Careful. A limited partner can only become such by way of registration with
a state authority whereas people can and do become general partners quite by
accident, unaware of the legal consequences that can follow from jointly
operating a business. So the relationship described would, absent the
conscious choice embodied in a filing with a state agency, not qualify as a
limited partnership. Granted that the parties could choose that
relationship. They could, for that matter, choose an LLP or LLC or
incorporation or S-corp or so forth. But that was not the issue; the issue
was whether or not a mere creditor could become a partner. General partner,
yes. Limited partner, not without an extra step of filing.
In a message dated 9/4/00 4:43:29 PM Pacific Daylight Time, jamesr@best.com
writes:
> On Mon, 04 Sep 2000, TOMorrow wrote:
> > Most notably, for present purposes, each owner of a
> > partnership (i.e., each partner) shares an equal right to control the
> > business organization. Someone who merely contributes money would
> probably
> > not qualify as a partner. He/she would more likely qualify as a
creditor.
>
>
>
> Most locales recognize what you are describing as a "Limited Partner"
> under the law. A limited partner is essential an investor that owns a
> percentage of a Partnership, but who is not actively involved in the
> business and therefore has no liability. Limited partners who do actively
> involve themselves in the business of the partnership are usually
> adjudicated as in fact being General Partners under the law, and can
> therefore be held liable.
>
> -James Rogers
> jamesr@best.com
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