Texas Partnership Agreement

Texas partnership agreements dictate the protocols that partners will follow regarding their co-owned business in detail. Additionally, a well-crafted partnership agreement covers every responsibility, contribution, and benefit a partner can expect as well as their potential liabilities.

Last updated February 14th, 2025

Texas partnership agreements dictate the protocols that partners will follow regarding their co-owned business in detail. Additionally, a well-crafted partnership agreement covers every responsibility, contribution, and benefit a partner can expect as well as their potential liabilities.

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Texas Partnership Types (4)

Partnership Type State Filing Requirement
General Partnership (GP) There are no registration requirements for general partnerships but, they are explicitly required to conform to naming requirements and partnership laws. Texas SOS Business Services
Limited Partnership (LP) Certificate of Formation of Limited Partnership (Filing Fee: $750.00)
Limited Liability Partnership (LLP) Registration of Limited Liability Partnership (Filing Fee: See Instructions – $200.00/ per general partner accordingly)
Limited Liability Limited Partnership (LLLP) Certificate of Formation of Limited Partnership (Filing Fee: See Instructions – $750.00)

Fiduciary Duty

Duty Of Loyalty:
  • Partners hold a duty to fully inform the partnership of every “profit or benefit” they receive from conducting (as well as winding up) partnership business; this applies to the use of partnership property or the receipt of property.[1]
  • Partners cannot participate in any dealings with the partnership while they possess “an interest adverse” to the partnership’s goals or operations, nor can they act on behalf of such a person (i.e., legal entity, individual, other partner).[2]
  • A partner owes the partnership their loyalty and thus are restricted from “competing” with or working against the partnership’s business.[3]

Duty of Care:

  • Partners must act “in the best interest of the partnership” whenever they exercise their rights, carry out their duties, or exhibit their partnership authority. [4]

Partners must act in the “good faith” that is consistent with their partnership agreement obligations.[5]

Partners are not violating their duties “under the partnership agreement” when pursuing outside interests solely because they are partners.[6]

No partner is a trustee simply because of their “capacity as a partner” and thus do not generally owe such duty.[7]

Partners do not absorb liability “merely because” they pursue business interests outside the partnership but must always remain compliant with both the agreement and the law.[8]

Partnerships are responsible for each partner’s conduct; thus, they can be held “liable for loss” or injuries to persons, and this includes to other partners.[9]

A partnership is responsible for the misapplication of “money or property” its partners receive on its behalf or specifically in the course of ordinary business.[10]

Liability

Limited partners are excused from meeting the “obligations of a limited partnership”; however, this is not the case if they hold a dual status of being a limited partner and a general partner.[11]

Limited partners are potentially responsible for meeting a partnership’s obligations and liabilities whenever they act “in the control of the business” and outside the limitations of the partnership’s limited partner status.[12]

A limited partner that is acting to control the partnership business is “liable only to a person who transacts business” with the LP while (erroneously) believing the limited partner is a general partner.[13]

State Definitions (3)

general partner is a partner (potentially) carrying “the liabilities of a partner in a partnership without limited partners,” whether in a general partnership or a limited partnership and named as such in the partnership agreement or as classified by Texas law.[14]

A limited partner means a person that is “acquiring a limited partnership interest” as the partnership agreement they sign dictates and under state law.[15]

Partnership agreement means a contract executed between partners to define their participation, roles, and obligations in a partnership that is legally executed whether “written, implied, or oral.”[16]