PARTNERSHIPS
Sole Trader
A person who alone:
a) has the right to make all decisions affecting the business;
b) owns all the assets of the business;
c) is responsible for paying income tax on all the profits of the business; and
d) has unlimited liability for the debts of the business.
There is no single piece of legislation which governs a business run by a sole trader
Partnership
Two or more persons who, on the basis of a contract (written or not) between them:
a) share the right to take part in making decisions which affect the business or the
business assets (although they may have agreed that one or more of their number
will not be involved in day-to-day matters but only in fundamental decisions);
b) share the ownership of the assets of the business (although they may have agreed
that the firm will use an asset which is owned by one of the partners individually);
c) share the profits of the business (although the partners may have agreed not to
share these equally); and
d) share unlimited liability for the debts of the business (although if one does not pay
then the others must pay his share)
Limited Partnership:
form of unincorporated business is established under the Limited Partnerships Act
1907
there must be at least one general partner who has unlimited liability for all the
debts of the partnership.
LPs must be registered with the Registrar of Companies (who also acts as the Registrar of
LPs) in accordance with s 8 of the LPA 1907 before they can start trading
Partnership Act 1890
1 Definition 2+ people carrying out business with shared view of profitpeople people carrying out business with shared view of profitcarrying people carrying out business with shared view of profitout people carrying out business with shared view of profitbusiness people carrying out business with shared view of profitwith people carrying out business with shared view of profitshared people carrying out business with shared view of profitview people carrying out business with shared view of profitof people carrying out business with shared view of profitprofit
2 Rules for determining existence of partnership indicia people carrying out business with shared view of profitof people carrying out business with shared view of profitS1:
o common people carrying out business with shared view of profitbusiness people carrying out business with shared view of profitactivities
o arrangements people carrying out business with shared view of profitfor people carrying out business with shared view of profitsharing people carrying out business with shared view of profitprofits
o contributed people carrying out business with shared view of profitcapital people carrying out business with shared view of profitand people carrying out business with shared view of profitknow people carrying out business with shared view of profithow
o meet people carrying out business with shared view of profiton people carrying out business with shared view of profita people carrying out business with shared view of profitregular people carrying out business with shared view of profit(quarterly) people carrying out business with shared view of profitbasis
4 Meaning of firm
5-10 Power to bind the firm
9 Liability of partners jointly people carrying out business with shared view of profitliability people carrying out business with shared view of profitfor people carrying out business with shared view of profitdebt people carrying out business with shared view of profit(S3 CLA people carrying out business with shared view of profitseverally people carrying out business with shared view of profitliable)
10 Liability of the firm for wrongs
14 Liability by ‘holding out’ (holding people carrying out business with shared view of profitout people carrying out business with shared view of profitto people carrying out business with shared view of profitbe people carrying out business with shared view of profita people carrying out business with shared view of profitpartner people carrying out business with shared view of profit= people carrying out business with shared view of profitliability)
17 Liability of incoming and outgoing partners
(2): people carrying out business with shared view of profitretiring people carrying out business with shared view of profitdoes people carrying out business with shared view of profitnot people carrying out business with shared view of profit= people carrying out business with shared view of profitno people carrying out business with shared view of profitliability
(3): people carrying out business with shared view of profitmay people carrying out business with shared view of profitbe people carrying out business with shared view of profitdischarged people carrying out business with shared view of profitfrom people carrying out business with shared view of profitliability people carrying out business with shared view of profitby people carrying out business with shared view of profitagreement
19 Variation of partnership terms = must have consent
24-25 Implied terms
26 Retirement from partnership at will
, 28-30 Duty to render accounts and info, to share private profits and not to
compete
32-35 Dissolution
36 Rights of persons against apparent members of the firm – must give notice
S36(1): people carrying out business with shared view of profitentitled people carrying out business with shared view of profitto people carrying out business with shared view of profittreat people carrying out business with shared view of profitold people carrying out business with shared view of profitmembers people carrying out business with shared view of profitare people carrying out business with shared view of profitmembers people carrying out business with shared view of profituntil people carrying out business with shared view of profitgiven people carrying out business with shared view of profitnotice
S36(2): people carrying out business with shared view of profitad people carrying out business with shared view of profitin people carrying out business with shared view of profitLondon people carrying out business with shared view of profitGazette people carrying out business with shared view of profit(future people carrying out business with shared view of profitmembers) people carrying out business with shared view of profit+ people carrying out business with shared view of profitcircular people carrying out business with shared view of profit(present people carrying out business with shared view of profitmembers)
44 Rules for distribution of assets on final settlement of accounts
Limited Liability Partnerships Act 2000
1 Definition – is a body corporate
2 Rules for incorporation
4 Members
5 Relationship of members – governed by agreement/regulations per S15(c)
6 Members = agents (unless no auth and person knows) and notice
requirements
15 Application of co law LLPs (Application of the CA 2006) Regulations 2009
LLP Regulations 2001
Limited Partnerships Act 1907
4 Definition and constitution of ltd partnership
5 Registration of LP required
6 Modifications of general (partnership) law in case of LPs
7 Law of private partnerships to apply where not excluded (ie PA 1890 & CL)
8 Duty (of registrar) to register (on application)
8A Application for registration
8B Name of LP – must end with ‘limited partnership’ or ‘LP’
8C Certificate of registration (= conclusive evidence of existence)
