Penny Pebble and Stuart Stone formed a partnership in a landscape business. Under their arrangement, Penny actively manages the company and assumes unlimited liability for its debts. Stuart has invested several thousand dollars of his money with plans to share in the profits, but does not actively make management decisions, nor will he assume liability beyond his initial investment. Penny and Stuart are in a limited partnership.

Question

Quizplus · Accepted Answer

A limited partnership consists of at least one general partner, who has unlimited liability, and at least one limited partner, who risks only what he or she has invested. By law, the limited partner cannot actively manage the partnership.

Penny Pebble and Stuart Stone Formed a Partnership in a Landscape