Which type of business relationship involves responsibilities for debts and powers matched by agreements made within a contract?

A general partnership is characterized by shared ownership and responsibilities among the partners, as well as the mutual management of the business. In this type of relationship, each partner has the authority to make decisions and act on behalf of the partnership. The partners typically have joint and several liabilities for the debts incurred by the business, meaning they are collectively responsible for the obligations of the partnership, and creditors may pursue any partner for the entire debt.

Additionally, the powers and responsibilities of each partner are outlined in a partnership agreement or contract, which details how profits and losses are shared, decision-making processes, and the roles of each partner. This agreement is crucial as it defines the relationship and expectations amongst the partners, making it a fundamental aspect of a general partnership.

In contrast, the other business types have different structures that affect responsibility and power dynamics. For example, a limited liability company (LLC) limits personal liability for debts to the extent of their investment in the company. A sole proprietorship is owned by one individual who bears complete responsibility for debts without the protection of separate legal status. Lastly, a corporation has a legally distinct status, offering limited liability to its shareholders, but typically involves more complex governance structures and different management powers.