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Partnership: Difference between revisions
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*'''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 | *'''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. | *'''[[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. | *'''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. Partnerships are defined by their general characteristics: profit sharing, common ownership of property and contribution of capital, joint management of the enterprise — which are unusual things for merchants to do if they ''don’t'' intend to be partners, but all the same, given the potential gravity of [[joint and several liability]], the risk of inadvertent partnership creates a spectral fear in legal advisors which you will often see articulated through the boilerplate provision of a [[no partnership]] covenant. | ||
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