It is advisable to have partners reduce their agreement to writing in a partnership agreement with that agreement to provide for contractual terms among the partners as to how the partnership will be managed and defining the limits of authority of the partners who manage the partnership affairs. A joint venture is a form of a partnership limited in scope to a specific object. The parties would be considered general partners concerning all management affairs of the specific business object, but would not be considered general partners for the purpose of one of the party's obligations or contracts concerning items not associated with the specific business object Limited Partnership. Broad liability exposure occurs in a general partnership which may be avoided in a limited partnership. As a result, in a properly formed limited partnership, the limited partners share in the profits and losses but have no rights to control or manage the affairs of the partnership.
Liability is limited to their investment.
The general partner remains fully, jointly and severally liable for all partnership obligations. Because of this investment of capital at risk with no right to control, a limited partnership involves dealing in securities as defined under Washington law and requires specific and formal advice concerning securities laws in the State of Washington. A firm specializing in the establishment of securities and securities regulations should be consulted if a limited partnership form of business entity is contemplated.