Ownership and Management

All partners in a general partnership are considered co-owners. By default, partners also have equal rights to manage the partnership. If an agreement contemplates joint ownership of a business for prof-it, as well as joint decision-making regarding the partnership’s business, then the likelihood increases that a partnership exists. More difficult questions are raised when co-ownership and co-management are considered in the context of control of the partnership. For example, under the default rules in the UPA and RUPA, both a capital partner and a labor partner have equal rights to manage the partnership, even if the labor partner is much more qualified to manage the business. Similarly, all partners have the authority to bind a partnership by transacting partnership business. In almost all situations, it is beneficial to include management and control provisions in a partnership agreement to avoid conflicts.

Inside Ownership and Management