Partnerships can be structured in the form of a general partnership or limited partnership. In most general partnerships, each partner is fully liable for the debts, liabilities, and obligations of the partnership, as well as the other partners, in respect of the business.
In this video we discuss:
- Tests for partnerships
- The liability of each partner
- Signing authority
- The absence of officers and directors
Transcript
I am Matthijs van Gaalen and I'm a corporate / commercial lending lawyer at Gowling WLG.
You're watching our fourth video as part of the video series entitled different types of borrowing entities. In this video we are going to review general partnerships.
A partnership is determined and exists when three things are present: one, it's two or more individuals corporations or other entities, two carrying on business in common and three, with a view to profit. While it is typically formed by a formal written partnership agreement and that's what lenders will expect it doesn't have to be formed by a partnership agreement. It can be informally established by certain actions taken by the business parties in the absence of a written agreement.
Partnerships can be formed as a general partnership or limited partnership and in this video we're focusing on general partnerships.
Generally speaking in a general partnership each of the partners is fully liable for the debts liabilities and obligations of the partnership and the other partners in respect of that business the business and affairs of the general partnership are regulated and governed by legislation and by the terms of their partnership agreement if any typically each partner has the ability to bind the partnership in connection with the authorization of transactions and entering into any agreements including loan documents in order to address any issues or questions about authorities about an individual partner being able to bind the partnership it's best to have all the partners sign the loan documents and that's what we see lenders typically expecting this will be the case unless there is a legal opinion or other document that is confirming conclusively that a single partner or a collection of partners have the authority to bind the partnership there are no officers and directors within a general partnership the partnership agreement will generally outline the duties responsibility and authorities of the partners to recap on general partnerships first a general partnership can exist with or without a formal agreement second in general partnerships all partnerships are liable for the liabilities and obligations of the partnership third in general partnerships all partners can bind the partnership subject to any limitation in the partnership agreement and fourth for additional certainty lenders typically like to see all partners sign for the partnership this presentation was a high level overview however if you find that you have more specific questions about any of the points discussed or their application to a specific situation please reach out to any member of our lending team and I'm also available through my contact information.
Thanks for watching
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