Aside from knowing that a limited partner is liable for partnership liabilities up to the extent of his
partnership contribution only, what else do we know about a limited partner and a limited partnership?
A limited partnership has two classes of partners and is often used when investors will not be actively
involved in the business and do not want to risk their personal assets. A limited partnership must
include at least one general partner who maintains unlimited liability. The liability of other partners is
limited to the amount of their investments. Therefore, they are called limited partners. A limited
partnership usually has LLP in its name. Again it is formed by general partners and limited partners,
where the general partner(s) run the business and have unlimited liability while limited partner(s) has
no day-to-day involvement in the business decision making.
Limited partner Characteristics:
1. A limited partners liability extends only to his capital contribution.
2. A limited partner must contribute cash or property to the partnership but not services.
3. A limited partners interest is freely assignable.
4. They can freely make or engage in business because they are considered as a mere contributor to the
partnership.
5. The retirement, death, insolvency, insanity of a limited partner does not dissolve the partnership, for
his executor or administrator shall have the rights of limited partner for the purpose of selling his
estate.
6. When the manner of management has not been agreed upon, a limited partner has no share in the
management of a limited partnership.
(source: Chapter 4 of book: differences between a general and a limited partner)
