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Business and Corporate Law > Partnership > Flashcards

Partnership Flashcards

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1
Q

What are the types of business organisations?

A

Sole trader / sole practionioner, partnership and company

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2
Q

What are the different types of partnerships?

A

General, limited and limited liability

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3
Q

What are the different types of company?

A

Private - limited and unlimited, and public limited

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4
Q

What is a sole trader?

A

An individual who carries on a business on an individual basis in his own name or some other name

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5
Q

Is a sole trader personally liable for the debts of the business?

A

Yes, the sole trader business form has no separate legal personality

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6
Q

What is a general partnership?

A

An incorporated business where the partners have unlimited liability for the debts of the business

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7
Q

What Act applies to every partnership?

A

The Partnership Act 1890

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8
Q

What is a limited partnership?

A

Allows for one or more of the partners to have limited liability, provided at least one of the partners has full/unlimited liability.

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9
Q

Where should all limited partnerships be registered at?

A

Companies House, until registered, it will be regarded as a general partnership

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10
Q

What is a limited liability partnership?

A

A hybrid form of business vehicle, representing a cross between a partnership and a company

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11
Q

What are limited liability partnerships governed by?

A

The Limited Liability Partnerships Act 2000

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12
Q

What is a company?

A

An artificial legal person, which has separate legal personality distinct from its members (shareholders), directors or employees

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13
Q

What is the most common type of company?

A

A registered company

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14
Q

What is a partnership?

A

A relationship which subsists two or more persons carrying on a business in common with a view of profit

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15
Q

What are the different types of partners?

A

General, sleeping, salaried or a limited partner in a limited partnership

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16
Q

What is a general partner?

A

Actively involved in the day to day running of the business

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17
Q

What is a sleeping partner?

A

Takes no active part in the running of the business. However, is jointly and severally liable for the debts and contracts of the business

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18
Q

What is a limited partner in a limited partnership?

A

Contributes a specific amount of capital. Liability limited to that amount. Cannot take part in the management of the firm

19
Q

What is a salaried partner?

A

Will receive a fixed amount in income. Not a real partner unless he also receives a share of the profits

20
Q

What does the Partnership Act 1890 provide?

A

It provides default rules for the regulation of the partnership but partners can oust or modify these rules in a partnership agreement

21
Q

What is the minimum number of partners required to form a partnership?

A

2, and there is no statutory maximum

22
Q

What must a business have a view of?

A

Profit

23
Q

What are the essential elements of a partnership?

A

Persons, business, carrying on and with a view of profit

24
Q

When does the partnership begin?

A

As soon as the partners start their business activity

25
Q

What is not necessary to create a partnership?

A

Joint ownership of property (s 2(1)), the sharing of gross returns (s 2(2)), and receiving share of profits (s 2(3))

26
Q

What is covered in s 4 of the 1890 Act?

A

Being called a “firm”

27
Q

What is covered in s 5-18 of the 1890 Act?

A

The relationship between partners, the partnership and third parties

28
Q

What does ss 5-9 deal with?

A

The liability of the partnership and the partners to third parties in contract

29
Q

What does section 5 state?

A

That every partner is deemed to be an agent of the partnership and of the other partners

30
Q

What kind of authority could a partner have?

A

Express, implied or ostensible authority

31
Q

What is express authority?

A

It is set out in the partnership agreement

32
Q

What is implied authority?

A

The individual partner must be acting within the usual scope of a partner’s powers in the particular business concerned

33
Q

What is ostensible authority?

A

Where it is arguable that the partner does not have implied authority, there may be circumstances in which the partnership has represented to third parties, by their own words or conduct, that the partner has authority to act on their behalf

34
Q

What does section 9 state?

A

Every partner in a firm is liable jointly with the other partners, and in Scotland severally also, for all debts and obligations of the firm while he is partner

35
Q

Why is the joint and several liability rule significant?

A

It means that a creditor of the partnership can choose to sue on partner, some partners or all of the partners for the recovery of the debts due to them by the partnership

36
Q

What does sections 10-13 cover?

A

The liability of the partnership and partners for wrongs committed against third parties

37
Q

What does sections 14-18 deal with?

A

Various matters which arise when the partners and/or the partnership interact with third parties

38
Q

What sections deal with the dissolution of a partnership?

A

Ss 32-35

39
Q

Under s 35, the court can bring a partnership to and end if what?

A

Partner has mental disorder or permanent incapacity, engages in activity prejudicial to the business, wilfully or persistently breaches the partnership agreement, conducts themselves in a way that is no longer reasonably practicable for the others to carry on in business with him, etc

40
Q

The proceeds from the sale of assets would be applied to who? (in order)

A

Paying debts to outsiders, paying the partners any advance they made to the firm beyond their capital contribution, and paying the capital contribution of the partners

41
Q

What happens if there is a residue remains from the proceeds of the sale of assets?

A

It will be divided between the partners in the same proportion in which they share the profits of the partnership

42
Q

What are the advantages of an LLP?

A

Substantial protection of members’ personal assets, internal flexibility regarding management and structure and tax transparency and benefits

43
Q

What are the disadvantages of an LLP?

A

Limited financial privacy, giving the filing requirements

44
Q

What is the Partnership (Prosecution) Scotland Act 2013?

A

Legislation passed to close the loophole that partnerships could not be found guilty of a criminal offence because the partnership had been dissolved

Business and Corporate Law (18 decks)

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