A limited partnership is a business structure that combines two types of partners with different roles and responsibilities. General partners have full management authority but face unlimited personal liability for partnership debts. Limited partners enjoy protection from personal liability beyond their investment, but this protection comes with restrictions on their management participation. This legal framework creates a balance between operational control and financial risk distribution among partners.
Option A states that a limited partnership must have at least one general partner. This statement is absolutely correct and reflects a fundamental legal requirement. Partnership law mandates that every limited partnership must include at least one general partner who assumes management responsibilities and unlimited liability. Without general partners, the entity cannot function as a legitimate partnership structure, as there would be no party authorized to make binding decisions or manage daily operations.
Option B claims that limited partners can contribute money, property, labor, intellectual property, or other assets as capital. This statement is incorrect because it includes labor or services as permissible contributions. Under partnership law, limited partners are specifically prohibited from contributing labor or services as their capital contribution. This restriction exists because labor contributions would necessarily involve management participation, which would compromise the limited partner's protected status and limited liability. Only monetary contributions, physical property, intellectual property rights, and other non-service assets are acceptable.
Option C suggests that limited partners can execute some partnership affairs through partnership agreement provisions. This statement is fundamentally incorrect and misunderstands a core principle of limited partnership law. Limited partners are strictly prohibited from participating in management or executing any partnership affairs, regardless of what the partnership agreement might specify. This restriction is not negotiable because any management participation would automatically cause the limited partner to lose their limited liability protection and become personally liable for all partnership debts.
Option D claims that when a limited partner converts to general partner status, they bear no joint liability for debts incurred during their limited partner period. This statement is completely incorrect and contradicts fundamental partnership law principles. When a limited partner converts to general partner status, they become subject to retroactive unlimited liability for all partnership debts, including those incurred during their previous limited partner period. The conversion eliminates all previous liability protection, making the converted partner personally responsible for both past and future partnership obligations.