13 Registrar to file statement and issue certificate
16 Inspection of registered statements
Approach to Partnership Question
1. Is there a partnership?
2. Who are the partners? Are they still partners?
3. What type of partnership is it?
(a) Fixed / At will?
(b) GP / LP / LLP?
4. What are the relevant terms?
(a) Express by oral/written agreement – s.19 PA 1890
(b) Inferred from conduct?
(c) Implied by PA 1890, LPA 1907, LLPA 2000
5. Apply to facts
6. Conclude
, General Partnership
- Creation -
s.1 PA 1890 “Partnership 2+ persons carrying on a business in common with view of profit.”
When this exists, partnership has been created regardless of any
agreement, or recognition of the parties.
Two or more persons;
Carrying on a business (s. 45 – includes every trade, occupation or
profession) in common – two or more persons share responsibility for
the business and for the decisions which affect the business;
With a view of profit.
“Partnership” no more than a business relationship based on agreement.
Does not have a separate legal existence (contra a co.)
s.2 In determining whether partnership exists, regard should be had to:
(1) JT, TiC etc do not of themselves create partnership – where they do or do
not share in the profits made from the use of that property
(2) Sharing of gross returns not of itself create a partnership
(3) Receipt of share of profits = prima facie evidence of partnership, but not
conclusive
May be governed by an agreement, but can be oral/in writing/implied by conduct.
- Fundamental Characteristics -
Typical rights Right to be involved in decision-making which affect the business
and Right to share in profits of a business
responsibilitie Right to examine accounts of the business
s of partners Right to insist on openness / honesty from fellow partners
(useful Right to veto the introduction of a new partner
evidence) Responsibility for sharing losses made by the business
Any people carrying out business with shared view of profitor people carrying out business with shared view of profitall people carrying out business with shared view of profitof people carrying out business with shared view of profitthese people carrying out business with shared view of profitcharacteristics people carrying out business with shared view of profitcould people carrying out business with shared view of profitbe people carrying out business with shared view of profitvaried people carrying out business with shared view of profitor people carrying out business with shared view of profitexcluded. people carrying out business with shared view of profitAt people carrying out business with shared view of profitsome people carrying out business with shared view of profitpoint people carrying out business with shared view of profitsuch people carrying out business with shared view of profit
variations/exclusions people carrying out business with shared view of profitmay people carrying out business with shared view of profitgo people carrying out business with shared view of profitso people carrying out business with shared view of profitfar people carrying out business with shared view of profitas people carrying out business with shared view of profitto people carrying out business with shared view of profitextinguish people carrying out business with shared view of profitthe people carrying out business with shared view of profitpartnership.
- Duration -
Express/Fixed Until a time pre-determined by agreement
Implied/At will Forever until dissolved by notice, death or bankruptcy
- Statutory Formalities -
Business Where s.1192 – s.1206 CA 2006 apply:
names - There are controls over choice of partnership names (ss.1193, 1194)
- Requirement to reveal names + business address of the partners (s. 1201)
Name formalities will NOT apply if only using names of the partners
Certain words/phrases appearing in business names will require written approval
for Secretary of State
Info must appear on all stationery (S1202) + on a notice at any place of business to
which customers/supplies have access (S1204)
- Names of partners + address for each partner in GB for service of docs
- Non-compliance: offence punishable by a fine + partners unable to enforce
contracts if other party can show prejudiced by non-compliance
(SS1205, 1206)
May state on stationery statement: full list of partners available at principal place
of business (S1203)
Sole Trader
A person who alone:
a) has the right to make all decisions affecting the business;
b) owns all the assets of the business;
c) is responsible for paying income tax on all the profits of the business; and
d) has unlimited liability for the debts of the business.
