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MASSACHUSETTS GENERAL PARTNERSHIPS

Please note that the following should not be construed as legal advice. You should consult an experienced
Massachusetts business attorney if you have a specific legal matter that needs to be addressed. Contact us today at
(800) 719-4889 if you need help with your Massachusetts business matter (you can read about our lawyers and
professionals here). Please review our main business law page if you have additional questions about the process of forming
a business entity in Massachusetts.

Massachusetts General Partnership

A general partnership is an association of two or more persons who carry on as co-owners a business for profit. Partners in
a general partnership are liable for partnership obligations to the full extent of their personal as well as business assets.
Partners must be persons with the legal capacity to act as partners.

Statutory Requirements for Formation

A general partnership is formed by the agreement of the parties or by a course of conduct. No filing of certificates, documents
or other agreements is necessary to create a general partnership; indeed, no partnership agreement is even required.

Since it is so easy to create a partnership inadvertently, it is almost always desirable to organize a partnership by means of
a written partnership agreement that specifically delineates the desired relationships among the partners.

Control and Management

In the absence of an agreement to the contrary, the control and management of the partnership is shared equally by the
partners. Each partner has the authority to bind the partnership contractually, and in the event of a disagreement, a
majority of the partners controls the outcome of a decision, except when deciding whether to admit a new partner, in which
case unanimous approval of the partners is required.

By agreement of the parties, however, the control and management of the partnership may be varied. Control may be
vested in a group of partners or in a single partner. Voting rights may be limited to a few partners, allocated equally among
the partners or varied in proportion to financial contribution, seniority or other criteria.

Even though the partnership agreement may limit the authority of partners to act and bind the partnership, partners with
apparent authority to act on partnership business may bind the partnership, unless the limitations on authority are brought
to the attention of third parties doing business with the partnership. Therefore, effective limitations on the exercise of
authority require notice to third parties, which may be impractical to deliver, or the cooperation of partners who are subject
to controls. Clients should always be made aware of the potential risks arising from this characteristic of the partnership
form; the best defense against abuse of partnership power is knowledge of the risk, coupled with a careful evaluation of the
trustworthiness and loyalty of the persons with whom one is commencing a business relationship.

Although, by agreement, the partners may endow a partner or group of partners with rights to control the management of
the partnership's business, all partners are entitled to certain protections. Each partner stands in a fiduciary relationship to
his or her partners and is obliged to deal with them with the utmost good faith and loyalty.  

Liability

Each general partner is liable to the full extent of his or her personal assets, as well as the partnership assets, for
obligations of the partnership. In addition to liability for their own torts, the partners are jointly and severally liable for the
damages caused by any tort or breach of trust committed by a partner within the scope of partnership business.

Continuity of Existence

A technical dissolution of the partnership occurs whenever a partner ceases to be associated with the carrying on of the
business of the firm. On dissolution, the partnership is not terminated but continues until the winding up of partnership
affairs is complete. Alternatively, there may be provision for the business to be continued. In addition to the withdrawal,
retirement or death of a partner, the dissolution of the partnership occurs when it is terminated in accordance with the
partnership agreement, on demand of any partner if there is no partnership agreement, by the consent of all the partners,
by any event that makes it unlawful to carry on partnership business, by the bankruptcy of any partner or of the partnership,
by court decree or by the occurrence of certain other events.

Like a proprietorship, a partnership does not have perpetual life. However, it is possible to structure the arrangements
between the partners to provide for some continuity of existence.

Transferability of Interests

The Massachusetts General Laws specify that the property rights of a partner are his or her

  •    rights in specific partnership assets,

  •    interest in the partnership and

  •    right to participate in management of the partnership.

Specific assets of the partnership are held by the partners as tenants in partnership. Subject to any agreement between the
partners, the partners have an equal and undivided interest in the assets of the partnership, and the interest of a partner in
such assets may not be assigned or conveyed except in connection with the assignment of the rights of all of the partners in
those assets. A partner's right in specific assets of the partnership is not subject to attachment or execution, except on a
claim against the partnership, and is not subject to dower, courtesy or allowances to surviving spouses or heirs.

A partner's interest in the partnership is the right to receive his or her share of the profits and surplus of the partnership. A
partner may assign his or her right to receive such profits or surplus, but the assignee does not thereby become a partner
and is not entitled to (1) interfere in the management or administration of the partnership's business; (2) obtain any
information concerning, or any accounting relating to, such business; (3) inspect the partnership's books; or (4) to vote.