When a partner contributes capital to a partnership, the partner receives an ownership percentage in all assets of the partnership, not just in the property contributed. All partners are jointly and severally liable for the obligations of the partnership. Joint and several liability means that each individual partner can be held responsible for all obligations of the partnership. A partner who pays an entire obligation can collect the other partners' pro rata share of the debt. Of course, the other partners may not be in a position to repay the partner.
Any partner can enter into a contract on behalf of the partnership.
By doing so, a partner can bind all partners in an unfavorable contract, since all partners are jointly and severally liable for the obligations of the partnership. A partnership of two or more individuals may require the efforts of all the partners to succeed, especially in the early life of the business. If one of the partners withdraws or dies, the existence of the partnership may be threatened. Key man life insurance is a life insurance policy on the life of key members of an organization to provide cash in the event of the death of a key member. The beneficiaries of a key man policy are the organization or the organization members.