...Page 1 of 19 PARTNERSHIP It is a CONTRACT whereby two or more persons (1) bind themselves to CONTRIBUTE money, property, or industry to a COMMON FUND (2) with the intention of dividing the PROFITS among themselves or in order to EXERCISE a PROFESSION a STATUS and a FIDUCIARY RELATION subsisting between persons carrying on a business in common with a view on profit CHARACTERISTICS OF THE CONTRACT OF PARTNERSHIP [C, C, L, I, AS, NP] 1. CONSENSUAL perfected by mere consent 2. CONTRIBUTION of money, property or industry to a COMMON FUND 3. object must be a LAWFUL one 4. INTENTION of DIVIDING the PROFIT among the PARTNERS 5. “AFFECTIO SOCIETATIS” the desire to formulate an ACTIVE UNION, with people among whom there exist a mutual CONFIDENCE and TRUSTS 6. NEW PERSONALITY the object must be for profit and not merely for the common enjoyment otherwise only a co-ownership has been formed. HOWEVER, pecuniary profit need not be the only aim, it is enough that it is the principal purpose BUSINESS TRUSTS when certain persons entrust their property or money to others who will manage the same for the former RULES ON CAPACITY TO BECOME A PARTNER 1. a person capacitated to enter into contractual relations may become a partner 2. an UNEMANCIPATED MINOR CANNOT become a partner UNLESS his parent or guardian consents 3. a MARRIED WOMAN, cannot contribute conjugal funds as her contribution to the partnership UNLESS she is permitted to do so by her husband...
Words: 8779 - Pages: 36
...PARTNERSHIP ( It is a CONTRACT whereby two or more persons (1) bind themselves to CONTRIBUTE money, property, or industry to a COMMON FUND (2) with the intention of dividing the PROFITS among themselves or in order to EXERCISE a PROFESSION ( a STATUS and a FIDUCIARY RELATION subsisting between persons carrying on a business in common with a view on profit CHARACTERISTICS OF THE CONTRACT OF PARTNERSHIP [C, C, L, I, AS, NP] 1. CONSENSUAL ( perfected by mere consent 2. CONTRIBUTION of money, property or industry to a COMMON FUND 3. object must be a LAWFUL one 4. INTENTION of DIVIDING the PROFIT among the PARTNERS 5. “AFFECTIO SOCIETATIS” ( the desire to formulate an ACTIVE UNION, with people among whom there exist a mutual CONFIDENCE and TRUSTS 6. NEW PERSONALITY ( the object must be for profit and not merely for the common enjoyment otherwise only a co-ownership has been formed. HOWEVER, pecuniary profit need not be the only aim, it is enough that it is the principal purpose BUSINESS TRUSTS ( when certain persons entrust their property or money to others who will manage the same for the former RULES ON CAPACITY TO BECOME A PARTNER 1. a person capacitated to enter into contractual relations may become a partner 2. an UNEMANCIPATED MINOR CANNOT become a partner UNLESS his parent or guardian consents 3. a MARRIED WOMAN, cannot contribute conjugal funds as her contribution to the partnership UNLESS...
Words: 8589 - Pages: 35
...What is Law of Partnership? A partnership is a for-profit business association of two or more persons. Because the business component is defined broadly by state laws and because "persons" can include individuals, groups of individuals, companies, and corporations, partnerships are highly adaptable in form and vary in complexity. Each partner shares directly in the organization's profits and shares control of the business operation. The consequence of this profit sharing is that partners are jointly and independently liable for the partnership's debts. According to Section (2) the relation between members of any company or association Which is— (a) Registered as a company under the Companies Act 1965 [Act 125] or as a co-operative society under any written Law relating to co-operative societies; or (b) Formed or incorporated by or in pursuance of— (i) Any other law having effect in Malaysia or any part thereof; or (ii) Any letters patent, Royal Charter or Act of the Parliament of the United Kingdom RULES FOR DETERMINING EXISTENCE OF PARTNERSHIP According to section ( 2 ) In determining whether a partnership does or does not exist, regard shall be had to the following rules- (1) Joint tenancy, tenancy in common, joint property, common property, or part ownership does not of itself create a partnership as to anything so held or owned, whether the tenants or owners do or do not share any profits made by the use thereof. (2) The sharing of gross returns does not...
