Partnerships

Question 1

What is a partnership?

Answer 1

An unincorporated business which is not a separate legal entity from its partners. Two or more people agree they will run a business together and actually do so

Question 2

Does there need to be a written partnership agreement?

Answer 2

No, the agreement to operate in a partnership can be in writing or oral or may even be implied by conduct

Question 3

Are there any rules regarding the partnership name?

Answer 3

No restrictions if the name consists only of the surnames of all partners however in any other case the CA will apply and certain words or expressions forming part of the business name will require prior approval plus the name must appear at the main place of business and on partnership stationary

Question 4

What are the default provisions that apply to partnerships in the absence of an express or implied agreement to the contrary regarding partners and duration?

Answer 4

• the parties to the agreement will be the partners and no new partner may be admitted without the consent of all of the partners
• unanimity is required by the partners in order to change the nature of the business
• any partner may determine the partnership at any time on giving notice to the other partners
• the partnership will be dissolved from the date specified in the notice or on communication of the notice if not specified

Question 5

What are the default provisions that apply to partnerships in the absence of an express or implied agreement to the contrary with regarding income and capital?

Answer 5

• capital profits and losses will be shared equally
• no right to interest on partners’ capital contributions
• income profits and losses will be shared equally
• it does not provide for salaries to be paid to partners

Question 6

What are the default provisions that apply to partnerships in the absence of an express or implied agreement to the contrary with regarding management?

Answer 6

• all partners are entitled to take part in the management of the business
• all matters may be decided by a majority of partners (except changing the nature of the business)

Question 7

What are the default provisions that apply to partnerships in the absence of an express or implied agreement to the contrary with regarding retirement, death or bankruptcy of partners?

Answer 7

• if a partner retired (left the partnership) it would be dissolved
• a partnership would also be dissolved through death or bankruptcy of any partner

Question 8

What are the default provisions that apply to partnerships in the absence of an express or implied agreement to the contrary with regarding expulsion of partners?

Answer 8

• no majority may expel any partner

Question 9

What is a partnership at will?

Answer 9

A partnership that continues indefinitely

Question 10

What is a fixed term partnership?

Answer 10

A partnership that terminates on a certain date or upon completion of project

Question 11

How is partnership property owned?

Answer 11

As a partnership does not have separate legal personality it cannot own property in its own right - the partners will own assets or property as tenants in common or joint tenants