Partnership Flashcards
How are decisions taken in a partnership
By a majority
Exceptions where decisions don’t need to be taken by majority - these must be unanimous
Changing nature of business
Introducing new P
Changing terms of P agreement
Excluding a P
Can a P delegate some decisions to an employee
Yes
Can Ps agree that more decisions must be taken unanimously
Yes
Define partnership
2 or more people carry on a business in common with a view to make a profit
Is there an implied restraint of trade clause for Ps
No
In what form does a P agreement need to be
Written, oral or implied by conduct (no one objects to the way things are done)
Restrictions on name of partnership
Cannot include Ltd Plc LLP offensive words same as existing name sensitive words or suggest a gov connection
What if Ps continue beyond expiry of fixed term agreement
Continue on same terms as before
Does PA 1890 imply holiday or sick pay
No
Are Ps employees
No
What is the income and profits that Ps receive called
Called drawings
Do Ps get a salary
Only if this is in the agreement
Do firms stop trading when partnership is dissolved
Not necessarily
Dissolution means ending of contractual relations
Can continue trading and it is still dissolved
How does outgoing P get their share back
They can insist it is sold so agreement must provide for partial dissolution
Does outgoing P get interest
5% until they receive their share
What is good will
Business reputation and value of clients and contracts
How is goodwill calculated
2 years profit
When a firm is sold how are proceeds applied
Creditors Debts/ loans Ps loans Ps capital Surplus shares between Pso
Under what circumstances can P apply to court for an order that firm is dissolved
P is perm incapable P is prejudicing firm Wilful or repetitive breach of agreement Can only carry on at a loss Or Just and equitable
What is a partnership at will
A partnership that carries on indefinitely until notice is given
What does automatic dissolution mean
All assets must be sold or sold as going concern and outgoing P must receive their shares
Under 1890 act when is a partnership dissolved.
Business becomes unlawful P retires Expiry of fixed term Death Bankruptcy P gives notice to P who was granted a charge over their share
Duty of P to other Ps
Duty of utmost fairness and good faith
What is included in Ps duty of utmost fairness and good faith
Open about info re Firm
Account for profits from firm made without consent
Cannot compete with firm or must account for profits
What if a P pays more than their fair share of liabilities or expenses
Other Ps must indemnify them
Do contracts need to be made by all Ps together
Can be made by all Ps or just one
Are firms always bound by contracts entered into by P in Firms name
Yes if P was acting with authority
How can P be authorised
Ps acted jointly
Actual authority express or implied
Apparent authority
How can actual authority be implied
All Ps are involved in running firm without any limitations
Regular behaviour no one objected to
What does apparent authority mean
Firm is bound by unauthorised actions which appear to an outside to be authorised
When does P have apparent authority
Transaction relates to business (objective)
Transaction is one P would be expected to have authority for (objective)
Other party didn’t know P didn’t have authority (subjective)
Other party thinks they are dealing with a P ( subjective)
What if P acts without actual authority
P will indemnify firm for loss
Who is liable for wrongful acts or omissions by P who acts in ordinary course of firms business or with authority
The firm
Does a P continue to be liable for firms debts after retirement
Yes liable for debts incurred while they were a P
2 ways to stop P from being liable for debts incurred by firm while they were a P
Novation agreement
Indemnity
What is a notation agreement
Retiring P released from existing debt through agreement with creditors, other Ps and poss new P
If no new P need consideration or deed
How does indemnity prevent P from liability for debts incurred while they were P
Agreement between outgoing P and other Ps
Creditors can sue retired P and then he claims against other Ps
How to prevent outgoing P from being liable for new firm debts incurred after they leave
Actual notice to anyone firm has dealt with (not in newspaper)
Notify all world (loving gazett)
Otherwise can treat all apparent members of firm as still Ps
What happens to an insolvent firm
Can be wound up as an unregistered company or may use rescuer procedures available to companies
What is holding out
When creditor gives loan based on representation that a person is a P of the firm
Consequences of holding out
Person representing as P can be liable for debt even if representation was by someone else as long as it was with their knowledge
Wil P be liable for future debts of firm is they die or are bankrupt
No
No need for notice to previous clients and whole world
Who can a debt of the firm be enforced against
P with who creditor made contract
Any P at time debt was incurred
The firm
Ps must contribute if just one P is sued
Usual debt enforcement options apply
