Running a company is not always something that is done by only one person. Collaboration can also be the way that a company is managed. This can be done by more than one person or entity. Each person or business entity that becomes an owner of a company will have certain obligations and responsibilities to benefit the company and keep it running successfully. Here, defining partnership roles are critical. This can and should, be done through a partnership agreement. Specific elements should exist in a partnership agreement, including assigning a certain amount of liability that each partner will have. Liability for each partner is one of the first considerations when entering into a partnership agreement.
Working with an attorney experienced in business law to help establish a partnership agreement can be advantageous for businesses focused on getting things done right. In California, the Los Angeles partnership agreement attorney at the Leiva Law Firm can help you when you decide to enter into a partnership.
Defining Partnership Liability
There are several benefits that come with putting together a partnership agreement. These contracts allow each partner to understand what their expectations are, how they will function in the company, the process for settling disputes, and an agreement that outlines how much liability a partner assumes if misconduct or errors are made. Therefore, making sure that a partnership agreement includes all of the critical aspects necessary to lay out business operations while addressing how to handle legal challenges that may come about is important.
There are three different types of liability that can exist for partnerships. These include:
When a general liability partnership exists, this means that each partner will be equally invested in the management of the company, and as a result, all will assume the same amount of liability.
When a limited partnership exists, some partners will be fully invested in the company’s operations while others will not be. Those that are not will only have a limited amount of liability.
When a limited liability partnership exists, each partner is individually protected from liability that may come with wrongdoing or errors made by other partners.
Every partner, regardless of their liability, must contribute in some beneficial way to the company. This could be with certain skills, financial investment, labor, or even property. Also, there must be at least one partner that is completely responsible for the overall general management of the company.
In summation, of all of the elements that are necessary for a partnership agreement, partnership roles and liability are at the top of the list.
Speak with an Attorney at the Leiva Law Firm Today
The legal team at the Leiva Law Firm can help you develop a customized partnership agreement that meets all of your goals and objectives. With extensive experience in business law and contract formation, businesses throughout Southern California can obtain sound guidance for many different matters, including drafting legal documents like partnership agreements.
Call the Leiva Law Firm today to schedule a free consultation at (818) 519-4465.