20 How are general partnerships organized?

When two or more people form their own business or professional practice, they usually consider becoming partners. Partnership law defines a partnership as “the association of two or more persons to carry on as co-owners a business for profit…whether or not the persons intend to form a partnership.” Revised Uniform Partnership Act, Section 202(a). In 2011, there were more than three million business firms in the United States as partnerships. When we use the word partnership, we are referring to the general business partnership. There are also other types of partnerships, one of which (the limited partnership) we will consider later.

Even if you do not plan to work within a partnership, it can be important to understand the law that governs it. Why? Because it is possible to become someone’s partner without intending to or even realizing that a partnership has been created. Knowledge of the law can help you avoid partnership liability.