Chapter 6- Types of trade Flashcards
What are the 3 main provisions for partnership act
Share profit equally and management responsibilities between partners
Changes to partnership needs to be agreed by all partners
Partners do not earn salary but receive interest on ADDITIONAL capital contributions
What does a partner’s implied authority include?
allows them to act as an agent for the partnership, binding all partners in transactions considered usual for the business. This includes borrowing money in trading partnerships.
If partners acts within usual business, other partners bound unless:
o They have no actual authority AND
o Third party either knows this or does not believe him to be a partner
Who is liable in partnership
Each partner responsible for full amount of firm liabilities, with outsiders able to take action against ALL or Each partner (joint/several liability)
If one pays, they can demand split
What are the 3 key differences between company and partnership
Company is separate legal entity therefore no personal liability
Partnership has no formality in formation whereas company is registered
Company managed by directors
What do LLP relate to
Accounting firms who must retain and publish records. If a member (partner) acts without authority and third party is aware, LLP is not liable
When are members of LLP personally liable
In cases of professional negligence or fraudulent trading.
What is the notice period to registrar of changes in LLP
Changes to the membership must be notified to the Registrar within 14
days.
What is the difference between partnerships and companies in regards to raising securities
Companies can use fixed or floating whereas partnerships can only use fixed
How does LLP become solvent?
CVA, administration and both types of liquidation
What must a sole trader do each year?
report the business’s finances to the tax authorities each year. No need to file accounts to registrar
When can a new partner be admitted and when can the partnership agreement change? When can a partner be expelled?
Upon gain of unanimous agreement and with consent of all partners
With a simple majority vote.
