Limited Partnership

Overview

A limited partnership (LP) is a partnership in which the duties and obligations of the partners are divided between one or more "general partners" and one or more "limited partners."

A general partner is a partner with the same liability and power as in a general partnership, who is responsible for managing the partnership and its operations. Like the partners in a general partnership, general partners in an LP are personally liable for all of the partnership's debts and other obligations

A limited partner, in contrast, does not participate in the partnership's management and day-to-day operations.  In fact, the limited liability of the limited partner usually depends on adhering to specific prohibitions against being actively involved in the management or operation of the partnership business.

Unlike the general partner, the limited partner is usually not personally liable for the partnership's debts and other obligations, except to the extent of the capital he has contributed to the partnership (or is obligated to contribute in the future under the partnership agreement).