Limited partnership agreement template

If you’re looking to form a limited partnership, having a clear and detailed limited partnership agreement is crucial. 

This guide will walk you through what a limited partnership agreement (LPA) is, its purpose, who manages it, and its various use cases. We'll also dive into what a good limited partnership agreement template should include, how these templates are usually managed, the challenges involved and how Juro can automate the process.

What is a limited partnership agreement?

A limited partnership agreement is a legal document that outlines the terms and conditions of a business partnership between one or more general partners and one or more limited partners. The general partners manage the business and assume liability for the partnership’s debts, while the limited partners contribute capital and share in the profits but have limited liability.

What is the purpose of a limited partnership agreement?

The primary purpose of a limited partnership agreement is to define the roles, responsibilities and rights of each partner involved in the partnership. It provides a clear framework for how the business will be operated, how profits and losses will be distributed, and how conflicts will be resolved. This helps to prevent misunderstandings and disputes among partners and ensure smooth business operations.

Who manages limited partnership agreements?

Limited partnership agreements are typically managed by the general partners. They are responsible for the day-to-day operations of the partnership and make decisions regarding the business. 

The limited partners usually have no management authority and are not involved in the business’s daily activities. However, they do have the right to be informed about the business’ performance and can vote on certain major decisions as outlined in the agreement.

Limited partnership agreement use cases

Here are some common scenarios where limited partnership agreements (LPAs) may be employed:

Private equity and venture capital funds

LPAs are frequently used in private equity and venture capital funds, where investors (limited partners) provide capital to be managed by general partners. The LPA details how the fund operates, profit distribution and the responsibilities of each party.

Real estate partnerships

In real estate investments, LPAs are used when multiple investors pool resources to purchase, develop, or manage properties. The agreement specifies the investment terms, profit-sharing and roles of general and limited partners.

Hedge funds

Similar to private equity, hedge funds use LPAs to define the relationship between the fund managers (general partners) and the investors (limited partners), including investment strategies, fee structures and withdrawal terms.

Oil and gas partnerships

LPAs are common in the oil and gas industry, where multiple investors come together to fund exploration, drilling and production projects. The agreement outlines the investment structure, profit distribution, and the roles and responsibilities of each partner.

Joint ventures

In various industries, LPAs are used in joint ventures where two or more parties collaborate on a specific business project. The agreement details the terms of the partnership – including capital contributions, management responsibilities, and the division of profits and losses.

Small business investments

Entrepreneurs may use LPAs when seeking investment from multiple investors to start or expand a small business. The agreement specifies the investment terms, profit-sharing arrangements, and the extent of involvement of each limited partner in the business operations.

What should a limited partnership agreement template include?

Title. Clearly state the title of the agreement at the top.

Date. Include the date when the agreement is being executed.

Parties involved. List the full names and addresses of all general and limited partners.

Background. Provide background information on the partnership’s purpose and goals.

Intent. State the intention to form a limited partnership under the relevant jurisdiction's laws.

Key terms. Define important terms used throughout the agreement (e.g. “capital contribution”, “distribution”, “majority vote”).

Formation date. Specify the date of the partnership’s formation.

Duration. Define the length of time the partnership will exist.

Governing law. Identify the jurisdiction under which the partnership is formed and governed.

Initial contributions. Detail the initial capital contributions required from each partner.

Additional contributions. Outline any requirements for additional capital contributions and the procedure for capital calls.

Default provisions. Specify the consequences if a partner fails to make required contributions.

Distribution. Describe how profits and losses will be distributed among partners.

Timing. State the frequency and method of distributions.

General partner roles. Define the roles, responsibilities and authority of general partners.

Decision-making. Outline the decision-making processes, including voting rights and required majorities for different types of decisions.

Limited partner rights. Specify the rights and limitations of limited partners, including their involvement in management.

Withdrawal. Explain the conditions under which a partner can withdraw from the partnership and the process for doing so.

Transfer restrictions. Detail any restrictions on transferring partnership interests and the procedures for approval of transfers.

Buyout provisions. Provide the method for valuing and buying out a partner’s interest upon withdrawal or transfer.

