Partner Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Partner, written in plain English, along with examples of how it is used.
What is Partner?
A person who unites with others with common interest to perform an activity especially business. Each partner invests its time and money to generate profit. Partners can be general, who has full rights in management of the firm on daily basis and has unlimited liability to extent of personal assets for all the debts. Then there is a limited partner who has no right in day to day management and have the liability to the extent of the investment made in the firm.
History and Meaning of Partner
The concept of partnership dates back centuries, with historical examples of business partnerships seen in the early days of trade and commerce. The modern-day definition of a partner typically refers to a person or entity that joins with one or more others to collectively conduct business operations, with each partner contributing time, money, and expertise towards the goal of generating profit.
In the United States, the legal framework for partnerships is established by state law, and can vary depending on the jurisdiction. Partnerships are often classified into two categories: general partnerships and limited partnerships. A general partnership means that all partners involved share equal responsibility for the business and are exposed to unlimited personal liability for any financial obligations. On the other hand, limited partnerships offer some partners the ability to invest but not be involved in the day-to-day business and have limited liability.
Examples of Partner
- Two friends open up a restaurant together and become partners. Each invests money and contributes to the management of the restaurant.
- A law firm consists of several partners who share profits and the responsibility of running the firm.
- A startup company receives funding from a venture capital firm, making the venture capital firm a partner in the business.
- An architecture firm has a general partner and several limited partners who have invested in the firm but are not involved in the daily operations.
Legal Terms Similar to Partner
- Co-owner: A person who shares ownership of something with another individual or group.
- Shareholder: An individual or entity that owns shares of a corporation and has a vested interest in its financial performance.
- Member: In an LLC, a member is an owner of the business and is responsible for contributing to its success.