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Vanderbilt Law Review

Janet L. Eifert

First Page

1407

Abstract

The term "limited partnership" denotes a business organization in which the liability of at least one partner, the "limited partner," for the debts and obligations of the partnership is limited to his contribution to the partnership, whereas the other members of the partnership, the "general partners," may incur unlimited personal liability. The limited partnership is currently used primarily as a public or private investment vehicle in oil and gas, mining,and real estate ventures. Limited partnerships recently have become more popular, primarily because they receive advantageous tax treatment and provide investors with the shelter of limited liability.

Although many scholars have commented on the tax considerations associated with limited partnerships, commentators virtually have ignored the issue of intrapartnership dispute resolution. This Note sets forth and analyzes the issues surrounding the removal of general partners from the limited partnership as a method of resolving intrapartnership disputes. Part II discusses the partnership agreement, its functions and contents, and high-lights removal provisions that may prevent many potential partnership disputes. Part II also considers the applicable uniform legislation and the various rules promulgated by state securities administrators. Part III addresses the collateral effects of removing a general partner, including federal income tax consequences, exposure of the limited partners to general liability, and the post-removal status of the partnership's contracts with third parties. Part IV outlines and examines the substitution of a new general partner to the partnership and the potential legal claims the former general partner may have against the partnership. Part V suggests specific legislation that would provide limited partners with an effective means, through a statutory grant of power to remove a general partner, of supervising their investments. Finally, Part VI concludes that legislators should grant limited partners a statutory right to remove a general partner as a means of protecting their investment and as a method of resolving intrapartnership disputes.

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