There is no single piece of legislation which governs a business run by a sole trader
Partnership
Two or more persons who, on the basis of a contract (written or not) between them:
a) share the right to take part in making decisions which affect the business or the
business assets (although they may have agreed that one or more of their number
will not be involved in day-to-day matters but only in fundamental decisions);
b) share the ownership of the assets of the business (although they may have agreed
that the firm will use an asset which is owned by one of the partners individually);
c) share the profits of the business (although the partners may have agreed not to
share these equally); and
d) share unlimited liability for the debts of the business (although if one does not pay
then the others must pay his share)
Limited Partnership:
form of unincorporated business is established under the Limited Partnerships Act
1907
there must be at least one general partner who has unlimited liability for all the
debts of the partnership.
LPs must be registered with the Registrar of Companies (who also acts as the Registrar of
LPs) in accordance with s 8 of the LPA 1907 before they can start trading
Partnership Act 1890
1 Definition 2+ people carrying out business with shared view of profitpeople people carrying out business with shared view of profitcarrying people carrying out business with shared view of profitout people carrying out business with shared view of profitbusiness people carrying out business with shared view of profitwith people carrying out business with shared view of profitshared people carrying out business with shared view of profitview people carrying out business with shared view of profitof people carrying out business with shared view of profitprofit
2 Rules for determining existence of partnership indicia people carrying out business with shared view of profitof people carrying out business with shared view of profitS1:
o common people carrying out business with shared view of profitbusiness people carrying out business with shared view of profitactivities
o arrangements people carrying out business with shared view of profitfor people carrying out business with shared view of profitsharing people carrying out business with shared view of profitprofits
o contributed people carrying out business with shared view of profitcapital people carrying out business with shared view of profitand people carrying out business with shared view of profitknow people carrying out business with shared view of profithow
o meet people carrying out business with shared view of profiton people carrying out business with shared view of profita people carrying out business with shared view of profitregular people carrying out business with shared view of profit(quarterly) people carrying out business with shared view of profitbasis
4 Meaning of firm
5-10 Power to bind the firm
9 Liability of partners jointly people carrying out business with shared view of profitliability people carrying out business with shared view of profitfor people carrying out business with shared view of profitdebt people carrying out business with shared view of profit(S3 CLA people carrying out business with shared view of profitseverally people carrying out business with shared view of profitliable)
10 Liability of the firm for wrongs
14 Liability by ‘holding out’ (holding people carrying out business with shared view of profitout people carrying out business with shared view of profitto people carrying out business with shared view of profitbe people carrying out business with shared view of profita people carrying out business with shared view of profitpartner people carrying out business with shared view of profit= people carrying out business with shared view of profitliability)
17 Liability of incoming and outgoing partners
(2): people carrying out business with shared view of profitretiring people carrying out business with shared view of profitdoes people carrying out business with shared view of profitnot people carrying out business with shared view of profit= people carrying out business with shared view of profitno people carrying out business with shared view of profitliability
(3): people carrying out business with shared view of profitmay people carrying out business with shared view of profitbe people carrying out business with shared view of profitdischarged people carrying out business with shared view of profitfrom people carrying out business with shared view of profitliability people carrying out business with shared view of profitby people carrying out business with shared view of profitagreement
19 Variation of partnership terms = must have consent
24-25 Implied terms
26 Retirement from partnership at will
, 28-30 Duty to render accounts and info, to share private profits and not to
compete
32-35 Dissolution
36 Rights of persons against apparent members of the firm – must give notice
S36(1): people carrying out business with shared view of profitentitled people carrying out business with shared view of profitto people carrying out business with shared view of profittreat people carrying out business with shared view of profitold people carrying out business with shared view of profitmembers people carrying out business with shared view of profitare people carrying out business with shared view of profitmembers people carrying out business with shared view of profituntil people carrying out business with shared view of profitgiven people carrying out business with shared view of profitnotice
S36(2): people carrying out business with shared view of profitad people carrying out business with shared view of profitin people carrying out business with shared view of profitLondon people carrying out business with shared view of profitGazette people carrying out business with shared view of profit(future people carrying out business with shared view of profitmembers) people carrying out business with shared view of profit+ people carrying out business with shared view of profitcircular people carrying out business with shared view of profit(present people carrying out business with shared view of profitmembers)
44 Rules for distribution of assets on final settlement of accounts
Limited Liability Partnerships Act 2000
1 Definition – is a body corporate
2 Rules for incorporation
4 Members
5 Relationship of members – governed by agreement/regulations per S15(c)
6 Members = agents (unless no auth and person knows) and notice
requirements
15 Application of co law LLPs (Application of the CA 2006) Regulations 2009
LLP Regulations 2001
Limited Partnerships Act 1907
4 Definition and constitution of ltd partnership
5 Registration of LP required
6 Modifications of general (partnership) law in case of LPs
7 Law of private partnerships to apply where not excluded (ie PA 1890 & CL)
8 Duty (of registrar) to register (on application)
8A Application for registration
8B Name of LP – must end with ‘limited partnership’ or ‘LP’
8C Certificate of registration (= conclusive evidence of existence)
