Thus, the general partner has all the rights and obligations of a
partner in an ordinary partnership, subject to some statutory
enumerated exceptions. Notably, there is no corresponding provision in the LPA conferring the same general rights and obligations
upon the limited partner.
[ 20] The LPA then proceeds to expressly define the rights and
the obligations of a limited partner. In particular, s. 9 of
the LPA significantly limits the obligations of a limited partner:
9. Subject to this Act, a limited partner is not liable for the obligations of
the limited partnership except in respect of the value of money and other
property the limited partner contributes or agrees to contribute to the limited
partnership, as stated in the record of limited partners.
This is the defining feature of a limited partnership: except as otherwise contemplated by the LPA, the limited partner’s liability is
limited to the extent of their capital contribution to the partnership:
Alison Manzer, A Practical Guide to Canadian Partnership Law,
looseleaf (Toronto: Canada Law Book, 2017), at paras. 9.560 to
[ 21] The limited liability of the limited partner is premised on
their status as a passive investor in the partnership business. In
this vein, s. 13( 1) of the LPA provides:
13( 1) A limited partner is not liable as a general partner unless, in addition
to exercising rights and powers as a limited partner, the limited partner takes
part in the control of the business.
[ 22] The LPA then sets out the extent of the limited partner’s
entitlements. Section 11 provides that a limited partner is entitled to a share of the profits of the limited partnership and to the
return of the limited partner’s contribution to the limited partnership. Further, s. 15( 1) provides that a limited partner has the
right to demand and receive the return of the limited partner’s
contribution, upon the dissolution of the limited partnership, subject to certain exceptions.
[ 23] The LPA does address the priority for payments arising on
the dissolution of the limited partnership. I repeat s. 24 of
the LPA for ease of reference:
24. In settling accounts after the dissolution of a limited partnership, the
liabilities of the limited partnership to creditors, except to limited partners on
account of their contributions and to general partners, shall be paid first, and
then, unless the partnership agreement or a subsequent agreement provides
otherwise, shall be paid in the following order:
1. To limited partners in respect of their share of the profits and other
compensation by way of income on account of their contributions.
2. To limited partners in respect of their contributions.