Explanatory notes on ordinary partnerships
What is an ordinary partnership?
An ordinary partnership is a contractual association between at least two people to achieve a joint purpose with joint means or effort. An ordinary partnership is founded whenever no other company is founded with the purpose of achieving a joint objective to which any person can contribute. This often is the case without the persons involved being aware of it. You bought a car together with your girlfriend or boyfriend to drive through Europe? Then you have formed an ordinary partnership. For an ordinary partnership, either legal entities (i.e. companies such as a corporation, limited liability company or a general partnership) or natural persons can come together for the purpose of the company. The company has an external appearance and is therefore outwardly visible, unlike a silent partnership.
More examples of an ordinary partnership?
Oftentimes, ordinary partnerships are established for a short period of time or at least a limited term. However, this is not mandatory. Other examples include the joint implementation of a construction project, office sharing, or shared households.
What characterizes an ordinary partnership?
It is a company based on people. That means that paid-in capital, for example, is secondary. Personal skills or contributions are more important.
Is an ordinary partnership a company with a domicile and name?
No, it does not have its own legal personality. That means that it cannot sue anyone and no one can sue it. In other words: All partners would have to sue together, not in the name of the ordinary partnership. And conversely, a lawsuit can also not be filed against the partnership. Instead, it must be filed against all the partners. The ordinary partnership does not have a domicile or an official name.
How are the rights and obligations of the partners governed?
In general, all members have the same rights. They contribute equally and bear the same share of earnings and losses. However, deviating regulations can be agreed.
Does my contribution have to be work?
No. Even if the focus is on personal contributions, a contribution can also be made in the form of money or items (provision of a car).
Can it entail a commercial business?
No, that is not allowed. Although an ordinary partnership may pursue an economic purpose, it cannot sell or manufacture products, for example.
Who is liable for the debt incurred?
Every partner is held liable personally (with their assets), jointly (everyone together), and on an unlimited basis (no restriction such as with a limited liability company).
How do you found an ordinary partnership?
It is enough for at least two people to agree to want to pursue a mutual goal with mutual means. This can be agreed orally, and without the members even knowing what an ordinary partnership is.
If the partners do not want the ordinary partnership to be visible outwardly, then a silent partnership can be created.
How does an ordinary partnership end?
Usually, the ordinary partnership is dissolved automatically when the joint goal is achieved or the agreed term has expired. There is also the option of requesting dissolution if the partnership was created for an indefinite period of time as well as the dissolution of the ordinary partnership with the agreement of all parties. Other reasons can be found in the document “General legal information.”
We also have a checklist for establishing an ordinary partnership as well as templates for contracts with two or more partners, and a sample agreement for establishing office sharing.