Business Organisations Flashcards
What are the types of business organisations?
- Sole proprietorship: Only one owner of the business, same legal entity (unlimited personal liabilities)
- General partnership: Relationship that subsists between people working together with the intention of making profits, same legal entity (unlimited personal liabilities)
- Limited partnership: Partnership incorporated with differing liabilities, limited partner’s liability is capped to pre-agreed amount in LP, limited partner cannot take part in management
- Limited liability partnership: Partners are not liable to debts and liabilities, separate legal entities (limited personal liabilities)
- Companies
Are owners in a general partnership liable for the debts and liabilities incurred?
Partners are jointly liable for all debts and liabilities incurred
Firm can be sued, which includes all partners to be liable
New partner: Not liable for wrongdoings before becoming a partner
Retired partner: Still liable for debts prior to retirement
Non-partner: Liable if he goes around telling people and giving the impression that he is a partner
Are partners in a general partnership bound by the acts of one partner in the case of contractual liability?
Yes. All partners in a general partnership are jointly liable unless the partner acting has no authority, and the third party knows that he has no authority/does not believe that he is a partner
Are partners in a general partnership bound by the acts of one partner in the case of tortious liability?
Yes. Firm is liable if act is done in the ordinary course of business, and partners will be jointly liable if firm is liable