Words: 1652 - Pages: 7
...Critically assess the various legal structures available to Northern Ireland business enterprises in the 21st Century. There are various options to anyone wishing to establish a business in the Northern Ireland economy in the 21st century. This paper will discuss and assess the three legal structures; sole traders, partnerships and incorporated bodies. Thus, establishing the features, operations, advantages and disadvantages of each. A sole trader is the simplest type of business structure. Tracey defines a sole trader as “a term used to describe an individual who carries on a business or profession without partners”. An alternative term is ‘sole practitioner’. The individual is free to engage in any kind of lawful business activity. Although small, a sole trader is not necessarily any less successful than a larger business. According to the Office of National Statistics, as of 2013, sole proprietors represented 62.6%, of all UK private businesses. Martin McNaughton, from Newry, founded Glen Dimplex in 1973, manufacturing heating pumps. He now ranks at number 736 on the Forbes Rich List, employing 10,000 staff, making a billion sales each year.The main advantage of being a sole trader is having total control over the business. There are no shareholders nor business partners one can be held accountable to. The business person can therefore make any decisions they see fit. In addition to this a sole trader receives, and keeps, 100% of the profits earned by the business...
Words: 2537 - Pages: 11
...Part A (The Report) Sole Proprietorship A sole proprietorship is the most common form of forming a business in the United States. The individual that forms the sole proprietorship and the business is one in the same. For example, if the business owes creditors money, the individual who created the sole proprietorship business has to pay the bill. When entering into contracts the individual is actually agreeing to the contract since the person and business is one in the same. The biggest advantage of doing business under a sole proprietorship is that it is extremely easy to form since the individual creating the sole proprietorship is the business. They are fully responsible for all aspects of the business including making good on payments, collecting monies from customers, and providing the goods or services to their clients. Another reason individuals create sole proprietorships is the flexibility they gain by owning their own business. Since they do not have anybody to report to they can do as they please as far as hours, vacations, expansion, or direction of the business. However, there are many disadvantages that come with a sole proprietorship business. Since the individual is the business they are responsible for all financial responsibilities. They are responsible for ensuring all payments to creditors are paid on-time and in full. If the individual runs into financial issues they are responsible without protection. Also, sole proprietorships can only have one owner...
Words: 3869 - Pages: 16
...Beirut and Mount Lebanon 00 CONTENT 01 LETTER FROM THE CHAIRMAN 02 JOINT LIABILITY COMPANY 03 LIMITED PARTNERSHIP 04 UNDECLARED PARTNERSHIP 05 JOINT STOCK COMPANY LIMITED LIABILITY COMPANY (LLC) 07 PARTNERSHIP LIMITED BY SHARES 08 HOLDING COMPANIES 09 OFFSHORE COMPANIES 10 THIRD-FOREIGN COMPANIES Chamber of Commerce Industry and Agriculture of Beirut and Mount Lebanon 01 2 LETTER FROM THE CHAIRMAN True to its mission of supporting the private economy, the Chamber hereby undertakes to assist prospective foreign investors all through the establishment process. The defining advantages of Lebanon’s investment environment derive from its free enterprise system distinguished by a high degree of openness to foreign trade and the absence of restrictions on capital movement. Such system naturally safeguards private ownership of all form of assets, and subjects local and foreign investors to the same code of laws and regulations. Hence, foreign investors retain full control over their business and private assets, unhindered by the constraint of an imposed local partner or restrictions on business and investment decisions. Evolution at the policy-making level continues to build on the competitiveness of the investment environment. The public-private partnership approach certainly generates abundant opportunities in building and operating infrastructure projects. Unscathed by the global...
Words: 12612 - Pages: 51
...Business operations Introduction Businesses can expand and originate from various entity types. Limited or general partnerships, corporation, sole proprietorship, nonprofit organizations, Limited Liability Company (LLC), and Limited Liability Partnership (LLP) may be a few examples of the styles available for business shareholders and owners to choose from in order to carry out their business operations. Each and every style may have its own gains and setbacks as regards taxation, liability and government regulations and laws. In a bid to answer your question, I might have to make use of two different business examples which comprise of different operation styles and guidelines. The two businesses include a bar business and professional practice and may be detailed on the basis of basic requirements necessary for successful business formation. I would also be keen at outlining the entity choice for each of these businesses as a way of providing advantages over the other. A detailed explanation of how each of the two scenarios controls the taxation, liability and business issues would also be in order. To add on that, the regulations, laws and potential risks that may be involved in every business style may be identified. Bar business The best business entity choice for Miriam, Lou and Jose in their business operation could be forming a Limited Partnership. Jose and Lou would then perform the role of general partners hence manage the operations of the business on a daily basis...
