Business law 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
■ Limited Partnership Act 1907
■ 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, ie 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
Duties of partners to each other
■ Partners owe fiduciary duties to each other
■ Three are specifically set out in the 1890 Act
■ Section 28: duty to render accounts
■ Section 29: accounting for profits
■ Section 30: duty not to compete with the firm
■ These specific obligations are not exhaustive
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
■ Limited Partnership Act 1907
■ 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, ie 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
Duties of partners to each other
■ Partners owe fiduciary duties to each other
■ Three are specifically set out in the 1890 Act
■ Section 28: duty to render accounts
■ Section 29: accounting for profits
■ Section 30: duty not to compete with the firm
■ These specific obligations are not exhaustive
