Partnership Agreement Lawyer

Limited Liability Partnership (LLP)

A Limited Liability Partnership or LLP is a general partnership that can provide its partners with limitations on their personal liability without changing most other attributes of a general partnership. Thus, an LLP can combine the income tax transparency of partnerships on both the federal and California levels, the management flexibility of general partnerships and, with significant limitations, limited liability for its partners akin to that of shareholders of business corporations.

As originally enacted the LLP legislation allowed only law firm partnerships and public accountancy partnerships and certain “related” partnerships to use the LLP format. The practice of architecture through a limited liability partnership was added to the others in 1998; practice through this format extends only until January 1, 2026. For information on Limited Liability Partnership taxation, please visit the FTB website on taxation.

Limited Liability Limited Partnership (LLLP)

A Limited Liability Limited Partnership (LLLP) is a relatively new type of business partnership. A Limited Liability Limited Partnership is similar to a Limited Partnership or LP. In a Limited Partnership, the limited partners do not manage the business and are protected from personal liability to third parties; the General Partners manages the LP and is exposed to personal liabilities. In a Limited Liability Limited Partnership, the General Partner and the limited partners are protected from personal liability. The legal entity Limited liability limited partnership (LLLP) is available in these states:

• • Alabama
  • Arizona
  • Colorado
  • Delaware
  • Florida
  • Georgia
  • Hawaii
  • Idaho
  • Illinois
  • Iowa
  • Kentucky
  • Maryland
  • Minnesota
  • Missouri
  • Montana
  • Nevada
  • North Carolina
  • North Dakota
  • Oklahoma
  • Pennsylvania
  • South Dakota
  • Texas
  • Virginia
  • Washington
  • Wyoming

How do partners get paid?

The very nature of the limited partner’s relationship with the business organization indicates that the limited partners have no property interest in the specific partnership assets. The limited partner is, primarily, an investor who contributes capital and thereby acquires the right to share in the business profits. Unless there is a written agreement, the general partner is not entitled to salary or pay for his services to the Limited Partnership. The general partner is paid from the profits from the Limited Partnership.

How to Create a Business Partnership

The Uniform Partnership Act of 1994 expressly recognizes that a partnership is an entity distinct from its partners, thereby mooting the old debate over whether a partnership is legally an entity or merely an aggregate of individuals. Adoption of the entity approach means that property acquired by a partnership is property of the partnership and not of the partners individually as cotenants.

A partnership can be formed with the help of a contractual lawyer. Some kind of partnership agreement, whether express or implied, oral or written, is necessary. No particular formalities are required in entering into a partnership agreement, and a valid partnership may be formed by extrinsic agreement. For example, a partnership formed for the purpose of buying and selling real property may be created by extrinsic agreement, and is not voidable under the provisions of the statute of frauds that requires a contract for the creation, sale, or transfer of an interest in land to be in writing. Absent an express agreement, a partnership relation may be inferred from the parties’ acts and declarations.

Whether an agreement is express or implied, its provisions define the respective rights and duties of the parties as far as they do not contravene some rule of law.

When interpreting partnership agreements, the courts follow the rules governing the interpretation of contracts generally. Interpretation of a partnership agreement presents a question of law that may be decided de novo by an appellate court.

Business Partnership License

Licensing statutes regulating certain trades and professions may require that a partnership obtain a license as an entity apart from any licenses or permits held by its members. Furthermore, some professional partnerships are required to notify the appropriate regulatory board when the partnership is formed or dissolved.

The settled rule is that when the object of a statute requiring a license for the privilege of carrying on a business is to prevent improper persons from engaging in that business or to protect the public, the imposition of a penalty amounts to a prohibition against doing the business without a license and a contract made by an unlicensed person in violation of the statute is void.The taint of illegality will affect not only contracts between unlicensed or defectively licensed partnerships and third parties but will affect the contract of partnership as well. Thus, in Hooper v. Barranti, it was held that an ousted partner cannot establish his interest under a partnership agreement that the parties, in pari delicto, knew was illegal from its inception because it contemplated operation of an on-sale liquor business without the required partnership license that, under the circumstances, could not have been obtained.

Business Partnership Name

Although a partnership name is not specifically required by the Act, use of a partnership name is assumed in those provisions of the Act pertaining to conveyances of real property and to the authority of a partner to bind the partnership through execution of instruments in the partnership name. Indeed, the partnership name may become a significant part of the goodwill of a business. Partnerships may, in general, adopt any firm name, but the selection of a name may be restricted by statute or regulations or by the law of unfair competition.

Filing of Fictitious Business Name Statement

Every partnership that transacts business for profit in California under a fictitious business name must file a fictitious business name statement. A fictitious business name in the case of a partnership means a name that does not include the surname of each general partner or a name that suggests the existence of additional owners, for example, one that includes words like “Company,” “& Company,” “& Sons,” “& Associates,” or “Brothers,” but not words that merely describe the business being conducted.

The statement must be filed no later than 40 days from the commencement of business, and a new statement must be filed after certain changes in the facts set forth in the previous statement filed, and on or before the expiration date of the statement currently on file. The statement must be filed with the clerk of the county in which the partnership has its principal place of business. If the partnership has no place of business in California, the statement must be filed with the Clerk of Sacramento County. The partnership may also file the statement in any other county, so long as the statutory filing requirements have been met. In Los Angeles, fictitious filing is done at the county recorder’s office.