.
They are also allowed to vote
for amendments in the
partnership agreement or for
the admission or removal of a
general or limited partner.
Limited partners are also
asked to vote for other
fundamental changes in the
scope of the LLP business.
2. Right to inspection of books
and records: Limited partners
have the right to inspect the
books and records of the
business. The rationale behind
this legal right is that limited
partners should be entitled to
know how management is
conducting the affairs of the
business in which they are
part owners.
3. Right to transact business
with the partnership: Another
legal right of limited partners
is the capacity to transact
business with the limited
liability partnership. This
transaction varies. An example
of such is lending money to
the LLP business whether as a
secured or unsecured creditor.
Racoma, John Iverson C.
AC1532
copy of the books and records.
If there are anomalies found in
the books of accounts and even
in the records involving the
partnership, each one has the
right to raise concerns or
confront any partner involved
in the anomalous activities.
5. Right to bring legal action
against the partnership: The
Revised Uniform Partnership
Act grants partners to bring
legal actions against their
partnerships if ever there are
any anomalies committed by
any partner or the partnership
as a whole. Take note that the
old partnership act prohibits
partners from suing their
partnership except under
limited circumstances. In cases
of disagreements due to
anomaly, partners typically
resorted to dissolving the
general partnership.
4. Right to bring derivative
action: Derivative action is a
legal action or lawsuit brought
by a partner on behalf of the
business against a third party.
This is an important legal right
of limited partners. A
particular limited partner can
bring derivative action
especially if the general
partners improperly refuse to
take necessary legal action
against circumstances that are
harming the LLP business.
5. Right to withdraw from the
partnership: The partnership
agreement should contain a
provision that would allow
limited partners to withdraw
from the limited liability
partnership business.
However, in the absence of
such provision, limited
partners can provide a notice
of withdrawal on six month
notice.
6. Right to apply for dissolution
of partnership: In instances
when a limited partner
reasonably deems the
business no longer feasible or
functional to carry on, he or
she may apply for the
dissolution of the limited
liability partnership. This is
another legal right of limited
partners.
7. Right to assignment of
interest: Just like in general
partnership in which the
general partners have the
right to assign their interests
in the partnership, limited
partners can also assign their
interest to profits. However,
this assignment does not and
will not result in the
dissolution of the partnership.
Racoma, John Iverson C.
AC1532
1. Fiduciary duties to other
partners: A general partner has
a fiduciary duty to the entire
Obligations general partnership. This
means that he or she has a
legal duty to act solely in the
interest of the organisation and
of his or her partners. The
general partner should use the
partnership property to benefit
everyone.
2. Individual personal liability for
all partnership obligations
 Personal liability for all acts of
other partners: General
partners are personally liable
for all contracts entered into
and all torts committed by
other partners within the scope
of the entire general
partnership. The partners can
also be held personally liable
for fraud or breach of trust
committed by a partner within
the scope of the general
partnership.
 Liability of each general partner
is joint and several: The
liabilities of all general partners
are both joint and several
regardless if this liability or
legal obligation emerges from a
contract or a tort. Joint and
several liability means that
each general partner is
personally and individually
liable for the entire amount
incurred by the general
partnership.
1. Limited liability: Just like the
shareholders in a corporation,
limited partners do not have
personal liability for
partnership obligations, but
rather, they only risk their
capital contributions in the
partnership business.
2. Loss of limited liability:
Limited Partners can lose their
limited liability status due to
any of the following instances:
 By serving as a general
partner: A limited partner may
also, at the same, become a
general partner in the same
limited liability partnership
business. In such case, the
limited partner will lose his or
her limited liability.
 Allowing name to be used in
the partnership name: A
limited partner foregoes his or
her limited liability rights if he
or she allows his or her name
to be used in the business
name, except when except
where the business has been
carried on in his name before
the limited partnership was
organised.
 Participating in the control of
business: In as much as a
limited partner do not have
managerial authority and
cannot participate in the day-
to-day activities of the limited
liability partnership, he or she
cannot participate in the
control of the said business.
Otherwise, if he or she did so,
he or she will lose his or her
limited liability. Although a
Racoma, John Iverson C.
AC1532
One of the advantages for a limited
partner in the Limited Partnership is
the fact that he or she only faces
limited liability. If the business goes
Privileges bankrupt or is sued, the limited partner
is only liable up to his investment in the
business and the business's assets. He
or she isn't personally liable, and unless
the limited partner has done something
as an individual to make him or her
liable, he or she can't be sued as an
individual.
limited partner may be hired
as an employee of the
partnership, and even as he or
she acts as a manager-
employee, still it does not
constitute control of the
partnership business.
An advantage of a general partner is
that he or she maintains most of the
power in the Partnership. The limited
partners can only participate
marginally as compared to the general
partner. This means that for the most
part, the general partner can make the
decisions and take the Partnership in
the direction he or she wants. If
there's more than one general
partner, this authority gets split
equally unless specifically stated
otherwise in the Partnership
Agreement