Legal Definitions - capital contribution

Definition: Capital contribution refers to the cash, property, or services that partners contribute to a partnership.

Example: John and Jane decide to start a business together. John contributes $50,000 in cash, while Jane contributes a property worth $100,000. These contributions become part of the partnership's capital.

Explanation: In a partnership, each partner contributes something of value to the business. This can be in the form of cash, property, or services. These contributions become part of the partnership's capital, which is used to fund the business operations. In the example above, John and Jane's contributions of cash and property become part of the partnership's capital, which can be used to purchase inventory, pay for expenses, or invest in the business.