Flashcards in Partnership Deck (13):
What is a partnership?
Two or more people carrying on a business with a view to a profit
When does The Partnership Act 1890 apply?
When the partners have not got their own agreement in place
What are the main provisions of The Partnership Act 1890?
- profits/losses shared equally
- all partners involved in managing business
- no partner entitled to remuneration for carrying out partnership business
- change in business nature unanimous decision
- no interest on original capital
- new partners agreed unanimously
- partners expelled by majority decision
- records available to all partners
- wound up like normal company
- capital deficiency shared on ratio of capital injected
Can a partner work with another company that has a conflict of interest?
If the partners are aware and agree to it then yes, but otherwise it should be avoided
What is the authority of a partner?
Similar to agent:
- express/actual authority
- implied authority
Partner acts beyond excess authority...
Partnership bound by action unless:
- he had no authority and third party knows this or believe he is not a partner
Assume they know unless it says they did not know
What is the general liability for partners in a partnership?
- all partners jointly or severally (individually) liable
- up to third party to choose
What is the liability for new partners?
Only liable to debts incurred when they joined, unless stated otherwise
What is the liability for retiring partners?
- liable for debts incurred until retirement
- must give notice of retirement
- can enter into indemnity agreement with other partners
What are the main differences of a company to a partnership?
- created by registration
- shares transferrable
- can create both fixed and floating charges as security for borrowing
- cannot usually return capital to members
- finance info public
- pay corp tax
How should an LLP be registered?
With the registrar with an incorporation document in the required format
What is the main legal difference between LLP and normal P?
Separate legal entity