Chap 6 PARTNERSHIP

Question 1

If more than 20 partners (publicity)

Answer 1

Give the address of principal place of business where the list of partners and their addresses can be inspected.

It is a criminal offence. Fine upto 1000 pounds. Failure to comply means business is unable to enforce its contracts

Question 2

Publicity

Answer 2

If a sole trader/ partnership trades under the name other than of its partner then it needs to disclose : the name of each partner or sole trader
address of each person mentioned in GB

Question 3

Implied authority of a partner

Answer 3

Capacity to act arises automatically from the position of partner in the firm.

Question 4

Apparent authority

Answer 4

If a person is not officially a partner but:
- he is held out as a partner
- make some representation about holding such position

Question 5

No apparent authority of a partner

Answer 5

No partner, whether in a trading or not has apparent authority of the following:
bind the firm by deed
To give a guarantee so as to bind the firm
To compromise a debt by taking something else instead of money
To bind the firm by submitting a dispute to arbitration
To unilaterally open a bank account for the firm.

Question 6

Retiring Partners (liability)

Answer 6

Liable for their pre retirement debts unless released from liability by the relevant creditors.

Novation

Question 7

Post-retirement Debts

Answer 7

Former partners will be liable for the transactions incurred by them with the person who knew them to be the partner

Question 8

Novation

Answer 8

The old debt is released in consideration for the remaining partners giving new assurances to the creditor to pay.

Question 9

Avoid post retirement debt

Answer 9

1. ensure that individual notices are sent to all people who were customers or suppliers of the firm while they were a partner; a change of letterhead will not suffice;
2. advertise having left the firm in the London Gazette;

Question 10

Incoming Partners (liable)

Answer 10

By way of novation

Question 11

basic rights & duties of partners (PA 1890)

Answer 11

-Profits/losses equally share
-No interest on fixed capital
-5% interest per annum on advances beyond their original capital
-No salaries payable
-Firms indemnify expenses incurred by them
-Records and accounts must be kept at the main place of business and open to inspection by all partners
-Every partner entitled to take part in mgmt
-no new partner introduced without their consent
-no expulsion of partner by majority votes unless partnership agreement specify
-Duty not to make secret profit
-Duty not to compete with the firm

Mgmt part take
E quality
D erived benefit
I nterest of 5% over capital contribution
C ompeting business
S alaries payable no
I ndemnify
N o new person
Books of account
E xplusion
D sisputes

Question 12

partnership property

Answer 12

Partnership property is used to pay debts before personal property, on the dissolution of the firm.

Partnership and personal property are treated differently in satisfying any claims made by partnership creditors (as opposed to personal creditors).

Question 13

Partnership is automatically dissolved when

Answer 13

1. Expiry of fixed term
2. Completion of any single venture for it was set up
3. Notice by one partner to the other(s) of intention to dissolve the partnership
4. Death or bankruptcy of any one partner.
5. Any event which makes it illegal for the partners to carry on the business

Question 14

The court may grant an order dissolving the firm after hearing a petition from one or more of the partners, seeking winding-up on the grounds that:

Answer 14

Partner is permanently incapable,
Partner has been guilty of conduct calculated to prejudice the carrying on of the business,
partner wilfully or persistently commits a breach of the partnership agreement,
The business of the partnership can only be carried on at a loss,
It is just and equitable that the partnership be dissolved

Question 15

Consequences of dissolution: (Assets of the firm are distributed)

Answer 15

Pay debts of the firm
Advances by partner beyond their fixed capital,
Partners capital,
Any surplus to profit sharing ratio

Question 16

Limited Partnership 1907 requirement

Answer 16

Firm must register details with Registrar of Companies,
firm’s name, nature of business, names of partner, financial contribution of a limited partner

-LP may not generally withdraw their capital

Question 17

LLP 2000

Answer 17

Treated as corporation. separate identity from its members.
but taxed as a partnership,
share profits in the manner of conventional partnerships

Question 18

Incorporation of LLP

Answer 18

First members of LLP must register incorporation document with ROC

-Signature of two or more persons
-name of LLP with ending LLP
-location of LLP registered office in ENgland, Wales, scotalnd
-Precise address of the registered office in appropriate country
-name and address of first members
-statement of compliance signed by members or by solicitor

Reg fee is same of companies

Question 19

Memebers of LLP

Answer 19

Atleast 2. if the fall below 2 for 6 months then sole person will be liable for the debts.
No upper limit

Question 20

LLP may designate some members to perform the same duties as BOD in company

Answer 20

-Appointing an auditor if req
-Signing accounts on behalf of members
-delivering accounts to registrar
-notifying the registrar of any membership changes or change to the Registered Office address or name of the limited liability partnership;
-preparing, signing and delivering to the registrar an annual confirmation statement
-acting on behalf of the limited liability partnership if it is wound up and dissolved

Question 21

R/S between members

Answer 21

The LLPA provides that the internal rights and obligations of members shall be governed by their own agreement.

Question 23

Partnership

Answer 23

Relationship between two or more people carrying on business in common with a view to profit

Partners are jointly and severally liable for partnership debts

Every partner is am agent of firm and other partners for the purpose of the business of the firm

Question 24

The agreement

Answer 24

Accounts
Division of profits
D rawings
I nterest
C ombined capital + current account
T ime period
S alairies
C apital
G oodwill