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What is Partnership Liability?
Partnership liability refers to the division of responsibility with regards to debts and losses of a business partnership. For instance, if a partnership is experiencing loss of profits, the partners may wish to understand how the losses are coming about, and who should be responsible.
The term "partnership liability" can also refer to which persons can be held legally responsible for violations that were performed by the partnership, or for injuries that the partnership caused to another person or business entity.
How Does Liability in a Partnership Work?
This depends on what type of partnership is in question. In a general partnership, each partner will be responsible for the debts and violations of the partnership. So for instance, if the partnership as a whole is in debt to another organization, it may be possible for the creditor to make collections on an individual partner, who would then be liable for a certain amount of the debt. In some cases, the partner can seek reimbursement from other partners for their fair share of the debt.
Liability is different in a limited partnership. With limited partnerships, each partner has a "limited" amount of liability for the partnership’s losses. Rather than being jointly responsible for the partnership’s losses, each partner will only be liable for their own contributions and business decisions.
Of course, a partnership can modify the liability terms through the use of a partnership agreement. It is generally recommended to have a lawyer help with the drafting and reviewing of a partnership agreement in order to ensure that it is fair and in compliance with business laws.
Do I Need a Lawyer for Help with Partnership Liability Issues?
Partnership liability can sometimes be a complicated legal subject to handle. You may need to hire a lawyer for help if you have any questions or concerns regarding liability in a partnership. Your attorney can provide you with the right legal advice that’s needed for your particular legal situation. Also, your lawyer will be able to provide you with representation in the event that you need to file a lawsuit.
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Last Modified: 07-18-2013 03:16 PM PDT
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