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Partnerships - Coggle Diagram
Partnerships
Limited partnerships
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The GP will be liable for all the debts and obligations whereas the LP are only liable for an amount specified in the registration document
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If a LP does take part in the firms management, then he will become liable for the firms debts and obligations as if he were a GP
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Ordinary partnership
The Partnership Act 1890 defines a partnership as the relation which subsists between persons carrying on a business in common with a view of profit
Every partner is liable jointly with the other partners for all the debts and obligations of the partnership incurred while they are partners
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The rights and obligations is usually determined by a partnership agreement. This agreement can be drafted by the partners themselves but it need not be in writing - it can be oral or implied via the partners' conduct - in order to avoid disputes it is usually in writing and will take the form of a contract
There is no requirement for a partnership to have a partnership agreement. PA1890 sets out rules that determine the relationship between partners and how the partnership is to be run including
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A prohibition on a partner being expelled from the partnership unless all the other partners so agree
If a partner enters into an agreement with a third party, the partnership and the other partners will be bound by that agreement. However the partnership and the other partners will not be bound if the partner had no authority to enter into the agreement and the third part knew he had no authority or did not know or believe him to be a party
Each partner is vicariously liable for the wrongful acts or omissions of another partner as long as the partner was acting within the ordinary business of the partnership or within his authority. Liability is joint and several, meaning that the claimant can sue each partner in turn or all the partners at once until he has recovered the amount of his loss
Dissolution
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The court can, following an application from a partner, dissolve a partnership in certain cases
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