A Limited Partnership Agreement is an agreement between the general partner, the limited partners and the Limited Partnership itself in which the partners can set forth in writing the particular agreements that they have among themselves. The Limited Partnership Agreement identifies what individual or other entity serves as the general partner. It also lists the ownership interests, profit percentage interest and any special rights of the general partner and limited partners. The general partner(s) are also named in the Certificate of Limited Partnership that is filed in the Pa. Department of State to form the Limited Partnership. The Limited Partners do not need to be identified in the Certificate of Limited Partnership.

A Limited Partnership Agreement may address, among other things, the following subjects:

  • Business Purpose of the Limited Partnership
  • Term of Existence
  • Capital Contributions of partners
  • Allocation of Profits and Losses
  • Distribution of Net Cash Flow
  • Powers and duties of General Partner and limitation on the powers of General Partner
  • Hiring and firing of employees
  • Compensation of partners
  • Bonus provisions
  • Decisions that require limited partner approval
  • Buy-Sell obligations, options or rights of first refusal
  • Events that cause termination and dissolution of the Limited Partnership
  • Disability provisions
  • Retirement provisions
  • Arbitration, mediation or other dispute resolution mechanisms

A Limited Partnership Agreement is essential for a Limited Partnership. Limited Partnership’s typically do not have bylaws like a corporation and Limited Partnerships laws have fewer guidelines than are provided for corporations.

Limited Partnership Agreements can also contain a “right of first refusal” which gives either the Limited Partnership or the other partners the first opportunity to buy the partnership interest, at a designated price, before it is sold to outsiders. (See Buy-Sell Agreements subpage). For example, if an employee-partner dies, becomes disabled or leaves the employment of the Limited Partnership, the Limited Partnership Agreement can require that the individual sells his partnership interest back to the Limited Partnership or to the other partners.

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