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Partnership: Difference between revisions
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{{a|entity|}}One of {{t|ISDA}}’s vaunted {{tag|netting}} categories. | {{a|entity|}}One of {{t|ISDA}}’s vaunted {{tag|netting}} categories. | ||
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{{partnership}} | {{partnership}} | ||
<small><small>''[[:template:partnership|view template]]''</small></small> | <small><small>''[[:template:partnership|view template]]''</small></small> | ||
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In the good old days, partnerships were a discrete form of business organisation which had a number of unusual features: | |||
*'''No [[legal personality]]''': Unlike a corporation, a partnership has no separate legal entity distinct from the collected personality of the individual partners, so to enter a contract with a partnership, or to sue one, is to sue its collected partners. If this were a corporation, that would be the equivalent of suing each of the shareholders of the corporation. This creatres conceptual difficulties and issues of course: partnership shares are not equal, and having to sue three hundred people at the same time just to recover a £5,000 debt, and working out exactly who owes what of that sum, seems rather a faff, so the comnmon law imputed to a partnership | |||
*'''[[Joint and several liability]]''': This means ''every'' partner in a partnership is ''personally'' liable for ''the whole of the partnership’s debt and other liabilities. This is really a pragmatic solution that the common law evolved, to recognise that untangling the complicated web or inter-partner responsibilities for action taken in the partnership’s name should not be a creditor’s problem: that burden should rest with the partners to sort out among themselves. So, a partner so sued for the partnership’s liability may seek proportional recovery from her partners — assuming they are solvent — but none of this is the creditor’s problem. | |||
*'''No real formal criteria for a partnership to exist''': Whether one is in a partnership or not is not always clear: whereas a corporation must have memorandum and articles of association and be registered with Companies registry somewhere, a partnership can be ''[[deemed]]'' to exist by behaviour, needs to formal deed or document, let alone any regulatory registration. Given the potential gravity of joint and several liability, this risk creates a special spectral fear which you will often see articulated through the boilerplate provision of a [[no partnership]] covenant. | |||
{{sa}} | {{sa}} | ||