Partnership

Question 1

When does a partnership occur?

Answer 1

When 2 or more persons run and own a business together.

It commences when s1 of PA 1890 is satisfied.

Question 2

S1 of PA 1890

Answer 2

A partnership is where 2 or more persons are associated for profit

Question 3

Type of partnerships

Answer 3

Oral
In writing
Implied by conduct

Question 4

Rights and responsibilities of partners

Answer 4

1. the right to be involved in making decisions which affect the business.
2. the right to share in profits of the business.
3. the right to examine the accounts of business.
4. the right to insist on openness and honesty.
5. the right to veto the introduction of a new partner.
6. the responsibility to share any losses made by the business.

Question 5

Duration of partnership

Answer 5

s 26 of PA 1890 - by notice to others (partnership at will)

Question 6

Dissolution of partnership

Answer 6

s.32 of PA 1890 defines the basis upon which partnerships are to be disolved
s 27 and s 32 expiry of a fixed term. 
s33 death or bankruptcy
s34 illegality
s35 by court order. 
Retirement not provided under PA.

Question 7

Liability of partners for partnership debts

Answer 7

1. Power of partner to bind the firm s5 of PA 1890
2. Partners bound by actions on behalf of the firm. s6
3. Partner using credit from firm for private purposes. s7
4. Effect of notice that firm will not be bound by acts of partner

Question 8

When will the firm be liable?

Answer 8

1. Actual authority.

2. Apparent (ostensible authority).

Question 9

Actual authority

Answer 9

• actions which were authorised:
  a) partners acting jointly in making the contract.
  b) express actual authority: instructing a partner to represent the firm in a particular transaction.
  c) implied actual authority: as above but implied.

Question 10

Apparent (ostensible authority)

Answer 10

• not authorised, but looks from the outside as if they were authorised.
• agency law - each partner is an agent
  S 5 - firm is liable if:
  a) the transaction relates to the type of business in which the firm is apparently engaged.
  b) the transaction is one for which a partner in such a firm would usually be expected to have authority to act.
  c) the other party did not know that the partner did not have authority to act.
  d) the other party deals with a person whom he knows/believes to be a partner.

Question 11

Personal liability

Answer 11

In instances where the partner acted with apparent authority he is also personally liable.

Question 12

Tortious liability

Answer 12

S 10 - liability of the firm for its wrongs.

S12 - jointly and severly.

Question 13

Against whom can the firm’s liability

Answer 13

1. the partners who made the contract
2. the firm - CPR part 7, PD7
3. any of the persons who were partners at the time of the transaction.
4. someone who left before the debt or who arrived after the debt, if:
   holding out
   failure to give proper notice of retirement.
   a novation agreement.

Question 14

Person’s liability for holding out

Answer 14

where a creditor has relied on a representation that a particular person was a partner in that firm - s 14

Question 15

Person’s liability for failure to give proper notice of retirement

Answer 15

actual notice, advertisment in the London Gazette - s 36

Question 16

Liability under a novation agreement

Answer 16

tri-partite contract: creditor, old partnership, new partnership