Lecture notes
Class notes Business Law & Practice
- Module
- Business Law & Practice
- Institution
- University Of Law (ULaw)
Business law and practice
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The Partnership Agreement Fundamental Principle – The Partnership Act implies basic terms into every partnership agreement.
These terms will not necessarily be appropriate for every partnership agreement and the terms are
not comprehensive in what they do cover, so a written agreement is often necessary.
Area of Issue What the Partnership Act Why is this problematic/what terms are desirable?
Implies
Commencement Nothing. Desirable to include a clause which specifies
Date The partnership comes the start-date of the partnership so it is
into being when the s1 certain when rights and obligations arise.
definition is satisfied.
Duration and No duration supplied by Any partner may terminate the entire
Dissolution the Act. partnership “at any time by giving notice of
If there is no agreement his intention to do so to all the other
to the contrary, the partners” (s26).
partnership will be a Notice is immediate, and does not need to
“partnership at will” be in writing unless the partnership
(s26). agreement is made by deed (s26(2)).
“Partnership at will” Flexible for the partners, but unsecure for the
means that the business as whole partnership can be
partnership continues brought to an end on the whim of a single
unless a partner gives partner.
notice to terminate the Amendments might include:
partnership. o Specifying a minimum period of
notice.
o Agreeing a fixed term, perhaps
continuing thereafter to be
terminable with a minimum notice
period.
o That the partnership shall continue as
long as there are two surviving
partners.
Dissolution Under Death or bankruptcy of a Desirable to depart from this and provide
s33 PA 1890 partner will that the remaining partners will
automatically dissolve automatically continue in partnership on
the partnership (s33). buying out the deceased/bankrupt partner’s
share.
Sale of Capital Partners share equally Partners may want to deviate from this to
Assets and in the capital of the reflect the capital contribution of each
Sharing of Capital business (s24(1)). partner to the business.
Increases Increases/decreases in E.g. if Partner A provides a factory worth
the value of assets are £50,000, and Partner B puts in £10,000 cash,
therefore also shared under the PA 1890 if the factory increases in
equally. value to £60,000, the £10,000 increase would
be split 50/50. Similarly if the factory is sold,
Partner A will only receive £30,000 despite
contributing an asset worth £50,000.
It may be worth specifying in the agreement
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