Words: 1897 - Pages: 8
...Bin No. Box No. *, y : R0 Z.; Partnership Act, 1890. Year. [53 & 54 VICT] [CH. 39.] ARRANGEMENT OF SECTIONS. Nature of Partnership. Section. Definition of partnership. 2. Rules for determining existence of partnership. 3. Postponement of rights of person lending or selling in consideration of share of profits in case of 1. insolvency. 4. Meaning of firm. Relations of Partners to persons dealing with them. 5. Power of partner to bind the firm. 6. Partners bound by acts on behalf of firm. 7. Partner using credit of firm for private purposes. 8. Effect of notice that firm will not be bound by acts of partner. 9. Liability of partners. 10. Liability of the firm for wrongs. 11. Misapplication of money or property received for or in custody of the firm. 12. Liability for wrongs joint and several. 13. Improper employment of trust-property for partnership purposes. 14. Persons liable by "holding out." 15. Admissions and representations of partners. 16. Notice to acting partner to be notice to the firm. 17. Liabilities of incoming and outgoing partners. 18. Revocation of continuing guaranty by change in firm. 19. 20. 21. 22. 23. Relations of Partners to one another. Variation by consent of terms of partnership. Partnership property. Property bought with partnership money. Conversion into personal estate of land held as partnership property. Procedure against partnership property for a partner's separate judgment...
Words: 6235 - Pages: 25
...Definition of Partnership A partnership is an arrangement in which two or more individuals share the profits and liabilities of a business venture. Various arrangements are possible: all partners might share liabilities and profits equally, or some partners may have limited liability. Not every partner is necessarily involved in the management and day-to-day operations of the venture. In some jurisdictions, partnerships enjoy favourable tax treatment relative to corporations. http://www.investopedia.com/terms/p/partnership.asp#ixzz49Y975kkP Types of Partnership A partnership is a business owned by two or more people. In most forms of partnerships, each partner has unlimited liability for the debts incurred by the business. The three typical classifications of for-profit partnerships are general partnerships, limited partnerships, and limited liability partnerships. 1. General Partnership: Partners divide responsibility for management and liability as well as the shares of profit or loss according to their internal agreement. Equal shares are assumed unless there is a written agreement that states differently. A general partnership involves two or more owners carrying out a business purpose. General partners share equal rights and responsibilities in connection with management of the business, and any individual partner can bind the entire group to a legal obligation. Each individual partner assumes full responsibility for all of the business's debts and obligations. ...
Words: 8398 - Pages: 34
...BUSINESS ORGANIZATIONS INTRODUCTION This unit introduces students to the most common forms of business organizations, namely sole proprietorship, partnership and limited liability companies. However, emphasis is placed here on partnership and the legal consequences which flow from the formation of such a method. The main advantages and disadvantages of these forms of business organizations are also discussed. Important Concepts in Business Organizations The following are some important concepts in business organizations: Incorporation The law permits the creation of artificial or legal persons. An example of such is an incorporated company. This means that such an organization has a legal personality separate from its members. Legal Personality Under The English Law, all human beings have a legal personality. A legal personality is made up of a person’s legal rights and duties. However, the extent of these rights and duties is dependent on whether the person is an adult or a minor. A minor has limited rights and few duties. By operation of the law, an incorporated company has a legal personality Limited/unlimited Liability As a result of an incorporated organization having its own legal personality, its members are not generally liable for the debts of the organization. This however is in contrast to a partnership which does not have a legal personality separate from the partners. Here, partners have unlimited liability for partnership’s debts. Also, a sole proprietor...
Words: 3835 - Pages: 16
...not FMV FMV is important for substantial economic effect Defining Entities I. History a. Corp used to be 4 factor analysis. Now check-the-box to opt in unless default in. i. Asked: Corporate resemblance test no longer relevant II. Classifying Partnerships for Tax Purposes a. Two or more members: pship or corporation 7701-2(a) i. Default = partnership 7701-3(b)(1)(i) 1. Applies to LLCs 2. To opt out of default Check-the-box 3. Look to state law; If state law corp = corp for tax 7701-2(b) b. One Member: Corp or DRE 7701-2(a) i. Default = Disregarded entity 7701-3(b)(1)(ii) 1. If state law corp = corp for tax 7701-2(b) 2. SMLLC can’t be Pship = DRE III. Reclassification a. 7701-3(g) Election to Convert PS to Corp for Tax i. No tax ii. Deemed contribution of pship assets to corp, followed by liquidation b. PTPs: taxed as corporations i. PTP – publicly traded partnership. 7704 c. Election to Convert Corp to PS i. Deemed liquidation and trigger tax at that time d. Add member to single member corp of LLC and subject to PS tax rules e. Lose member and become single member, then DRE ...
