General Partner

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General partners are two or more persons engaged in a business for the purpose of joint profit, thereby creating a general partnership. General partners assume unlimited joint and several personal liability; as such, a general partner may be personally liable for the actions of other general partners. 

General partners finance the general partnership through the partners’ own personal resources. This grants general partners easy access to capital; partners can withdraw their investment at any time by dissolving the partnership. Default control of a general partnership is equal control and voting power regardless of contribution, but this can be modified by contract. 

Each general partner has the power to bind the partnership in matters pertaining to the partnership’s business. For instance, partners may purchase “ordinary matters connected with the partnership for the purposes of the business and within the scope of the business.” UPA §18(b)

Other general partners can be held liable for the acts of another general partner even if the latter had acted wrongfully during the ordinary course of business. If, by any wrongful act or omission during the ordinary course of the business of the partnership, a general partner incurs a penalty or causes a loss to any non-partner in the partnership, the entire general partnership is liable to the same extent as the general partner who wrongfully acted or omitted to act. UPA §13. However, if the general partner had no authority to act for the partnership in that particular matter, and the person with whom the partner was dealing had knowledge of the fact that the partner had no such authority, the partnership is not bound by one partner’s wrongful act.

See also: limited partnership

[Last updated in January of 2022 by the Wex Definitions Team]