• 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. English for business

    piata interna Margin - marja Margin in cash - acont ´┐Żn numerar Margin of profit - marja de beneficii Market overt - piata publica Market share - cota pietei Market swing - tendinta pietei Market value - valoarea comerciala Prices levelled off - preturile au atins un nivel constant Prices

  1. Business Studies

    periods of time > Regularity determined by employers demands > Do not receive benefits > Entitled to 1.5 times the amount of full time employees Fixed term contracts > Used when businesses only need labour for a specific time Common law: > Contract of employment sets out; - rewards for

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

    However, under s6 (4) of the act, the wrongdoer is liable to the same extent as the firm. This follows the liability of a company in negligence where the company can be sued, as it is a separate legal entity.

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

    of Bill and Stan that is carrying on in the usual business way of the kind carried on by the partnership, binds the firm and its partners. Any agreements between the partners inter se, for example on roles within the firm or profit sharing ratios, aren't binding on third parties who are oblivious to them.

  2. Business Studies Edexcel Coursework

    Making open questions moderately short and to the point allows Errol to collect the data and opinions and group them accordingly into allocated groups in tables. All the data from each questionnaire can be recorded in tables (most are

  1. Job roles and contracts at Alton Towers

    all aspects of day to day leadership from leading briefings, organising rota's, monitoring performance etc. need the right attitude, great communication skills, and confidence to approach our guests and put a smile on their faces throughout their day! You will need to be target driven and have a real passion for sales and guest service.

  2. Importance of Human Resources Management

    An Employee may leave because they are ill, retiring or having children. In some cases, they may be dismissed. All these cases are unavoidable. However, some workers leave voluntarily because they are not satisfied with the job. It's these workers that a business should be most concerned about.

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