Lecture 1:
Sole trader:
■ Business carried on by and for a single person
■ The profit is kept by the trader
■ Contracts are made in his or her own name
■ There might be employees paid a salary
■ But the risk is borne solely by the trader, ie all trader’s assets can be used to satisfy
business debts
Partnerships:
■ Three types:
■ Partnership Act 1890: the general partnership, no limited partnership, all partners
are at risk
■ Limited Partnership Act 1907, protection for some of the partners, under the
contract of the partnership get protection of their personal assets, there has to be
one general partner, limited partners have no say but they have a share of their
profits whilst protecting their assets.
■ Limited Liability Partnerships Act 2000: the LLP
The general partnership
■ Formed by agreement, no registration requirement
■ Agreement can be express or implied, and formal or informal
■ The business is referred to as “the firm” but there is no separate legal person. The
firm can be sued in that name
■ Partners remain jointly liable for business debts regardless of any agreement
between them: s.9
■ Every partner is an agent of the firm, s. 5, i.e. with power to affect the legal relations
of all other partners, unless there is a limitation on a partner and the third party
knows of the limitation: s.8
Partnership Act 1890:
■ Partnership is defined by s. 1 as “the relation which subsists between persons
carrying on a business in common with a view of profit.”
■ By s.1(2) Companies registered the Companies Act are excluded but there can be a
partnership where a company or companies are partners
■ Partners must intend to carry on business in common for profit, does not matter if
no profit is made
■ Partnerships end by dissolution
■ Partnership agreements will provide for admission, expulsion, retirement and death
Sole trader:
■ Business carried on by and for a single person
■ The profit is kept by the trader
■ Contracts are made in his or her own name
■ There might be employees paid a salary
■ But the risk is borne solely by the trader, ie all trader’s assets can be used to satisfy
business debts
Partnerships:
■ Three types:
■ Partnership Act 1890: the general partnership, no limited partnership, all partners
are at risk
■ Limited Partnership Act 1907, protection for some of the partners, under the
contract of the partnership get protection of their personal assets, there has to be
one general partner, limited partners have no say but they have a share of their
profits whilst protecting their assets.
■ Limited Liability Partnerships Act 2000: the LLP
The general partnership
■ Formed by agreement, no registration requirement
■ Agreement can be express or implied, and formal or informal
■ The business is referred to as “the firm” but there is no separate legal person. The
firm can be sued in that name
■ Partners remain jointly liable for business debts regardless of any agreement
between them: s.9
■ Every partner is an agent of the firm, s. 5, i.e. with power to affect the legal relations
of all other partners, unless there is a limitation on a partner and the third party
knows of the limitation: s.8
Partnership Act 1890:
■ Partnership is defined by s. 1 as “the relation which subsists between persons
carrying on a business in common with a view of profit.”
■ By s.1(2) Companies registered the Companies Act are excluded but there can be a
partnership where a company or companies are partners
■ Partners must intend to carry on business in common for profit, does not matter if
no profit is made
■ Partnerships end by dissolution
■ Partnership agreements will provide for admission, expulsion, retirement and death
