General Partnership Agreement (Texas)

GENERAL PARTNERSHIP AGREEMENT (TEXAS)

Texas-Specific Notice on Liability. Unless the partnership is registered as a Texas Limited Liability Partnership ("LLP") under Tex. Bus. Orgs. Code § 152.801 et seq., each Partner is jointly and severally liable for all obligations of the Partnership under TBOC § 152.304, and a partner is personally liable for a partnership obligation incurred while that partner is a partner. The Partners are advised to consider LLP registration (TBOC § 152.802), which requires (i) filing a written application with the Texas Secretary of State, (ii) paying the fee of $200 per partner, and (iii) maintaining minimum liability insurance of at least $100,000 or an amount in a segregated account equal to the required coverage under TBOC § 152.804.

1. PARTIES AND FORMATION

This General Partnership Agreement ("Agreement") is made effective [__/__/____] (the "Effective Date") by and among the following Partners (each, a "Partner" and collectively, the "Partners"):

2. FORMATION UNDER TEXAS LAW

2.1 Formation. The Partners hereby associate to carry on a business for profit and thereby form a general partnership under Tex. Bus. Orgs. Code § 152.051 governed by Chapter 152 of the TBOC (Texas RUPA). This Agreement controls to the extent allowed by TBOC § 152.002; non-waivable provisions (including the duty of loyalty, the obligation of good faith and fair dealing, and the rights of third parties) apply regardless of this Agreement.

2.2 Partnership Name. "[________________________________]" (the "Partnership"). If the name does not include the surname of every Partner, an Assumed Name Certificate must be filed with the Secretary of State under Tex. Bus. & Com. Code Ch. 71.

2.3 Principal Office. [________________________________], [____] County, Texas.

2.4 LLP Election. (Check if applicable)
☐ The Partnership is registered as a Limited Liability Partnership under TBOC § 152.801 et seq., effective [__/__/____], Texas SOS File No. [________________________________]. The Partners shall timely renew LLP status annually and maintain required insurance or segregated funds under TBOC § 152.804.

2.5 Purpose. The Partnership shall engage in: [________________________________], and any lawful activities incidental thereto.

2.6 Term. The Partnership continues at will unless dissolved under Section 10 or TBOC § 11.051/§ 152.701.

3. CAPITAL CONTRIBUTIONS AND ACCOUNTS

3.1 Initial Contributions. As set forth in the table above.

3.2 Additional Contributions. Under TBOC § 152.203(c), a partner is not required to contribute additional capital except as agreed. Additional calls require unanimous written consent.

3.3 No Interest; No Compensation. Under TBOC § 152.203(b), a partner is not entitled to remuneration for services to the Partnership except in winding up, unless the Partners agree otherwise. The Partners agree: ☐ No compensation. ☐ Compensation as follows: [________________________________].

3.4 Capital Accounts. A capital account shall be maintained for each Partner consistent with Treas. Reg. § 1.704-1(b)(2)(iv).

4. ALLOCATIONS AND DISTRIBUTIONS

4.1 Default Rule Modified. TBOC § 152.202(a) provides that each partner is credited with an equal share of profits and must contribute equally to losses, in the absence of agreement. The Partners modify this default and allocate profits and losses in accordance with their Sharing Ratios.

4.2 Distributions. Cash distributions shall be made pro rata in accordance with Sharing Ratios at such times as the Partners unanimously determine, subject to reserves for reasonably anticipated obligations.

5. MANAGEMENT AND AUTHORITY

5.1 Equal Management Right (Modified). TBOC § 152.203(d) gives each partner equal rights in management. The Partners modify this as follows:

☐ Management by all Partners equally. Each Partner has one vote regardless of Sharing Ratio; ordinary business decisions require a majority of Partners; Major Decisions (Section 5.3) require unanimous written consent.

☐ Management by Managing Partner(s). The following Partners serve as Managing Partner(s): [________________________________]. Non-managing Partners retain only the rights expressly reserved herein.

