Business Organisations Flashcards

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1
Q

What are the types of business organisations?

A
  1. Sole proprietorship: Only one owner of the business, same legal entity (unlimited personal liabilities)
  2. General partnership: Relationship that subsists between people working together with the intention of making profits, same legal entity (unlimited personal liabilities)
  3. 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
  4. Limited liability partnership: Partners are not liable to debts and liabilities, separate legal entities (limited personal liabilities)
  5. Companies
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2
Q

Are owners in a general partnership liable for the debts and liabilities incurred?

A

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

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3
Q

Are partners in a general partnership bound by the acts of one partner in the case of contractual liability?

A

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

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4
Q

Are partners in a general partnership bound by the acts of one partner in the case of tortious liability?

A

Yes. Firm is liable if act is done in the ordinary course of business, and partners will be jointly liable if firm is liable

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