Angel, Ltd. was a traditional limited partnership formed with 3 general partners
ID: 2732844 • Letter: A
Question
Angel, Ltd. was a traditional limited partnership formed with 3 general partners (Martha, Nancy, and Olive) and one limited partner (Paul) to operate a restaurant. At a partner meeting in June of 2010, Martha proposed that the limited partnership enter into a contract with Taylor's Inc. to purchase all of the restaurant's beef, chicken and pork products for the following year. (This was a substantial portion of the restaurant's yearly purchases.) Nancy and Olive consulted with Paul(who had some expertise in the industry), and decided to oppose the proposal. However, Martha thought it was such a good opportunity that on May 1 2010, she signed the contract with Taylor's on behalf of Angel Ltd. What are the rights and obligations of the following parties? 1) Martha 2) Nancy 3) Olive 4) Angel, Ltd. 5) Taylor's 6) Paul
Explanation / Answer
Answer
A limited partnership (LP) is a form of partnership similar to a general partnership, except that where a general partnership must have at least two general partners (GPs), a limited partnership must have at least one GP and at least one limited partner.
The GPs are, in all major respects, in the same legal position as partners in a conventional firm, i.e., they have management control, share the right to use partnership property, share the profits of the firm in predefined proportions, and have joint and several liability for the debts of the partnership.
As in a general partnership, the GPs have actual authority, as agents of the firm, to bind the partnership in contracts with third parties that are in the ordinary course of the partnership's business. As with a general partnership, "an act of a general partner which is not apparently for carrying on in the ordinary course the limited partnership's activities or activities of the kind carried on by the limited partnership binds the limited partnership only if the act was actually authorized by all the other partners
At a partner meeting in June of 2010, Martha proposed that the limited partnership enter into a contract with Taylor's Inc. to purchase all of the restaurant's beef, chicken and pork products for the following year. (This was a substantial portion of the restaurant's yearly purchases.) Martha thought it was such a good opportunity that on May 1 2010, she signed the contract with Taylor's on behalf of Angel Ltd.
So It was contract entered with third party that is in the ordinary course of the partnership's business.
1) Martha : So Martha has joint and several liability for the contract entered by her.
2) Nancy : So Nancy has joint and several liability for the contract entered by one of the other partner (Martha)
3) Olive : So Olive has joint and several liability for the contract entered by one of the other partner (Martha)
4) Angel, Ltd. : Angel Ltd. is bind by act of any of its general partner in dealing with third party (i.e. Taylor’s Inc.). So Angel Ltd is responsible for contract entered by one of its general partner i.e. Martha
5) Taylor's : Tayor’s Inc is third party which has entered agreement with Angel, Ltd. So it can enforce the contract against Angel Ltd.
6) Paul : Paul is limited partner. A limited partner is not liable for the obligations of the limited partnership except in respect of the amount of property he contributes or agrees to contribute to the capital of the limited partnership.