BUSINESS LAW AND PRACTICE
REVISION NOTES
LPC (University of Law)
Partnerships
LLPs and LPs
Company Law
Company Planning Procedure
Directors
Shareholders
Share Capital
Corporation Tax
Company Finance
Insolvency
All notes correct and Distinction worthy as of
academic year 2020/21
,PARTNERSHIPS
Partnership is “the relationship between persons carrying on a business in common with a view of
profit” (s.1 Partnership Act 1890)
There are no formalities required to set up a partnership, only that this definition is met
Partners may have an express partnership agreement in writing (usually as a deed), an inferred
agreement by a course of dealings, or simply abide by the rules set out in the Partnership Act 1890
A lack of written agreement was criticised in Ham v Ham & Another
In the absence of express agreement, s.24 implies terms into a partnership such as:
• partners share equally in the capital, profit, and losses of the business (s.24(1))
• all partners may be involved in management of the business (s.24(5))
• partnership decisions will be made on the basis of a simple majority (s.24(8))
• partners are not entitled to a salary (s.24(6))
• decisions to change the nature of the partnership must be unanimous (s.24(8))
Partners can agree whatever terms they like within their own partnership (s.19) and vary those by
mutual consent either expressly or inferred from course of dealing
Partners’ duties and responsibilities can be set out expressly, but partners also owe the fiduciary
duty to conduct themselves with complete good faith and the highest standard of honour towards
co-partners, and duties set out within the PA:
• to divulge all true and relevant information about things affecting the partnership to all
other partners (s.28)
• to account to the firm for any benefit or profit they have derived from the business
without the consent of the other partners (s.29)
• to share any profits made from carrying on a competing business without the consent of
the other partners (s.30)
• to share any losses and indemnify fellow partners against bearing more than their share of
any liability or expense (s.24)
Every partner has the power to bind the firm in contract (s.5) if doing any act in the usual way of
business (although this can be restricted by agreement under s.8)
Therefore, the firm will be liable for any actions taken by a partner who as acting as an agent with
express actual authority, implied actual authority, or apparent or ostensible authority – although if
so, the partner will be liable to indemnify their fellow partners for any liability or loss which they
incur as a result
The firm will be liable in tort for any act or wrongful omission of a partner acting in the ordinary
course of the firm’s business, or with the authority of the other partners (s.10)
Partners are jointly and severally liable for the debts of the firm (s.9, s.12)
New partners do not become liable for anything before they became partner (s.17(1)) nor do
retiring partners automatically cease to be liable (s.17(2)) although the partners can enter into an
agreement to the effect that they are released from liabilities (s.17(3))
Liabilities can be enforced against:
• the firm as a whole
• any individual partner
, • any other person if they know they are being represented to be a partner, and the other
party relies on that representation i.e. by “holding out” (s.14)
• a partner who has failed to give notice that they were leaving by giving notice to all
persons who deal with the firm and advertising in the London Gazette (s.36)
• the current partners of the firm – if a novation agreement has been signed
Flowchart on liability – p281
Dissolution is when a partnership ends
Technical or partial dissolution of a partnership occurs when the membership of the firm changes
General or full dissolution is the complete winding up of a partnership
Dissolution will occur by:
• Notice if the partnership is at will (s.32) i.e. if there are no restrictions for effecting
dissolution in a partnership agreement
• The expiry of a fixed term (s.32) – if a partnership continues after this is will become a
partnership at will (s.27)
• Automatically upon death or bankruptcy of a partner (s.33)
• Retirement of a partner in a partnership at will (s.26)
• Where it is illegal to carry on the business (s.34)
• There has been a court order for dissolution (s.35)
• Upon the agreement of all partners (unanimity is required by s.19)
A partner can only be expelled from a partnership by unanimous consent – including that of the
partner being expelled (s.25)
There is no implied term to prevent an outgoing partner from setting up business in competition
with the partnership – so an express provision should be included
A restraint of trade clause is against the public interest unless it is reasonable
• To protect a legitimate interest e.g. the firm’s business connections, confidential
information, or employees
• For the protection of that interest in terms of area and duration
A ‘non-dealing clause’ which prevents the partner from entering into contracts with customers or
employees, or a ‘non-solicitation clause’ which prevents the partner from soliciting such contracts,
are more likely to be enforceable
s.44 sets out how partnership assets must be applied on dissolution, and how accounts between
partners can be settled
The proceeds of sale will be distributed in the following order to creditors first, then any partners
who had lent to the firm, capital back to the partners, and surplus in accordance with an
