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Consideration in Forming a General Partnership

Consideration in Forming a General Partnership

General partnerships are made up of the two or more persons, called general partners, who enter an agreement to conduct business for a profit. General partners have a fiduciary duty of loyalty and trust to the other partners and must subordinate their personal interests to those of the partnership

Basic Characteristics

For most of its basic characteristics, a partnership is similar to a sole proprietorship; yet in other respects it is similar to a corporation.

Creating a Partnership

No formalities are necessary to create a partnership. Two persons may become partners in accordance with a written partnership contract or partnership agreement. They may agree orally to be partners, or they may become partners merely by arranging their affairs as if they were partners. If partners conduct business under an assumed name, they must file the name with the Utah Division of Corporations and Commercial Code in compliancewith Utah statute requiring the registration of fictitious business name.

When people decide to become partners, they should employ a lawyer to prepare a written partnership agreement. Although such an agreement is not required to form a partnership, it is highly desirable for the same reasons that written contract are generally preferred. In addition, the Statute of Frauds requires a writing for a partnership having a term exceeding one year.