Partnership Law Flashcards
What is a parternship?
A legal relationship between two or more persons carrying on a business in common with a view to profit.
What are the essentail elements of a partnership?
- Involve at least two individuals.
- Involve an active commercial enterprise.
- Must share in the business’ operations and decision-making.
- Intention to generate profit is essential.
What is a general partnership?
All partners have unlimited liability.
What is a limited partnership?
At least one partner has limited liability.
What is a limited liability partnership?
No partner has unlimited liability.
What is the legal status of a partnership in Scotland?
A partnership is considered a separate legal entity, distinct from its partners.
What is an agency relationship?
Partners act as agents for each other and the partnership.
What is a joint and several liability relationship?
Partners are jointly liable for the partnership’s debts and obligations.
What is fiduciary duty?
Partners owe each other a duty of good faith, loyalty, and full disclosure.
How is a partnership formed?
By agreement, either written (partnership deed) or oral - written is recommended to clarify the rights and obligations of each partner.
What are the rights of partners in a partnership?
Participate in management, share in profits, inspect books and records, receive information about partnership affairs.
What are the duties of parnters in a partnership?
Act in good faith, make full disclosure, not compete with the partnership, and account for profits earned from partnership dealings.
What is the expiration of a fixed term?
Partnership has a set duration.
What is the termination of a single venture?
Partnership was formed for a specific project.
What is meant by notice?
Giving notice to others of their intention to dissolve.
What does death or bankruptcy of a partner depend on?
The partnership agreement.
What is meant by the illegality of a partnership?
If the business becomes illegal.
What is meant by a court order?
A court can dissolve a partnership if it’s just and equitable.
What is a limited partnership?
At least one general partner with unlimited liability and at least one limited partner with limited liability.
What are the consequences of a partnership dissolution?
Winding up of partnership affairs, distribution of assets, and potential liability of outgoing partners for existing debts.
What is the difference between a limited partnership and a limited liability partnership?
LP - limited partners have limited liability but no management rights.
LLP - all members have limited liability and can participate in management.
What are the key features of an LLP?
Separate legal personality, limited liability for all members, and flexibility in management and organization.
How is an LLP formed?
By registering an incorporation document with the Registrar of Companies.
What are the disclosure requirements for an LLP?
Required to file annual accounts and an annual return with the Registrar of Companies.
What happens in the event of an LLP’s insolvency?
Generally subject to the same insolvency rules as companies under the Insolvency Act 1986.
Can a salaried partner be liable to third parties?
They are essentially an employee that may not be liable to third parties for partnership debts.
Can a partnership be prosecuted for a crime?
Under the Partnerships (Prosecution) (Scotland) Act 2013, a partnership can be prosecuted for crimes committed even after dissolution (subject to certain time limits).
What is the principle of ‘delectus personae’?
Means ‘choice of person’ and reflects the importance of the personal element in a partnership - a new partner can be introduced without the unanimous consent of existing partners.
What is the concept of holding out in a partnership?
A person can be held liable for partnership debts if they have allowed themselves to be represented as a partner, even if they are not actually a partner, and a third party has relied on that representation.
