There Are Three Partnerships In The State Of Oklahoma
Video Transcribed: Tulsa Attorney Isaiah Brydie with Urban Legal, and this is going to be another video all about partnerships. So a couple of things that we’re going to be doing with this video is going over three different types of partnerships. The first one being a general partnership, the second one being a limited partnership, and the third being a limited liability partnership.
So going straight into the general partnership, under Oklahoma law, a general partnership will be presumed by a court whenever you have two or more people coming together to conduct business together and then share the profits at the end of the day. There isn’t a requirement for writing. There isn’t a requirement for capital contribution or contributing to the partnership itself. However, that will be used as evidence to show the party’s intent to enter into a partnership with one another.
So what are the things that can happen to you under a partnership? Well, as a general matter, you will be held completely liable for the obligations of that partnership. So that means that you can be held personally liable for any debts that are incurred by the partnership. However, there’s a caveat to that. Before you’re held personally liable for those debts of the partnership, the partnership’s assets themselves need to be completely extinguished in resolving those debts.
Second thing is that the partnership will be held to account for the contracts or for the actions of the actual individual partners themselves. So with that being said, aside from matters, if your partner enters into a contract and then the partnership breaches that contract, both yourself and the partner that entered into that contract will be held liable once there is, again, an exhaustion of the assets of the partnership.
And also too, management and control. I kind of eluded to that just a little while ago. All the partners in the general partnership are presumed to have full management and control of the partnership. So that means they’ll be able to act as agents of the partnership, be able to enter into contracts on behalf of the partnership, be able to buy property or assets for the partnership, be able to sell it off, all of those things are completely in the hands of everyone who’s a partner. The only way that you can change that up is by stating differently in some sort of operating agreement that you may create.
The next partnership association is going to be, it’s called a limited partnership. Basically meaning that some of the partners themselves are limited in their capacities to do things. So in a limited partnership, there are two types of partners. There’s the general partner and the limited partner. The general partner is going to be that partner or partners that generally operate in control of the partnership.
They’re going to be the people that do the day to day managing. They’re going to be the people who enter into contracts for the partnership and things of that nature. And the limited partners are people who just share the profits at the end and they may contribute some capital or some property or things like that.
Here the things are a little bit different. A limited partnership is only created once you file a certificate of limited partnership with the Secretary of State, stating your intent to create a limited partnership, including the words LP, with the words limited partnership or the letters LP in the name. And also too, you need some kind of capital contributed to that partnership.
And with that capital, so as a general matter, liabilities tend to follow capital contributions, so limited partners will only be liable to the debts of the limited partnership to the extent that they contributed capital.
So if you only contributed $30,000 worth of capital, you will only be held liable as a limited partner is a limited partnership up to that $30,000 amount. However, general partnerships or general partners in a limited partnership can be held fully liable personally for the debts of the limited partnership outside of their capital contribution.
So that leads us to our last partnership entity and that is the limited liability partnership. So creating a limited liability partnership is really easy. All you do is you file a statement of qualifications with the Secretary of State, laying out the name of the LLP, including the letters LLP or limited liability partnership, or LMT LIB P .. You guys understand it. But, yeah. Laying out that it is a limited partnership.
The benefits of a limited partnership is that there is no liability for any of that limited liability partnership’s obligations imposed onto the partners, the limited partners, except for their own torts, their own individual torts.
So a partner will be held liable for their torts that they commit, associated with the partnership. They will only be personally held liable for those torts. And as well, another precaution for limited liability partnerships, because there is that limited liability aspect, in a lot of ways if you exhaust the assets of the partnership themselves, potential plaintiffs might be at a loss. Limited liability partnerships are generally held to be required to have at least $500,000 in liability insurance, just in case they do get sued. Because again, those partners themselves are limited.
So those are three general … I can’t really say general. Those are three types of partnerships in the state of Oklahoma. Be sure to reach out to us at the email or the phone number in the comments and thank you guys for your time.