• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

A partnership or a company?

Extracts from this document...


A Partnership or a Company? People going into business nowadays ought to be aware of how they could share a business with someone else and be covered legally. An insight into the theory is a good introduction. A partnership is a voluntary association of two or more persons who decide to carry on a business together with a purpose of making a profit. In a partnership each partner contributes something in a way of skill, work or financial investment. Each partner has the right to participate in the running of the business and is also an agent of the firm, which means that he has the power to form a business contract at any time. According to the Partnership Act S 4(2): 'a partnership in Scotland is a legal person distinct from the partners of whom it is composed' meaning that it has a separate legal personality from the actual partners. Also this means that it can enter contracts and sue and be sued in the firm's name and that it may own its own property. On the other hand, the Company Act 1985 says: 'companies are corporate bodies formed by registration.' ...read more.


When we speak about limited liability we mean the responsibilities of the owners of a company are restricted to any money that remains unpaid. The partner (investor) is not personally responsible for the debts and obligations of the company in the event that these are not fulfilled. Unlike the partnership firm, members of a limited company have the right to a limited liability. Any individual member's contribution to paying off the debts of the company is limited to the amount of his shares. The limited liability enjoyed by the members of companies is regarded as a major advantage of forming a company rather than entering a partnership. The number of members forming a partnership cannot exceed twenty in total and there must be a minimum of at least two, or else a partnership cannot be formed. However there is an exeption to this rule for firms of solicitors, accountants, stockbrokers and certain other professionals, which in their case they may have over twenty partners. Also it must be mentioned that apart from the normal common law duties of any member (agent) the Partnership Act 1890 provides the following: * The partners must render true accounts to the firm and supply full information on everything affecting the partnership (S28). ...read more.


Some of the consequences of a company being a separate person at law from its members or its directors are the following: * The company enters contracts in its own name. * It may be a debtor and a creditor in its own name and also may be debtor and creditor of its own members. * It can hold both heritable and movable property in its own name. * Constant succession applies to it, unlike the partnership. The legal personality of the company is not affected by changes in the personnel within it. Members can enter or leave the company, die, become insane or go bankrupt, without this having any effect upon the existence as a legal person of the company. In Scotland though not in England, partnership firms have their own legal personality separate from the individual partners. These are the consequences: * Partnerships can contract in their own name. * The firm can hold movable property in its own name. * The firm can be debtor and creditor in its own name, and even of its own partners. * The firm can become bankrupt, and the bankruptcy does not necessarily make the individual partners bankrupt. A personal decision would be made after considering the above theory, the people involved, weighing up the advantages and disadvantages and the type of business being planned. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Business, Companies and Organisation, Activity section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Business, Companies and Organisation, Activity essays

  1. Human Resources Management

    If more people have left then there should be an action taken maybe more appraisals should be introduced. It will also mean that if Ford decides to invent more models then more mechanics and machine workers would be required where they should plan considering these statistics.

  2. Business Studies

    some retail stores by providing them with stock at lower prices - Trade practises act - tries to discourage price discrimination - Implied conditions and warranties - Good way to show faith in products is offer warranties - powerful marketing too - All products have implied warranty - under legislation

  1. Legally the brothers could now be a partnership emphasised by Jessel MR in Pooley ...

    fund for repayment of the debts, the company will be wound up if there are still outstanding debts. Those debts would then be legally extinguished. Stan or Bill wouldn't have the threat of losing their personal fortune. Most registered companies are "limited by shares".

  2. Describe the Limited Liability Partnership and explain the emergence of this new legal form ...

    Gray14 describes this as 'a guarantee requiring him or her to contribute up to a maximum specified sum if the assets of the LLP become available to its liquidator.' This is true of a limited company where the debts in liquidation are limited by share or guarantee.

  1. Job roles and contracts at Alton Towers

    (Requirements) Previous experience of leading a team would be beneficial in this role, you will need to understand how to motivate and gain respect from your team members and drive them to hit tough sales targets. You will be expected to work closely with a Sales and Information Executive to manage

  2. Busnies management

    That is why the components have to be in combination with each other and not separately. * Break-even-analysis This is where the break-even point is achieved when total costs are equal to total income. At this point there is no profit or loss.

  1. Business Process Management

    The boundaries of ensuring that the shelves are constantly filled to the correct amount rely on good communication between staff and managers. The employees are the people who are in direct contact with the products and if they can see that the product is running low, then they need to tell their manager so that they can act accordingly.

  2. Importance of Human Resources Management

    The forecasts must be constantly reviewed and updated where necessary where it must be prepared by skill/job level rather than stating an overall total human resources records must be up to date, ideally computerised and easy to access for the employees, Ford has kept those up to date with the accurate number of results.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work