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company law problem

Extracts from this document...

Introduction

Company Law Law 220 Assignment 1 Gemma Bolt 053047962 Word Count 2,620 Table of cases Ewing v Buttercup Margarine Co Ltd [1917] 2 Ch 1 Salomon v A. Salomon & Co Ltd [1897] AC 22 HL Syers v Syers (1876) 1 App CAS 174 HL Ward v Newalls Insulation Co Ltd [1998] 1 WLR 1722 Winter v Winter 10 November 2000 Table of Statutes Business Names Act Elizabeth II HMSO sections 1, 4 Companies Act 1985 Elizabeth II HMSO section 119(c) Limited Liability Partnership Act 2000 Elizabeth II HMSO Limited Partnership Act 1907 Elizabeth II HMSO Partnership Act 1890 Elizabeth II HMSO sections 1(1), 24(1), 26, 33, 37, 38, 39, 40, 42(1), 43 Question One The legal framework of a business will influence the way a business operates and develops1. Therefore it is necessary to decide whether Archie, Bob and Catherine should form a partnership or a limited company. A partnership, defined in section 1(1) of the Partnership Act 18902 (PA 1890), is the 'relationship which subsists between persons carrying on a business in common with a view of profit'3. A partnership is a relationship which has no separate legal identity they cannot make contracts, commit crimes or be sued and confers unlimited liability4. This makes it possible for each partner to be liable without limit for debts incurred by other partners in the course of partnership business5. A partnership is formed by an agreement which is contractually binding subject to contract law6. The agreement takes the form of a deed and sets out the terms and conditions of the partnership7. There are three forms of partnership, an ordinary partnership governed by the PA 18908, a limited partnership governed by the Limited Partnership Act 19079 and, governed by the Limited Liability Partnership Act 200010, the limited liability partnership11. However despite these different forms, a partnership is simply the partners who comprise a business12. ...read more.

Middle

Section 42(1) PA 189078 provides that a departing partner can either opt for a share in the profits between these times or opt for 5% interest to be paid on their share per annum, again this is subject to the partnership agreement79. However if the partnership agreement does not identify the status of the partnership after death or retirement then a general dissolution will occur. If this is the case then the firm would need to be wound up which includes collecting and valuing assets, settling partnership debts and distributing any surplus80. Again three steps must be undertaken. Firstly it must be decided who will wind up the business, the partners themselves or a receiver appointed by the court81. The most common way to wind up is by an existing partner. It is cheaper, quicker and conducted more privately82. Under section 38 PA 189083 there is a duty to wind up the business and complete any unfinished transactions84. A failure to do this may result in actions for negligence by third parties85. This will apply unless a court orders otherwise and appoints a receiver to conduct the winding up process86. If a receiver is appointed they are the only person entitled to act on behalf of the firm87. Secondly it must be determined whether there are any premiums that need to be returned to the partners88. A premium is a joining fee paid to allow someone to become a partner for a specified time89. If a firm is dissolved prematurely, under section 40 PA 189090 the premiums may, in part, need to be returned91. Finally the partner's rights to the firm's assets must be established. Under section 39 PA 189092 every partner is entitled, once partnership debts have been paid, to a share of the surplus93. Following this it is likely that Archie and Bob would undertake a technical dissolution. As they wanted to be able to retire from the partnership and be able to purchase an outgoing partners interest it is likely that the partnership agreement would provide for the continuation of the firm in the event of a death, bankruptcy or retirement. ...read more.

Conclusion

Partnership Law, Oxford University Press page 248 87 Morse, G. (2006) Partnership Law, Oxford University Press page 249 88 Morse, G. (2006) Partnership Law, Oxford University Press page 253 89 Morse, G. (2006) Partnership Law, Oxford University Press page 253 90 Partnership Act 1890 Elizabeth II HMSO section 40 91 Morse, G. (2006) Partnership Law, Oxford University Press page 253 92 Partnership Act 1890 Elizabeth II HMSO section 39 93 Morse, G. (2006) Partnership Law, Oxford University Press page 254 94 Morse, G. (2006) Partnership Law, Oxford University Press page 229 95 www.lawcom.gov.uk/Ic_reports.htm 96 Morse, G. (2006) Partnership Law, Oxford University Press page 5 97 Morse, G. (2006) Partnership Law, Oxford University Press page 230 98 Morse, G. (2006) Partnership Law, Oxford University Press page 229 - 230 99 Morse, G. (2006) Partnership Law, Oxford University Press page 246 100 Morse, G. (2006) Partnership Law, Oxford University Press page 246 101 Partnership Act 1890 Elizabeth II HMSO section 38 102 Morse, G. (2006) Partnership Law, Oxford University Press page 246 - 247 103 Morse, G. (2006) Partnership Law, Oxford University Press page 248 104 Morse, G. (2006) Partnership Law, Oxford University Press page 249 105 Morse, G. (2006) Partnership Law, Oxford University Press page 253 106 Morse, G. (2006) Partnership Law, Oxford University Press page 253 107 Partnership Act 1890 Elizabeth II HMSO section 40 108 Morse, G. (2006) Partnership Law, Oxford University Press page 254 109 Partnership Act 1890 Elizabeth II HMSO section 39 110 Morse, G. (2006) Partnership Law, Oxford University Press page 254 111 Morse, G. (2006) Partnership Law, Oxford University Press page 256 112 Morse, G. (2006) Partnership Law, Oxford University Press page 256 113 (1876) 1 App CAS 174 HL 114 Morse, G. (2006) Partnership Law, Oxford University Press page 256 115 Morse, G. (2006) Partnership Law, Oxford University Press page 257 116 Morse, G. (2006) Partnership Law, Oxford University Press page 257 117 Morse, G. (2006) Partnership Law, Oxford University Press page 230 ?? ?? ?? ?? ...read more.

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