Types of Business Structure

Question 1

Types of Business Structure

Types of Partnership

3

Answer 1

1. Limited Partnership
2. Limited Liability Partnership
3. Ordinary Partnership

Question 2

Types of Business Structure

Limited Partneship

2 (Statute and management)

Answer 2

Limited Partnerships Act 1907

1 partner must NOT be involved in management

Min: 1 General Partner (Unlimited) and 1 Limited Partner (limited to contribution)

These are unpopular

Question 3

Types of Business Structure

Limited Liability Partnership (LLP)

2 (statute and management)

Answer 3

Limited Liability Partnership Act 2000

Separate legal person

Partners all enjoy limited liability

Min 2 members

Question 4

Types of Business Structure

Ordinary (“General”) Partnership

2 (statute and formation)

Answer 4

Partnership Act 1890 (unless varied)

s1(1) PA 1890:
A business in common
Carried on for profit
By or on behalf of partners

Question 5

Types of Business Structure

Khan v Miah (2000)

1

Answer 5

A partnership may exist before trading commences

Mere agreement is not sufficient

Question 6

Types of Business Structure

s2(3) Key Factor in Determining if a Partnership Exists

1 (what raises the presumption?)

Answer 6

Sharing profits

(not enough by itself)

Question 7

Types of Business Structure

Other Indicators in Determining if a Partnership Exists

6

Answer 7

1. A financial interest in the business
2. Right to be involved in decisions
3. Right to examine accounts
4. Right to insist on openness and honesty
5. Right to block intro of new partner
6. Responsibility for sharing losses

Courts will look at what’s a) expressly and b) Tacitly agreed