7. Partnerships Flashcards
Distribution of profits order in partnership?
- Fixed charge holder
- Loans to partners
- Partner’s shares
- Remaining surplus divided between partnership equally or under partnership agreement
Indemnity agreement
Promise by one or more partners to compensate (pay back) the other partner(s) if they suffer a loss because of something the promising partner did.
Novation Agreement
Agreement between creditors and partners - existing partner released from debts and passed onto incoming partner
‘Holding out’ meaning
Creditor relied on a representation by outgoing partner that they were still a partner at the firm + relied on that representation e.g. partner was aware of their name as partner on company website + didn’t change
Notice Requirement for retiring partner?
Clients = direct notice
everyone else = London Gazette
Actual Authority
Express - contract/instructed them
Implied - regular and past dealings
Apparent Authority
Unauthorised action by partner + relied on 3rd party representation
If partner cannot pay debt to 3rd party?
Go after partnership assets or sole partners assets
Procedure for new LLP members joining?
- New members join LLP
- Notify Register of Companies within 14 days on address, DOB and name
Partnership definition
2 or more partners conduct business with a common view to profit
Does partnership agreement have to be written?
No, can be oral or implied by conduct but written is advised
Common provisions in partnership agreement?
- Name
- Address + nature of business
- Losses and profit division
- Working hours
- Salary
- Financial contribution
- Termination
- Goodwill
- Dispute Resolution
- Decisions
- Own assets
- Expel
- Restrain of Trade
- Sale proceeds
- Roles
- commencement and duration
PA 1980 Duties?
- account for any private profits made without partners consent
- dont compete
- indemnify fellow partners
- split profits per agreement
- open about info regarding partnership
When do you not need to give notice for leaving partnership?
death or bankruptcy
who can claimant sue for partnership breaches?
- partner via privity of contract
- all partners
- partnership itself
Incorporation formalities for LLP?
IN01 + name ends in LLP + at least 2 members
LLP fiduciary duties?
– act in good faith, account for any money received on behalf of LLP and give true accounts to members
What act governs LLP?
LLP 2000
Default provisions of LLP Regulations?
- Profits shared equally
- Losses born by LLP
- Decisions made by majority unless 3 exceptions
- Leave LLP by giving reasonable notice – cannot expel
