A limited partnership is a partnership structure with at least one general partner and one or more limited partners.
Why It Matters
This structure matters because it separates management authority from more passive investment roles. Legal rights, liability exposure, and business control can differ sharply between general and limited partners.
Where It Appears
Limited partnerships appear in business formation, investment structures, real estate ventures, private funds, and disputes over partner rights and liability.
Practical Example
An investment venture is organized so one partner manages the business while other investors contribute capital without taking the same management role. That may be a limited partnership.
How It Differs From Nearby Terms
A general partnership usually does not separate partner roles in the same way. An LLC offers a different liability and governance structure. A limited partnership specifically distinguishes general partners from limited partners.
Related Terms
Knowledge Check
- What is a key feature of a limited partnership? It has at least one general partner and one or more limited partners.
- How does it differ from a general partnership? It separates partner roles more explicitly, especially regarding management and liability exposure.