Words: 2456 - Pages: 10
...There are a lot of legal forms for businesses. In this paper, I will talk about these forms; sole proprietorship, partnership, limited liability partnership, limited liability company, S corporation, franchise, and corporate form. I will try to develop scenarios in which each of these forms of business would be the preferred form. For each scenario, I will justify why the corresponding business form is preferred. Sole proprietorship is the first form of businesses and it is the simplest form of business organization. The Sole proprietorship and the owner of the businesses are representing the organization. Forming the sole proprietorship is very easy and does not cost a lot and this is why it is the most common business in United State. The businesses owner is the manager and he takes all the decisions and the responsibilities including the hiring, and firing the employees. The sole business owner owns all of the business and has the right to obtain all of the business’s profits. For the past points, the sole business would best a good form. Lastly, the only disadvantage is that the sole business owner is responsible for the entire business obligation. There are many examples for the Sole proprietorship such as Independent Contractor, E-Business, Brick and Mortar Business… Etc. Tina is young lady who she part time student at community college. She decided to earn some money by creating a small business for dogs’ setter. She provides services in her new business (feed the dogs...
Words: 1097 - Pages: 5
...Subject : National Lumber Company v. Advance Development Corporation Date: Saturday, April 20, 2013 Parties Advance Development Corporation, The partnership, is the defendant in the case. National Lumber Company, The supplier, is the plaintiff in the case. Facts Pat McGowan, Val Somers, and Brent Robertson were general partners of Vermont Place, a limited partnership formed for the purpose of constructing duplexes on an undeveloped tract of land in Fort Smith, Arkansas. The general partners appointed McGowan and his company, Advance Development Corporation, to develop the project, including contracting with materials people, mechanics, and other suppliers. None of the limited partners took part in the management or control of the partnership. Eight months later, Somers and Robertson discovered that McGowan had not been paying the suppliers. They removed McGowan from the partnership and took over the project. The suppliers sued the partnership to recover the money owed them. The partnership assets were not sufficient to pay all their claims. Who is liable to the suppliers? Procedure The Chancellor held that the affairs of Advance and Vermont Place were so merged that they had become one entity. He presented the following: I. That Pat McGowan, Advance Development Corporation and Vermont Place Properties partnership so merged their affairs to the extent that they were one and the same person or entity when dealing with the lien holders in this action. II. That...
Words: 1135 - Pages: 5
...so you are personally responsible for all the debts and obligations of the business. Many challenges are faced when it comes to raising money for this type of business. Since you can’t sell stock in the business, investors won’t often invest. Also, banks are terribly hesistant to loan money to this type of business for lack of credibility if the business ends up failing. General Partnership is a form of business where two or more people share the ownership of one business. Each partner contributes to all aspects of the business including money, property, labor and skill. In return, each partner shares in the losses and gains of the business. Partnerships entail more than one person when it comes to decision making. It is very important that the parties involved discuss a wide variety of issues up front and develop a legal partnership agreement. This agreement should document how future business decisions will be made, including how the partners will divide profits, resolve disputes, change ownership (bring in new partners or buy out current partners) and how to dissolve the partnership. Partnership agreements are...
Words: 1657 - Pages: 7
...THIS PARTNERSHIP AGREEMENT is made this __________ day of ___________, 20__, by and between the following individuals: | |Address: __________________________ | |___________________________ |City/State/ZIP:______________________ | | |Address: __________________________ | |___________________________ |City/State/ZIP:______________________ | 1. Nature of Business. The partners listed above hereby agree that they shall be considered partners in business for the following purpose: ______________________________________________________________________________ ______________________________________________________________________________ 2. Name. The partnership shall be conducted under the name of ________________ and shall maintain offices at [STREET ADDRESS], [CITY, STATE, ZIP]. 3. Day-To-Day Operation. The partners shall provide their full-time services and best efforts on behalf of the partnership. No partner shall receive a salary for services rendered to the partnership. Each partner shall have equal rights to manage and control the partnership and its business. Should there be differences between the partners concerning ordinary business matters, a decision shall be made by unanimous...
Words: 720 - Pages: 3