13 Registrar to file statement and issue certificate
16 Inspection of registered statements
Approach to Partnership Question
1. Is there a partnership?
2. Who are the partners? Are they still partners?
3. What type of partnership is it?
(a) Fixed / At will?
(b) GP / LP / LLP?
4. What are the relevant terms?
(a) Express by oral/written agreement – s.19 PA 1890
(b) Inferred from conduct?
(c) Implied by PA 1890, LPA 1907, LLPA 2000
5. Apply to facts
6. Conclude
, General Partnership
- Creation -
s.1 PA 1890 “Partnership 2+ persons carrying on a business in common with view of profit.”
When this exists, partnership has been created regardless of any
agreement, or recognition of the parties.
Two or more persons;
Carrying on a business (s. 45 – includes every trade, occupation or
profession) in common – two or more persons share responsibility for
the business and for the decisions which affect the business;
With a view of profit.
“Partnership” no more than a business relationship based on agreement.
Does not have a separate legal existence (contra a co.)
s.2 In determining whether partnership exists, regard should be had to:
(1) JT, TiC etc do not of themselves create partnership – where they do or do
not share in the profits made from the use of that property
(2) Sharing of gross returns not of itself create a partnership
(3) Receipt of share of profits = prima facie evidence of partnership, but not
conclusive
May be governed by an agreement, but can be oral/in writing/implied by conduct.
- Fundamental Characteristics -
Typical rights Right to be involved in decision-making which affect the business
and Right to share in profits of a business
responsibilitie Right to examine accounts of the business
s of partners Right to insist on openness / honesty from fellow partners
(useful Right to veto the introduction of a new partner
evidence) Responsibility for sharing losses made by the business
Any people carrying out business with shared view of profitor people carrying out business with shared view of profitall people carrying out business with shared view of profitof people carrying out business with shared view of profitthese people carrying out business with shared view of profitcharacteristics people carrying out business with shared view of profitcould people carrying out business with shared view of profitbe people carrying out business with shared view of profitvaried people carrying out business with shared view of profitor people carrying out business with shared view of profitexcluded. people carrying out business with shared view of profitAt people carrying out business with shared view of profitsome people carrying out business with shared view of profitpoint people carrying out business with shared view of profitsuch people carrying out business with shared view of profit
variations/exclusions people carrying out business with shared view of profitmay people carrying out business with shared view of profitgo people carrying out business with shared view of profitso people carrying out business with shared view of profitfar people carrying out business with shared view of profitas people carrying out business with shared view of profitto people carrying out business with shared view of profitextinguish people carrying out business with shared view of profitthe people carrying out business with shared view of profitpartnership.
- Duration -
Express/Fixed Until a time pre-determined by agreement
Implied/At will Forever until dissolved by notice, death or bankruptcy
- Statutory Formalities -
Business Where s.1192 – s.1206 CA 2006 apply:
names - There are controls over choice of partnership names (ss.1193, 1194)
- Requirement to reveal names + business address of the partners (s. 1201)
Name formalities will NOT apply if only using names of the partners
Certain words/phrases appearing in business names will require written approval
for Secretary of State
Info must appear on all stationery (S1202) + on a notice at any place of business to
which customers/supplies have access (S1204)
- Names of partners + address for each partner in GB for service of docs
- Non-compliance: offence punishable by a fine + partners unable to enforce
contracts if other party can show prejudiced by non-compliance
(SS1205, 1206)
May state on stationery statement: full list of partners available at principal place
of business (S1203)
