Difficulty: Easy

Average Score: 100%

Which of the following is true of a limited partnership?

Rationale

A limited partnership requires a general partner.

In a limited partnership, there must be at least one general partner who manages the business and has unlimited liability, distinguishing them from limited partners who contribute capital but do not participate in management and have limited liability.

A (Limited partners are responsible for managing the partnership's business.) YOUR ANSWER

Limited partners do not have management responsibilities within a limited partnership; they contribute capital but are not involved in the day-to-day operations. This separation of roles is a fundamental characteristic that protects limited partners from personal liability beyond their investment.

B (A limited partnership may be entered into orally.) YOUR ANSWER

While it is possible for a limited partnership to be created verbally, most jurisdictions require the partnership to be formalized in writing to ensure legal recognition and to protect the rights of the partners involved. This written agreement typically outlines the roles and responsibilities of each partner.

C (The death of any of the partners dissolves the partnership.) YOUR ANSWER

In a limited partnership, the death of a limited partner does not necessarily dissolve the partnership, as the partnership can continue with the remaining general partner. However, the death of a general partner may result in dissolution unless otherwise specified in the partnership agreement.

Conclusion

A limited partnership is defined by the presence of at least one general partner who manages the business and assumes unlimited liability, while limited partners have restricted roles and liability. Understanding these roles is crucial for recognizing how limited partnerships function and the legal requirements that govern their formation and continuity.

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