A limited partnership is a specific type of business partnership. In a limited partnership, there are general partners and limited partners. The general partners carry more responsibility and are in charge of management and operation of the partnership. Limited partners have less duties and rights, but they can still reap some of the benefits of the partnership. Only one general partner is required, although there can be more if needed.
Many businesses choose to form as limited partnerships due to favorable tax benefits, as well as the limited liability that the partners experience. That is, limited partners generally can’t be held liable for losses that the business experiences.
Like any type of business structure, limited partnerships can also experience various legal disputes. These may involve:
- Disputes between general and limited partners
- Disputes over allocation of benefits
- Internal disputes regarding the direction and aims of the overall partnerships
- Legal violations such as tax fraud, securities fraud, and other types of white-collar crime
Lastly, another common dispute is that of terminations. Limited liability partnerships are less prone to dissolution than other types of partnerships, since a limited partnership won’t automatically terminate if one partner withdraws. However, the withdrawal of a partner can still cause legal issues.
In many cases, a limited partnership may have internal mechanisms for resolving disputes. These are often discussed the partnership bylaws and various contracts between members. If this will not resolve the dispute, a legal claim may be required. This way, a judge can intervene and make various rulings and determinations to help clarify the situation. Limited partnership lawsuits can often result in damages awards that will allow the plaintiff to recover losses they’ve experienced.
Limited partnerships need to follow very specific business formation laws. You may need to hire a business lawyer if you need help starting a limited partnership, or if you have any legal issues involving one. Your attorney can provide you with guidance for your legal issue, and can also provide you with representation if you need to file a lawsuit.