Dissolution events. List the events that can trigger the dissolution of the partnership.

Winding up. Describe the process for winding up the partnership’s affairs, including the distribution of remaining assets.

Amendments. Specify the procedure for amending the agreement.

Notices. Detail how notices and communications between partners should be made.

Entire agreement. State that the agreement constitutes the entire understanding between the partners.

Severability. Include a clause that ensures if one part of the agreement is invalid, the rest remains in effect.

Execution. Provide spaces for the signatories to formalize the contract, along with the date of signing.

How are limited partnership agreement templates usually managed?

Limited partnership agreement (LPA) templates are managed through a structured process to ensure accuracy, consistency, and legal compliance. Here are the key steps involved:

1. Initial drafting

• Engage legal professionals to draft the initial template, ensuring it adheres to applicable laws and regulations.
• Tailor the template to meet the specific needs of the partnership, including industry-specific requirements.

2. Review and approval

• Have key internal stakeholders review the template to ensure it meets the partnership’s objectives.
• Obtain feedback from external legal counsel to validate compliance and completeness.

3. Version control

• Use a robust document management system to store and manage different versions of the template.
• Track versions, maintaining a log of changes to ensure the use of the most current version.

4. Distribution

• Provide controlled access to authorized personnel only, protecting sensitive information.
• Train relevant staff on how to use and customize the template appropriately.

5. Customization for specific partnerships

• Customize the template for each specific partnership, adjusting terms to reflect unique arrangements.
• Conduct a legal review of the customized agreement to ensure compliance.

6. Execution and storage

• Facilitate the signing process, ensuring all partners review and sign the agreement.
• Store executed agreements securely in a centralized repository with encryption for added security.

7. Monitoring and updates

• Periodically review the template to make sure it stays up-to-date with changing laws and regulations.
• Establish a feedback mechanism for users to suggest improvements based on their experiences.

Manage limited partnership agreements in Juro

Juro’s AI-native contract management platform offers several features that can streamline the management of limited partnership agreements.

Centralized repository

Secure storage. Store all LPAs in one secure, centralized repository, ensuring easy access and management.

Searchability. Use Juro’s OCR functionality to quickly find specific agreements or clauses.

Automation

Template creation. Automate the creation of LPA templates with predefined fields and clauses, ensuring consistency and accuracy.

Version control. Automatically track changes and maintain a log of different versions, ensuring the use of the most current template.

Collaboration

Real-time collaboration. Enable multiple stakeholders to collaborate on drafting and reviewing LPAs in real-time, reducing delays and improving efficiency.

Comments and approvals. Facilitate the contract review process with comment and approval workflows, ensuring all feedback is captured and addressed.

Customization

Dynamic templates. Create dynamic templates that can be easily customized for each specific partnership, adjusting terms to reflect unique arrangements.

Clause library. Use a library of standard clauses to quickly adapt templates to meet specific needs.

Electronic signatures

Integrated eSignatures. Streamline the signing process with integrated eSignature capabilities, so that all partners can review and sign agreements electronically.

Audit trails. Maintain a comprehensive audit trail of the signing process for legal compliance.

Compliance

Automated compliance checks. Use AI-driven tools to perform compliance checks, making sure that LPAs adhere to internal policies and external regulations.

Regular updates. Keep templates up-to-date with changing laws and regulations through automated updates.

Analytics and reporting

Insights. Gain insights into contract performance and risk with advanced analytics and reporting tools.

Custom reports. Generate custom reports to track key metrics, such as agreement status, approval times and compliance.

Integration

Tool integration. Integrate Juro with other business tools, such as CRM and project management software, enabling seamless data flow and improving efficiency.

API access. Use API access to connect Juro with existing systems, ensuring a smooth integration with your workflow.

By leveraging these features, Juro can help you manage limited partnership agreements more efficiently, reducing administrative burden, ensuring compliance, and enabling effective collaboration across your organization.

Juro's AI-native contract automation platform empowers all teams to create, agree, execute and manage contracts up to 10x faster than traditional tools. To find out more, hit the button below to book your personalized demo.