Partnerships
For example opening a shop and sharing profits
Partnerships for solicitors often turn into LLPs
Partnership Act 1990 applies unless agreement (express/implied) to the contrary
in respect of certain provisions
Partnership Agreement must be read with the Partnership Act legal
document that dictates the way a business is run and details the relationship
between each partner.
Nature of partnership:
S.1(1) - Partnership is the relation which subsists between persons carrying on in
business in common with a view to profit
o ‘persons’ plural
o ‘In business' doesn't include charitable and non-profit
o ‘View to profit' no requirement to have made a profit just a view to.
It is matter of fact whether a partnership exists or not if they end up in court and
the court say they have a relationship in business with a view to profit assumption
that there is a partnership
Unincorporated no separate legal personality therefore the partnership cannot
own assets or grant security over them i.e. partnership property, the individual
partners ARE able to grant security over the assets
o the court can grant partnerships to be sued or to sue in the name of the firm.
When a partnership comes into existence there is no rule of law that they must be
trading e.g., set up a restaurant, bought the goods, entered into lease but then fell
out before opening House of Lords said there is a partnership as there is an
intention of carrying an in business
S.4(1) Persons who have entered into partnership with one another are, for the
purposes of this Act called collectively a Firm...
Formation relationship created orally or written should be a good partnership
agreement in place but not necessary
Very little regulation no registration, notify HMRC, register for VAT if turnover
exceeds 85k, keep partnership accounts for tax purposes (each partner pays tax on
their share of profits), no maximum number of partners and no minimum age
Duration and dissolution unless agreement to the contrary, a partnership is 'at
will’ BUT:
o s.26 where no fixed term has been agreed upon for the duration of the
partnership, any partner may determine the partnership at any time on
giving notice of his intention to do so to all other partners
o s.32(c) subject to any agreement between the partners, a partnership is
dissolved if entered into for an undefined time, by any partner giving
notice to the others of his intention to dissolve the partnership.
typically the partnership agreement will state that those 2 sections do
not apply.
s.33 subject to any agreement between the partners, every partnership is
dissolved as regards all the partners by the death or bankruptcy of any partner
, o typically there is an express agreement in the partnership agreement that
is contrary to this section
Relationship between partners
If there is no partnership agreement the default provisions apply
S.19 the mutual rights and duties of the partners can be varied by consent of all
partners expressly or inferred from a course of dealings
typically consent will come from a partnership agreement.
Finances there are a number of implied terms that apply subject to
contrary agreement
s.24(1) all partners are entitled to share equally in the capital and profits
of the business, and must contribute equally towards losses whether of
capital or otherwise sustained by the firm.
to can be varied in the partnership agreement
Capital e.g. A contributes 100k cash, B contributes 150k machinery, C contributes
250k property partnership capital equals 500k
can include a clause in partnership agreement that states capital will
be shared in the same proportion it was put in.
BUT share equally on dissolution unless there is an express/implied
agreement to the contrary.
Profits share equally even if the partners contributed capital in unequal
shares unless there is an express or implied agreement to the contrary would be
included in w the partnership agreement.
Losses as others. prima facie share equally
BUT s.44 if there is an express or implied agreement to share profits
unequally, - losses will also be shared unequally
Finances sources = capital and borrowing.
need to distinguish between 'lenders' and partners' (capital) important in
terms of liability
if you put in capital you could be seen as a partner and therefore have
unlimited liability if you are just a lender and not a silent partner this
needs to be stated in the partnership agreement.
Other implied terms:
s. 24 (4) no interest paid on capital
s.24(6) not entitled to remuneration for acting in the partnership business
Unless express/implied agreement to the contrary (for both)
Partnership Property s.20(1) all property originally brought into the partnership or
acquired in the course of the partnership business is partnership property and must
be held und used exclusively for the purposes of the partnership and in accordance
with the partnership agreement items brought in or acquired by the firm.
E.g., a band forms a partnership, people come in and out of the band and
they end up with a whole new band but the partnership carries on.
