Legal Definitions - general partner

A general partner is an individual who, along with one or more other individuals, co-owns and operates a business known as a general partnership. This business structure is characterized by several key features, most notably that general partners assume unlimited personal liability. This means their personal assets, such as homes, savings, or other investments, are not protected and can be used to satisfy the partnership's debts or legal obligations, even if those obligations were incurred by another partner.

Furthermore, each general partner typically has the authority to make decisions and enter into contracts that legally bind the entire partnership, even without the explicit consent of the other partners, as long as the actions are within the ordinary course of the business. They share in the profits and management responsibilities, and while they can fund the partnership through personal resources, this also exposes them to significant financial risk.

• Example 1: Small Business Debt

  Sarah and Michael decide to open a small artisanal coffee shop, "The Daily Grind," as a general partnership. They each invest their personal savings and share equally in the management and profits. After a few months, the shop struggles and accumulates significant debt to a coffee bean supplier and a landlord. Because Sarah and Michael are general partners, the creditors can pursue not only the coffee shop's business assets (like the espresso machine or inventory) but also Sarah's personal savings and Michael's car to recover the money owed. This illustrates their unlimited personal liability for the partnership's financial obligations.

• Example 2: Professional Service Malpractice

  Dr. Anya Sharma and Dr. Ben Carter form a general partnership to operate a joint medical practice, "City Health Clinic." They share office space, staff, and patient referrals. One day, Dr. Carter makes a critical error during a patient's diagnosis, leading to a severe health complication and a subsequent malpractice lawsuit. Even though Dr. Sharma was not involved in the patient's care, as a general partner, she is also personally liable for any damages awarded to the patient. This highlights the "joint and several" aspect of unlimited liability, where one partner can be held responsible for the professional misconduct of another partner within the scope of the business.

• Example 3: Binding Authority in a Real Estate Venture

  David, Emily, and Frank form a general partnership to buy, renovate, and sell residential properties. They agree to split profits and management duties. While David is away on vacation, Emily identifies a promising property and, without consulting David or Frank, signs a purchase agreement for the property on behalf of the partnership. Because Emily is a general partner, her signature legally binds the entire partnership to the purchase, obligating David and Frank to contribute their share of the funds, even if they might have disagreed with the specific acquisition or price. This demonstrates a general partner's inherent authority to bind the partnership in ordinary business matters.