Future Business Leaders of America (FBLA) Business Law Practice Exam

Which term describes a partnership with more than one type of partner?

1. General partnership

2. Limited partnership

3. Joint venture

4. Silent partnership

The correct answer is: Limited partnership

A limited partnership is defined as a partnership that features both general partners and limited partners. In this arrangement, general partners manage the business and have unlimited liability for the debts and obligations of the partnership, while limited partners contribute capital and benefit from profits without being actively involved in the management, and their liability is restricted to their investment in the partnership. This unique structure allows for a combination of active management and passive investment, differentiating it from other types of partnerships, such as general partnerships where all partners share equal responsibilities and liabilities, or joint ventures, which typically involve a temporary partnership for a specific project. The inclusion of different roles and liabilities within a limited partnership is what clearly distinguishes it as the correct answer for describing a partnership with multiple types of partners.