02 Partnerships Flashcards

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1
Q

What is a partnership?

A

A partnership is an unincorporated business that exists where 2 or more people carry on a business in common with a view of profit.
The agreement to operate in a partnership can be oral or in writing, or may even be implied by conduct.
=> no separate legal entity
=> no specific formalities required

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2
Q

Can a new partner be admitted without the consent of all of the partners?

A

No

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3
Q

What is a partnership at will?

A

A partnership where no specific duration or term is set

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4
Q

How are, income, capital profits and losses shared in a partnership?

A

In the absence of express or implied agreement to the contrary, the PA provides that income, capital profits and losses will be shared equally (s 24(1))

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5
Q

When is unanimity required under the PA? (i.e. in the absence of a partnership agreement)

A

Unanimity is required when changing the nature of the business

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6
Q

When a partnership will be dissolved under the PA? (i.e. in the absence of a partnership agreement)

A
  • notice given by one of the partners at any time
  • retirement
  • death
  • bankruptcy
  • expulsion
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7
Q

Can partners force another partner to leave without his/her consent in the absence of a formal partnership agreement?

A

No. If the partner doesn’t agree to leave, they must carry on in business with him/her or dissolve the partnership

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8
Q

What are partners’ duties to each other under the PA?

A
  • duty to provide true accounts and full information on partnership matters
  • duty to account for profits derived from the position as partner
  • duty to account for profits from a competing business
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8
Q

How is the liability of the partnership engaged towards third parties?

A

A partner acting within the scope of their actual authority OR apparent/ostensible authority will bind the partnership as a whole

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9
Q

What are the rules governing the liability of partners?

A

*Partners are jointly and severally liable for the debts and obligations of the partnership without limit (s 9 PA)
*A partner is liable for the debt incurred whilst they are a partner
*A new partner is not liable for debts incurred by the partnership before they became a partner
*A retiring partner is not released from debts incurred by the partnership whilst they were a partner
*A retired partner may be liable for debts incurred after their retirement (future debts) if they fail to comply with s36 (notice) & s14 (holding out)

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10
Q
A
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