United Kingdom partnership law

There is no such thing as United Kingdom partnership law The law governing Partnerships in the UK is either English law or Scots law depending upon where the Partnership was formed. There are many common acts relating to Partnerships in both legal systems but there are also many differences for example under Scots Law a Partnership is considered to be a distinct legal entity and therefore can borrow money from a bank in the name of the Partnership. Under English law a Partnership is not a distinct legal entity and therefore borrowing would be in the names of the individual partners. Partnerships are a form of business association, which arises automatically when people carry on business with a view to a profit. (Partnership Act 1890 s 1). Partners are jointly and severally liable, just as they own the property in common. A limited partnership, under the Limited Partnerships Act 1907 may have sleeping partners, who if they do not partake in any business management will not be liable beyond their investments (s 6). A ‘partnership’ under the Limited Liability Partnerships Act 2000 is now considered a separate legal person (s 11) with limited liability (ss 1 and 14), though it is treated as a partnership for tax, and is not subject to so much regulation as would be a company. There must, however, be at least two partners.

Common law

Partnerships were a common law phenomenon, dating back to the Roman law institution of a societas universorum quae ex quaestu veniunt, or a trade partnership.

• Waugh v Carver (1793) 126 ER 525, 2 HBI 235, held that receipt of profits of partnership made the recipient a partner. John George Phillimore later opined that this was 'one indeed of the most absurd decisions ever come to by a court of law'.

Partnership Act 1890

Main article: Partnership Act 1890

Section one of the 1890 Act defines partnership as ‘the relationship which subsists between persons carrying on a business in common with a view of profit.’ This can come about by oral agreement, written document or conduct. The minimum membership is two and the maximum since 2002 is unlimited. The provisions of the Partnership Act 1890 apply unless expressly or impliedly excluded by agreement of the partners. Each partner is entitled to participate in management, get an equal share of profit, an indemnity in respect of liabilities assumed in the course of business and the right to not be expelled by other partners. A partnership ends on the death of a partner. A partner is jointly and severally liable for others debts; there is no limited liability.

Limited Partnership Act 1907

Main article: Limited Partnership Act 1907

Only sleeping partners may have limited liability, and it is possible to have a partnership made up all of limited partners.

Limited Liability Partnerships Act 2000

Main article: Limited Liability Partnerships Act 2000

Under the 2000 Act, such partnerships are deemed to have legal personality. It allows limited liability for general trading debts, but individual partners cannot limit personal liability for negligence. It was introduced to allow some protection against large negligence actions, where the risks were felt to be excessive.

See also

• United Kingdom company law
• Limited Partnerships in England and Wales
• Limited Liability Partnerships Act 2000
• Limited Liability Partnerships Act (Northern Ireland) 2002

References

• JA McCahery and EPM Vermeulen, ‘Limited Partnership Reform in the United Kingdom: A Competitive, Venture Capital Oriented Business Form’ (2004) 5 European Business Organization Law Review 61

External links

• 1911 Britannica entry

UK legislation

• Text of the Partnership Act 1890 as in force today (including any amendments) within the United Kingdom, from the UK Statute Law Database