5.2 Statutory Agency Authority; Statement of Authority. TBOC § 152.301 provides that an act of a partner apparently for carrying on the ordinary course of Partnership business binds the Partnership unless the partner has no authority and the third party knows of the lack of authority. The Partners may file a Statement of Partnership Authority under TBOC § 152.802 with the Texas Secretary of State to give public notice of authority or restrictions.

5.3 Major Decisions (Unanimous Written Consent).
☐ Amending this Agreement
☐ Admitting a new Partner
☐ Incurring debt exceeding $[____]
☐ Sale, lease, or mortgage of any substantial asset outside the ordinary course
☐ Merger, conversion, or dissolution
☐ Confession of judgment
☐ Commencement or settlement of litigation > $[____]
☐ Assignment of Partnership property for benefit of creditors

6. PARTNER FIDUCIARY DUTIES (TBOC §§ 152.204–152.206)

6.1 Duty of Loyalty (§ 152.205). Each Partner shall (a) account to the Partnership for any property, profit, or benefit derived from Partnership business, use of Partnership property, or a misappropriation of Partnership opportunity; (b) refrain from dealing with the Partnership as or on behalf of a party having an interest adverse to the Partnership; and (c) refrain from competing with the Partnership in the conduct of Partnership business before dissolution. These duties may not be eliminated, though the Agreement may identify specific activities that do not violate the duty if not manifestly unreasonable. TBOC § 152.002(b)(2).

6.2 Duty of Care (§ 152.206). Each Partner's duty of care is limited to refraining from grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law.

6.3 Good Faith and Fair Dealing (§ 152.204(d)). Each Partner shall discharge duties and exercise rights consistently with the obligation of good faith and fair dealing. This obligation may not be eliminated by agreement.

7. BOOKS, RECORDS, AND INFORMATION (TBOC § 152.212)

Books shall be kept at the principal office. Each Partner has the statutory right, upon reasonable demand and without cause, to access and copy books and records, and to receive true and full information concerning Partnership affairs.

8. LIABILITY OF PARTNERS AND EXHAUSTION RULE

8.1 Joint and Several Liability (§ 152.304). Unless the Partnership has registered as a Texas LLP, all Partners are jointly and severally liable for all obligations of the Partnership.

8.2 LLP Protection (§ 152.801). If registered as an LLP, a partner is not personally liable for a partnership obligation incurred while the Partnership is an LLP, except for (a) the partner's own tortious conduct, and (b) conduct the partner supervises or directs.

8.3 Exhaustion Requirement (§ 152.306). A judgment creditor of the Partnership may not proceed against a partner's separate property to satisfy a partnership obligation unless a judgment is obtained against the partner and (i) a writ of execution against Partnership property has been returned unsatisfied, (ii) the Partnership is a debtor in bankruptcy, (iii) the partner has agreed the creditor need not exhaust, or (iv) a court grants permission based on hardship.

9. TRANSFER OF PARTNERSHIP INTEREST

A Partner may transfer only the right to receive distributions; admission of a new Partner as a full partner requires unanimous consent under TBOC § 152.406. A transferee has no right to participate in management or inspect records. Any attempted transfer in violation of this Section is void.

10. DISSOCIATION, DISSOLUTION, AND WINDING UP

10.1 Events Causing Dissociation (TBOC § 152.501). A Partner is dissociated upon express will, expulsion, bankruptcy, death or adjudication of incapacity (for an individual), dissolution (for an entity), or a decretal order. A wrongful dissociation may subject the dissociating partner to damages under TBOC § 152.503.

10.2 Continuation; Buyout. Absent a dissolution event, the Partnership continues and the dissociated Partner's interest shall be purchased at the buyout price determined under TBOC § 152.602 within the time frames of § 152.608.

10.3 Events of Dissolution (§ 152.701). The Partnership dissolves upon (i) express will of a majority of Partners in an at-will partnership; (ii) occurrence of an event specified in this Agreement; (iii) an event that makes it unlawful to continue; (iv) judicial decree under TBOC § 11.314; or (v) as otherwise required by Chapter 11 of the TBOC.

