The general contractor finds out that thousands have been embezzled by his accountant and he can't finish the job. Coincidentally, the company holding the construction bond goes belly up. Who is liable for the construction funds spent to date? Who is liable for getting the project completed? Who is liable if the partnership gets sued?
No one is liable for ANYTHING until it has been established the PARTNERSHIP has a debt. One it is established the partnership OWES someone, then if the partnership can't pay it, the GP must. Creditors cannot move against a general partner until it has been established that the partnership owes them money (the General Partner is secondarily liable on debts of the partnership, with the partnership itself being primarily liable).
Now, any of the things you mention MAY (or may not) give rise to liabilities of the partnership, depending on the outcomes of contractural disputes. Before a GP can be called on to make payment, there must be a liability properly recordable on the books of the partnership.
For example, a GP cannot be called upon to settle a contingent liability of the partership (and, in fact, if he were to do so, he might have a very difficult time collecting from the partnership absent a prior agreement).
Now, in a construction scenario, as you suggest, the GP may become liable, for example, for the partnership's failure to perform the contract. Even in that circumstance, the amount of the liability would first have to be fixed with respect to the partnership.
Again, I think these are semantic differences, but in financial accounting issues, as many have recently learned, terminology is everything. |