Saxon a founding member left and tried to stop registration of intellectual
property on the band’s name unable to do so as Saxon belongs to the
band and not the founding member need to stipulate whether the
property is held in the partnership or by the individual lending or leasing
to the partnership
For example opening a shop and sharing profits
Partnerships for solicitors often turn into LLPs
Partnership Act 1990 applies unless agreement (express/implied) to the contrary
in respect of certain provisions
Partnership Agreement must be read with the Partnership Act legal
document that dictates the way a business is run and details the relationship
between each partner.
Nature of partnership:
S.1(1) - Partnership is the relation which subsists between persons carrying on in
business in common with a view to profit
o ‘persons’ plural
o ‘In business' doesn't include charitable and non-profit
o ‘View to profit' no requirement to have made a profit just a view to.
It is matter of fact whether a partnership exists or not if they end up in court and
the court say they have a relationship in business with a view to profit assumption
that there is a partnership
Unincorporated no separate legal personality therefore the partnership cannot
own assets or grant security over them i.e. partnership property, the individual
partners ARE able to grant security over the assets
o the court can grant partnerships to be sued or to sue in the name of the firm.
When a partnership comes into existence there is no rule of law that they must be
trading e.g., set up a restaurant, bought the goods, entered into lease but then fell
out before opening House of Lords said there is a partnership as there is an
intention of carrying an in business
S.4(1) Persons who have entered into partnership with one another are, for the
purposes of this Act called collectively a Firm...
Formation relationship created orally or written should be a good partnership
agreement in place but not necessary
Very little regulation no registration, notify HMRC, register for VAT if turnover
exceeds 85k, keep partnership accounts for tax purposes (each partner pays tax on
their share of profits), no maximum number of partners and no minimum age
Duration and dissolution unless agreement to the contrary, a partnership is 'at
will’ BUT:
o s.26 where no fixed term has been agreed upon for the duration of the
partnership, any partner may determine the partnership at any time on
giving notice of his intention to do so to all other partners
o s.32(c) subject to any agreement between the partners, a partnership is
dissolved if entered into for an undefined time, by any partner giving
notice to the others of his intention to dissolve the partnership.
typically the partnership agreement will state that those 2 sections do
not apply.
s.33 subject to any agreement between the partners, every partnership is
dissolved as regards all the partners by the death or bankruptcy of any partner
, o typically there is an express agreement in the partnership agreement that
is contrary to this section
Relationship between partners
If there is no partnership agreement the default provisions apply
S.19 the mutual rights and duties of the partners can be varied by consent of all
partners expressly or inferred from a course of dealings
typically consent will come from a partnership agreement.
Finances there are a number of implied terms that apply subject to
contrary agreement
s.24(1) all partners are entitled to share equally in the capital and profits
of the business, and must contribute equally towards losses whether of
capital or otherwise sustained by the firm.
to can be varied in the partnership agreement
Capital e.g. A contributes 100k cash, B contributes 150k machinery, C contributes
250k property partnership capital equals 500k
can include a clause in partnership agreement that states capital will
be shared in the same proportion it was put in.
BUT share equally on dissolution unless there is an express/implied
agreement to the contrary.
Profits share equally even if the partners contributed capital in unequal
shares unless there is an express or implied agreement to the contrary would be
included in w the partnership agreement.
Losses as others. prima facie share equally
BUT s.44 if there is an express or implied agreement to share profits
unequally, - losses will also be shared unequally
Finances sources = capital and borrowing.
need to distinguish between 'lenders' and partners' (capital) important in
terms of liability
if you put in capital you could be seen as a partner and therefore have
unlimited liability if you are just a lender and not a silent partner this
needs to be stated in the partnership agreement.
Other implied terms:
s. 24 (4) no interest paid on capital
s.24(6) not entitled to remuneration for acting in the partnership business
Unless express/implied agreement to the contrary (for both)
Partnership Property s.20(1) all property originally brought into the partnership or
acquired in the course of the partnership business is partnership property and must
be held und used exclusively for the purposes of the partnership and in accordance
with the partnership agreement items brought in or acquired by the firm.
E.g., a band forms a partnership, people come in and out of the band and
they end up with a whole new band but the partnership carries on.
Saxon a founding member left and tried to stop registration of intellectual
property on the band’s name unable to do so as Saxon belongs to the
band and not the founding member need to stipulate whether the
property is held in the partnership or by the individual lending or leasing
to the partnership
