Partnership

Question 1

How are decisions taken in a partnership

Answer 1

By a majority

Question 2

Exceptions where decisions don’t need to be taken by majority - these must be unanimous

Answer 2

Changing nature of business
Introducing new P
Changing terms of P agreement
Excluding a P

Question 3

Can a P delegate some decisions to an employee

Answer 3

Yes

Question 4

Can Ps agree that more decisions must be taken unanimously

Answer 4

Yes

Question 5

Define partnership

Answer 5

2 or more people carry on a business in common with a view to make a profit

Question 6

Is there an implied restraint of trade clause for Ps

Answer 6

No

Question 7

In what form does a P agreement need to be

Answer 7

Written, oral or implied by conduct (no one objects to the way things are done)

Question 8

Restrictions on name of partnership

Answer 8

Cannot include Ltd Plc LLP offensive words same as existing name sensitive words or suggest a gov connection

Question 9

What if Ps continue beyond expiry of fixed term agreement

Answer 9

Continue on same terms as before

Question 10

Does PA 1890 imply holiday or sick pay

Answer 10

No

Question 11

Are Ps employees

Answer 11

No

Question 12

What is the income and profits that Ps receive called

Answer 12

Called drawings

Question 13

Do Ps get a salary

Answer 13

Only if this is in the agreement

Question 14

Do firms stop trading when partnership is dissolved

Answer 14

Not necessarily
Dissolution means ending of contractual relations
Can continue trading and it is still dissolved

Question 15

How does outgoing P get their share back

Answer 15

They can insist it is sold so agreement must provide for partial dissolution

Question 16

Does outgoing P get interest

Answer 16

5% until they receive their share

Question 17

What is good will

Answer 17

Business reputation and value of clients and contracts

Question 18

How is goodwill calculated

Answer 18

2 years profit

Question 19

When a firm is sold how are proceeds applied

Answer 19

Creditors
Debts/ loans
Ps loans
Ps capital
Surplus shares between Pso

Question 20

Under what circumstances can P apply to court for an order that firm is dissolved

Answer 20

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

Question 21

What is a partnership at will

Answer 21

A partnership that carries on indefinitely until notice is given

Question 22

What does automatic dissolution mean

Answer 22

All assets must be sold or sold as going concern and outgoing P must receive their shares

Question 23

Under 1890 act when is a partnership dissolved.

Answer 23

Business becomes unlawful
P retires
Expiry of fixed term
Death
Bankruptcy 
P gives notice to P who was granted a charge over their share

Question 24

Duty of P to other Ps

Answer 24

Duty of utmost fairness and good faith

Question 25

What is included in Ps duty of utmost fairness and good faith

Answer 25

Open about info re Firm Account for profits from firm made without consent Cannot compete with firm or must account for profits

Question 26

What if a P pays more than their fair share of liabilities or expenses

Answer 26

Other Ps must indemnify them

Question 27

Do contracts need to be made by all Ps together

Answer 27

Can be made by all Ps or just one

Question 28

Are firms always bound by contracts entered into by P in Firms name

Answer 28

Yes if P was acting with authority

Question 29

How can P be authorised

Answer 29

Ps acted jointly Actual authority express or implied Apparent authority

Question 30

How can actual authority be implied

Answer 30

All Ps are involved in running firm without any limitations | Regular behaviour no one objected to

Question 31

What does apparent authority mean

Answer 31

Firm is bound by unauthorised actions which appear to an outside to be authorised

Question 32

When does P have apparent authority

Answer 32

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)

Question 33

What if P acts without actual authority

Answer 33

P will indemnify firm for loss

Question 34

Who is liable for wrongful acts or omissions by P who acts in ordinary course of firms business or with authority

Answer 34

The firm

Question 35

Does a P continue to be liable for firms debts after retirement

Answer 35

Yes liable for debts incurred while they were a P

Question 36

2 ways to stop P from being liable for debts incurred by firm while they were a P

Answer 36

Novation agreement | Indemnity

Question 37

What is a notation agreement

Answer 37

Retiring P released from existing debt through agreement with creditors, other Ps and poss new P If no new P need consideration or deed

Question 38

How does indemnity prevent P from liability for debts incurred while they were P

Answer 38

Agreement between outgoing P and other Ps | Creditors can sue retired P and then he claims against other Ps

Question 39

How to prevent outgoing P from being liable for new firm debts incurred after they leave

Answer 39

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

Question 40

What happens to an insolvent firm

Answer 40

Can be wound up as an unregistered company or may use rescuer procedures available to companies

Question 41

What is holding out

Answer 41

When creditor gives loan based on representation that a person is a P of the firm

Question 42

Consequences of holding out

Answer 42

Person representing as P can be liable for debt even if representation was by someone else as long as it was with their knowledge

Question 43

Wil P be liable for future debts of firm is they die or are bankrupt

Answer 43

No | No need for notice to previous clients and whole world

Question 44

Who can a debt of the firm be enforced against

Answer 44

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