Partnership

Question 1

General partnership

Answer 1

A relationship which subsists between persons carrying one business in common with a view of profit - partnership act 1890 section 1

Question 2

Limited partnership

Answer 2

• Allows 1/more persons to have limited liability; provided at least 1 has full/unlimited liability (1906 act, s 4(2))
• partners who have full liability=liable for all debts and are general partners
• all must be registered at companies house

Question 3

Limited liability partnership

Answer 3

• governed by LLP Act 2000
• persons involved are called LLPs
• liability of members are limited to amount of capital they have agreed in to contribute

Question 4

Company

Answer 4

Artificial legal person with separate legal personality distinct from members, employees, directors
-registered company which has been formed by company which has been formed by complying with procedures in companies act

Question 5

Types of partners

Answer 5

General - actively involved
Sleeping- takes no part but jointly and liable for debts and contracts
Salaried- receive fixes amount in income. Not real partner unless receiving a share of profits

Question 6

Formation

Answer 6

Can be verbally or in writing or may be inferred from the actions/conduct of the parties in particular the nature of their relationship towards each other

Question 7

Formalities requirements

Answer 7

No formalities 
Min 2 and no max 
Sound mind and of age 
No illegal activity 
No similar name (passing off)

Question 8

Essential elements

Answer 8

Persons
Business-every trade, occupation, profession
Degree of business activity required
With view of profit

Question 9

DONT necessarily create partnership

Answer 9

Joint ownership of property
Sharing gross returns
Receiving share of profit

Question 10

Expressed authority

Answer 10

Authority of a partner is set out in the partnership agreement

Question 11

Implied authority

Answer 11

Sell the firms goods
But goods for the business 
Receive payments of debts due to firm 
Engage employees 
Employ a solicitor to act for firm In defence of a claim in the pursuance if a debt

Question 12

Ostensible authority

Answer 12

is the power of an agent to legally bind its principal with a third party

Question 13

Incoming

Answer 13

A person who is admitted as a partner into an existing firm doesn’t thereby become liable to the creditors of the firm for anything done before he became a partner

Question 14

Outgoing

Answer 14

A partner who retired from a firm doesn’t thereby cease to be a liable for partnership debts or obligations incurred before his retirement

Question 15

Dissolution of partnership-without

Answer 15

Expiry of fixed term/completion
One partner gives notice
Death or bankruptcy
Where continuous would be illegal

Question 16

Dissolution of partnership -with court order

Answer 16

Partner has mental disorder or permanent incapacity
Partner engages in activities prejudicial to business
Partner breaches agreement : accident or not
Business can only be carried on at a loss

Question 17

Limited liability partnership

Answer 17

Corporate body which combines the features of a traditional partnership with company
Can be described as a Hybrid between company limited by shares and partnership
LLP act 2000
LLP Regulation 2001

Question 18

LLP advantages

Answer 18

• Substantial protection of memebers personal assets
• Internal flexibility regarding management and structure
• Tax transparency and benefits

Question 19

LLP disadvantages

Answer 19

Limited financial privacy, given the filing requirements

Question 20

Differences between LLP and partnership

Answer 20

LLP- liability of members is limited to amount of capital they agreed on
LLP must file annual accounts and annual report with companies house
LLP- can hold property in own rights, enter into contracts in own name, create floating charges, sue and be sued