10.4 Winding Up. Upon dissolution, the Partnership's affairs shall be wound up pursuant to TBOC § 152.704. Assets shall be applied as required by TBOC § 11.053: first to creditors (including Partners who are creditors), then to Partners in accordance with positive capital account balances.

10.5 Statement of Dissolution. After dissolution, the Partners may file a Statement of Dissolution with the Texas Secretary of State under TBOC § 152.803.

11. INDEMNIFICATION

The Partnership shall indemnify each Partner for payments made and liabilities incurred in the ordinary course of Partnership business, as provided in TBOC § 152.203(c), except where arising from the Partner's own breach of fiduciary duty, bad faith, intentional misconduct, or knowing violation of law.

12. TAX MATTERS

12.1 Federal. The Partnership is a partnership for federal tax purposes. [________________________________] shall serve as Partnership Representative under IRC § 6223.

12.2 Texas Franchise Tax. Under Tex. Tax Code § 171.0002(b)(3), a general partnership directly and entirely owned by natural persons is NOT subject to the Texas franchise tax. If any Partner is an entity, the Partnership is a taxable entity under Tex. Tax Code Ch. 171 and must file annually with the Comptroller. The 2026 no-tax-due threshold is $2.65 million in annualized total revenue.

12.3 Filings. The Partnership shall file federal Form 1065, Texas Franchise Tax Reports (if applicable), Assumed Name Certificates (if applicable), and any LLP renewal or annual reports.

13. DISPUTE RESOLUTION

13.1 Governing Law. Texas law, without regard to conflicts of law.

13.2 Venue. Exclusively in the state district courts of [________________________________] County, Texas or the U.S. District Court for the [____] District of Texas.

13.3 Attorney's Fees. The prevailing party shall recover its reasonable and necessary attorney's fees and costs under Tex. Civ. Prac. & Rem. Code § 38.001 (as amended effective 9/1/2021 to permit recovery against partnerships, LLPs, LLCs, and other organizations).

13.4 Statute of Limitations. The Partners acknowledge the 4-year SOL under Tex. Civ. Prac. & Rem. Code § 16.004.

13.5 Jury Waiver. EACH PARTNER KNOWINGLY AND VOLUNTARILY WAIVES THE RIGHT TO A JURY TRIAL IN ANY ACTION ARISING FROM OR RELATING TO THIS AGREEMENT.

14. MISCELLANEOUS

14.1 Entire Agreement. This Agreement, together with any Schedules, constitutes the entire agreement among the Partners.

14.2 Amendment. Amendments require a writing signed by all Partners.

14.3 Notices. By personal delivery, certified mail return receipt, or recognized overnight courier to addresses above.

14.4 Severability. Invalid provisions shall be reformed to the minimum extent necessary.

14.5 Counterparts; Electronic Signatures. Enforceable under Tex. Bus. & Com. Code Ch. 322 (Texas UETA).

15. SIGNATURES

Executed effective [__/__/____].

PARTNER 1: [________________________________]
Signature: [________________________________] Date: [__/__/____]

PARTNER 2: [________________________________]
Signature: [________________________________] Date: [__/__/____]

PARTNER 3: [________________________________]
Signature: [________________________________] Date: [__/__/____]

SOURCES AND REFERENCES

• Tex. Bus. Orgs. Code Ch. 152: https://statutes.capitol.texas.gov/Docs/BO/htm/BO.152.htm
• TBOC § 152.801 et seq. (LLP registration)
• Tex. Tax Code Ch. 171 (Franchise Tax): https://statutes.capitol.texas.gov/Docs/TX/htm/TX.171.htm
• Texas Comptroller, Franchise Tax overview: https://comptroller.texas.gov/taxes/franchise/
• Texas Secretary of State, LLP registration and forms: https://www.sos.state.tx.us/corp/llpfaqs.shtml
• Tex. Civ. Prac. & Rem. Code § 38.001 (2021 amendment)
• Ingram v. Deere, 288 S.W.3d 886 (Tex. 2009) (partnership formation factors)