partnerships (workshop 1) Flashcards
what is a partnership defined under S1(1) PA 1890?
a relationship between persons carrying on a business in common with a view to making a profit
is a traditional partnership a separate legal entity separate from its partners?
no, a partnership is NOT separate legal entity from the partners
what is the overriding duty of partners in a partnership?
a duty of good faith
are partners jointly liable for the debts of the firm?
yes, every partner is jointly liable for all debts and obligations incurred while they are a partner
what is the tortious liability of partners in a partnership?
partners have joint and several liability in tort
how are partners taxed in a partnership?
each partner is liable for tax on their share of income or gains; the partnership itself is not taxed
what happens if a partner leaves without an agreement regarding retirement or termination?
the partnership is automatically dissolved
what ways can a partnership be dissolved? (there are 4)
-automatic dissolution
-notice from a partner
-business becomes unlawful
-court dissolution
what is a limited liability partnership (LLP)?
a hybrid entity combining elements of a partnership and a company, offering limited liability to its members
how is an LLP treated for tax purposes?
treated as a partnership for tax, meaning it is not taxed as an entity, but its members are
what is the ‘clawback’ rule in relation to LLPs?
money taken out by members up to 2 years before winding up can be reclaimed to pay creditors
what is the contractual liability for partnerships?
every partner is liable jointly with the other partners for all debts and obligations of the firm incurred whilst they are a partner
is a partnership agreement necessary for a traditional partnership or LLP?
no, it is not necessary
what are the corporate characteristics of an LLP?
separate legal personality, limited liability, incorporation and registration requirements, filing accounts, and certain provisions of company law apply.
in the event of a dispute, would one partner be able to remove the other against their will?
A member cannot be expelled by a majority vote unless all members have previously agreed that a majority can do this. But if there are only 2 members then both need to agree
