A well structured indemnification clause can save you a mountain of grief later.  There are many scenarios in which a well written indemnification clause can help you, that angry client who can't understand how you lost their money, even though it was the worst market since the great depression, you simply chose the wrong strategy and shorted at absolutely the wrong time, or the sector of the market in which you trade has taken a beating, and while you know these stocks are currently undervalued and a good buy in the long run, in the short term it looks like a loss.

The indemnification clause generally includes a provision which states that the General Partner, its affiliates, associates agents and employees, shall not be liable for a loss suffered by the Partnership unless said loss is caused by its "gross negligence or willful misconduct".   This is the norm, but for added protection, the term gross negligence or willful misconduct should be limited by including language that describes common acts that would not amount to gross negligence or willful misconduct.   For example, making a decision to invest in stocks within a specific sector of the market, even though that sector of the market has had a dramatic drop in value, does not rise to the level of gross negligence or willful misconduct.  Holding a stock as it falls is not gross negligence or willful misconduct, a stupid trading decision or a trading decision that result in a loss, does not rise to the level of gross negligence or willful misconduct.  Give yourself the added protection by describing common acts that may occur in a trading environment.

Your General Partnership Agreement, Limited Partnership Agreement and Offering Memorandum should all have separate detailed indemnification clauses.  The wording can be similar, but each should be specific to the agreement which it represents. You should also add permissive language, which allows you to do certain acts or to rely on third parties.  For example, the General Partner may consult with counsel and accountants in respect of the Partnership's affairs and, in acting in accordance with the advice or opinion of such counsel or accountants, the General Partner shall not be liable for any loss suffered by the Partnership, provided that such counsel or accounts shall have been selected with reasonable care.

As the General Partner, you will be making the decisions for the partnership, be those decisions, trading, investing in real estate, or venture capital, you need the freedom to take chances without fear of retribution if the stock should go down, the value of the real estate drops below the level at which you purchased it, or the business plan was flawed.  You must be specific in including wording that allows to make these decisions, and wording that protects you once these decisions are made.