Partnership Law
Peter James and Jenny Shorter are in business together designing and producing ladies hand-made clothing to order. They are based in Chelsea and trade under the name of J & S Fashions. They have not drawn up or signed any documents to form the business, or registered it with anyone. J & S Fashions has recently set up its own web page on the Internet, intending to gain customers that way and to expand. It has been suggested to Peter, by a friend in a pub, that it would make "sound business sense" to run the business as a limited company.
A] What legal sort of business organisation do Peter and Jenny currently have, with what financial implications for them and others?
B] What would Peter and Jenny have to do to form a company? Explain to them what procedures and documents would be involved, what would need to be contained in them and what the legal implications are for them of this change of type of business organisation.
Answer :
a) Peter and Jenny are currently trading as a partnership. A partnership is created in law when two or more persons agree to carry on a business together. This agreement can either be put in writing or oral. The law relating to partnerships is largely contained in the Partnership Act 1890 (hereafter "PA 1890"). Section 1 of the PA 1890 defines a partnership as "the relation which subsists between persons carrying on business in common with a view to profit. "It is important to note at the outset that, unlike a company, a partnership does not possess a separate legal personality distinct from its members.
Generally speaking, Peter and Jenny can be advised that partners enter into a partnership agreement on the terms that they themselves have established through negotiation and accepted. They are contractually bound by those terms as a consequence, and those terms are susceptible to enforcement at law in the same way as ordinary contractual terms. This is the case unless a term is in conflict with the express provisions of the
A] What legal sort of business organisation do Peter and Jenny currently have, with what financial implications for them and others?
B] What would Peter and Jenny have to do to form a company? Explain to them what procedures and documents would be involved, what would need to be contained in them and what the legal implications are for them of this change of type of business organisation.
Answer :
a) Peter and Jenny are currently trading as a partnership. A partnership is created in law when two or more persons agree to carry on a business together. This agreement can either be put in writing or oral. The law relating to partnerships is largely contained in the Partnership Act 1890 (hereafter "PA 1890"). Section 1 of the PA 1890 defines a partnership as "the relation which subsists between persons carrying on business in common with a view to profit. "It is important to note at the outset that, unlike a company, a partnership does not possess a separate legal personality distinct from its members.
Generally speaking, Peter and Jenny can be advised that partners enter into a partnership agreement on the terms that they themselves have established through negotiation and accepted. They are contractually bound by those terms as a consequence, and those terms are susceptible to enforcement at law in the same way as ordinary contractual terms. This is the case unless a term is in conflict with the express provisions of the