agreement
REVISION NOTES
LPC (University of Law)
Partnerships
LLPs and LPs
Company Law
Company Planning Procedure
Directors
Shareholders
Share Capital
Corporation Tax
Company Finance
Insolvency
All notes correct and Distinction worthy as of
academic year 2020/21
,PARTNERSHIPS
Partnership is “the relationship between persons carrying on a business in common with a view of
profit” (s.1 Partnership Act 1890)
There are no formalities required to set up a partnership, only that this definition is met
Partners may have an express partnership agreement in writing (usually as a deed), an inferred
agreement by a course of dealings, or simply abide by the rules set out in the Partnership Act 1890
A lack of written agreement was criticised in Ham v Ham & Another
In the absence of express agreement, s.24 implies terms into a partnership such as:
• partners share equally in the capital, profit, and losses of the business (s.24(1))
• all partners may be involved in management of the business (s.24(5))
• partnership decisions will be made on the basis of a simple majority (s.24(8))
• partners are not entitled to a salary (s.24(6))
• decisions to change the nature of the partnership must be unanimous (s.24(8))
Partners can agree whatever terms they like within their own partnership (s.19) and vary those by
mutual consent either expressly or inferred from course of dealing
Partners’ duties and responsibilities can be set out expressly, but partners also owe the fiduciary
duty to conduct themselves with complete good faith and the highest standard of honour towards
co-partners, and duties set out within the PA:
• to divulge all true and relevant information about things affecting the partnership to all
other partners (s.28)
• to account to the firm for any benefit or profit they have derived from the business
without the consent of the other partners (s.29)
• to share any profits made from carrying on a competing business without the consent of
the other partners (s.30)
• to share any losses and indemnify fellow partners against bearing more than their share of
any liability or expense (s.24)
Every partner has the power to bind the firm in contract (s.5) if doing any act in the usual way of
business (although this can be restricted by agreement under s.8)
Therefore, the firm will be liable for any actions taken by a partner who as acting as an agent with
express actual authority, implied actual authority, or apparent or ostensible authority – although if
so, the partner will be liable to indemnify their fellow partners for any liability or loss which they
incur as a result
The firm will be liable in tort for any act or wrongful omission of a partner acting in the ordinary
course of the firm’s business, or with the authority of the other partners (s.10)
Partners are jointly and severally liable for the debts of the firm (s.9, s.12)
New partners do not become liable for anything before they became partner (s.17(1)) nor do
retiring partners automatically cease to be liable (s.17(2)) although the partners can enter into an
agreement to the effect that they are released from liabilities (s.17(3))
Liabilities can be enforced against:
• the firm as a whole
• any individual partner
, • any other person if they know they are being represented to be a partner, and the other
party relies on that representation i.e. by “holding out” (s.14)
• a partner who has failed to give notice that they were leaving by giving notice to all
persons who deal with the firm and advertising in the London Gazette (s.36)
• the current partners of the firm – if a novation agreement has been signed
Flowchart on liability – p281
Dissolution is when a partnership ends
Technical or partial dissolution of a partnership occurs when the membership of the firm changes
General or full dissolution is the complete winding up of a partnership
Dissolution will occur by:
• Notice if the partnership is at will (s.32) i.e. if there are no restrictions for effecting
dissolution in a partnership agreement
• The expiry of a fixed term (s.32) – if a partnership continues after this is will become a
partnership at will (s.27)
• Automatically upon death or bankruptcy of a partner (s.33)
• Retirement of a partner in a partnership at will (s.26)
• Where it is illegal to carry on the business (s.34)
• There has been a court order for dissolution (s.35)
• Upon the agreement of all partners (unanimity is required by s.19)
A partner can only be expelled from a partnership by unanimous consent – including that of the
partner being expelled (s.25)
There is no implied term to prevent an outgoing partner from setting up business in competition
with the partnership – so an express provision should be included
A restraint of trade clause is against the public interest unless it is reasonable
• To protect a legitimate interest e.g. the firm’s business connections, confidential
information, or employees
• For the protection of that interest in terms of area and duration
A ‘non-dealing clause’ which prevents the partner from entering into contracts with customers or
employees, or a ‘non-solicitation clause’ which prevents the partner from soliciting such contracts,
are more likely to be enforceable
s.44 sets out how partnership assets must be applied on dissolution, and how accounts between
partners can be settled
The proceeds of sale will be distributed in the following order to creditors first, then any partners
who had lent to the firm, capital back to the partners, and surplus in accordance with an
agreement
