Ch 11- Partnerships

Question 1

Standard partnerships are governed by _______?

Answer 1

Partnership act 1890.

Question 2

Is standard partnership a separate legal entity?

Answer 2

No, and therefore have full personal liability for the debts.

Question 3

Significance of partnership agreement.

Answer 3

When the partners themselves draw up agreements and Any aspects not covered by the agreement will be governed by the PA act 1890 -

Question 4

What are the different ways of dissolution of a standard partnership? (5 points)

Answer 4

1. Expiry of the fixed period of contract.
   2.completion of the purpose for which the partnership was formed.
2. A partner gives notice to leave. (Pa 1890)
3. Death or bankruptcy of a partner. (Pa 1890)
4. Activity becomes illegal.

Question 5

What are the statutory duties between partners? (Note: partners have fiduciary duties as well such as trust and utmost faith.)

Answer 5

A) The duty to disclose
B) The duty to account
C )The duty to not compete.

Question 6

What is the nature of ownership for partnership property?

Answer 6

• partnership property is when a property is owner either by an individual partner or by the partnership as a whole.
  1. Partnership property must be used exclusively for partnership business.
  2. Partnership property is used to pay debts of the partners upon dissolution.
  3. The increase in value of property passes to the owner, either the partnership or the individual depending on the partnership property.

Question 7

Partners are deemed to be agents of the firm. True / false.

Answer 7

True.

Question 8

What are the 4 restrictions that allow the limited partnership act 1907 (LPA 1907) to limit some of its partners liability in case of liquidation?

Answer 8

1. The partnership must be registered with the companies registry.
2. One or more of the partners must retain full and unlimited liability.
3. Partners with limited liability must not take part in the management of the business, and cannot usually bind the business in contract.
4. Limited partners cannot in ordinary course of business withdraw their capital.

Question 9

The limited liability partnership act 2000 (LLPA 2000) allowed the formation of a new type of legal trading entity known as____________?

Answer 9

The limited liability partnership.

Question 10

How many members are required to sign the LLP formation contract?

Answer 10

At least 2.

Question 11

Key features of LLPs:

Answer 11

1. Name of partnership must end with LLP.
2. Partners are known as members and there must be at least two members.
3. LLP is a separate legal entity.
4. Members liability is limited.
5. Members are agents of the LLP.
6. Designated number of member(s) is responsible for filing and administration.
7. LLP is not subject to corporation tax.