Also known as: special partners · limited partner
Written by attorneys · grounded in primary & secondary sources — see below
A partner in a limited partnership who receives a share of profits but does not participate in management and whose personal liability is limited to the amount of the investment contributed.
Sebastian Santos and Sapphire Technologies execute documents to create a limited partnership for a new venture. They agree that Sebastian will contribute capital without managing operations. Upon filing the certificate of limited partnership, Sebastian acquires special partner status as the parties had arranged.
Samantha Stone invests funds as special partner in Silverline Industries LP. When the partnership defaults on a large loan, creditors attempt to collect from Samantha individually. The court refuses the claim because her status as special partner alone does not create personal liability for partnership obligations.
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Seth Shapiro holds a special partner interest in Starlight Media LP. After an audit report proves inaccurate, Seth and other special partners sue the accounting firm. The court examines whether the firm owed a duty directly to the special partners given the absence of privity or specific linking conduct.
A person becomes a special partner after formation as provided in the partnership agreement or through the affirmative vote or consent of all existing partners when the agreement is silent.
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No. A special partner remains shielded from personal liability for partnership obligations even when participating in management and control.
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No. An incoming special partner is not personally liable for debts or obligations the limited partnership incurred before admission.
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Dissociation ends future rights and duties but does not discharge liability for obligations that arose while the person was still a special partner.
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…of the limited partnership and as a specifically intended beneficiary of the partnership's contract with the accountants, the limited partner might well have been considered actually in privity with the accountants." (483 N.E.2d at p. 117, fn. 9.)) The "linking conduct" element of the New York rule will undoubtedly be defined…