SQE 1 - Business Law and Practice
Partnership Act 1890 - Answer-Governing statute for partnership
Partnership - Answer-A relationship in which two or more persons carrying out a business with the
intention of making profit.
Partnership (legal entity) - Answer-not a separate legal entity from the partners themselves.
Minimum number to form a partnership - Answer-2 (can be an individual or corporate entity)
Formation of partnerships - Answer-If all individuals take part in decision making.
Evidence of profit and/or loss sharing.
Partnership (formalities) - Answer-None
Relationship of partners to one another - Answer-Fiduciary relationship:
Honest and Full Disclosure
,Unauthorised personal profit
Conflict of duty and interest
Partnerships (liability for debts) - Answer-The partners themselves
Nature of the partner's liability - Answer-Contractual - every partner is jointly liable
Tortious - joint and several
Liability (former partners) - Answer-Potentially liable for debts after they have left unless third party has
been notified of the change.
Liability (new partners) - Answer-- New partners not automatically liable for pre-existing debts.
- liable for any debt incurred whilst a partner.
- Retired partner can novate their agreement with creditors' consent.
Liability (holding out) - Answer-non-partner liable if they have entered into a contract whilst
representing to be part of the firm.
Non-partner is liable
Contracts binding a partnership - Answer-Partners = yes if the agent is a partner
, non-partners = agency law applies
Taxation - Answer-Income tax = each partner is liable for their share of the profits
CGT = Normal CGT principles on disposal of an asset.
Partnership Agreement - Answer-Document containing mutual rights and obligations.
Can be varied at any time with unanimous consent.
Partnership Property - Answer-Each partner owns their own distinct share of the partnership property.
Shares in income, capital, profits and losses - Answer-all partners can share equally in these respects
unless there is an express or implied agreement.
Drawing/Remuneration - Answer-Partners are not entitled to a salary without an agreement but can
draw income from the profits.
Incoming partners - Answer-Unanimous agreement of existing partners required to add a new partner.
Expulsion - Answer-cannot expel a partner without an express agreement
Partner leaving - Answer-No agreement = partnership dissolved (technical dissolution).
Automatic dissolution - Answer-When there is no fixed term, partnership dissolved by a partner leaving
Partnership Act 1890 - Answer-Governing statute for partnership
Partnership - Answer-A relationship in which two or more persons carrying out a business with the
intention of making profit.
Partnership (legal entity) - Answer-not a separate legal entity from the partners themselves.
Minimum number to form a partnership - Answer-2 (can be an individual or corporate entity)
Formation of partnerships - Answer-If all individuals take part in decision making.
Evidence of profit and/or loss sharing.
Partnership (formalities) - Answer-None
Relationship of partners to one another - Answer-Fiduciary relationship:
Honest and Full Disclosure
,Unauthorised personal profit
Conflict of duty and interest
Partnerships (liability for debts) - Answer-The partners themselves
Nature of the partner's liability - Answer-Contractual - every partner is jointly liable
Tortious - joint and several
Liability (former partners) - Answer-Potentially liable for debts after they have left unless third party has
been notified of the change.
Liability (new partners) - Answer-- New partners not automatically liable for pre-existing debts.
- liable for any debt incurred whilst a partner.
- Retired partner can novate their agreement with creditors' consent.
Liability (holding out) - Answer-non-partner liable if they have entered into a contract whilst
representing to be part of the firm.
Non-partner is liable
Contracts binding a partnership - Answer-Partners = yes if the agent is a partner
, non-partners = agency law applies
Taxation - Answer-Income tax = each partner is liable for their share of the profits
CGT = Normal CGT principles on disposal of an asset.
Partnership Agreement - Answer-Document containing mutual rights and obligations.
Can be varied at any time with unanimous consent.
Partnership Property - Answer-Each partner owns their own distinct share of the partnership property.
Shares in income, capital, profits and losses - Answer-all partners can share equally in these respects
unless there is an express or implied agreement.
Drawing/Remuneration - Answer-Partners are not entitled to a salary without an agreement but can
draw income from the profits.
Incoming partners - Answer-Unanimous agreement of existing partners required to add a new partner.
Expulsion - Answer-cannot expel a partner without an express agreement
Partner leaving - Answer-No agreement = partnership dissolved (technical dissolution).
Automatic dissolution - Answer-When there is no fixed term, partnership dissolved by a partner leaving
