Management Decision in Legal Form of Business

A partnership is a business owned by two or more people with a goal of earning a profit and is governed by the Partnership Act 1890. Handy has suggested that formal partnership agreements are drawn up by a solicitor who governs the partnership business activities. It elaborates the rights and obligations of the individual partners. It also gives provisions changes brought about by death or retirement of partners and indicates that the members are owners of its property and are liable to its contracts and should meet their duties to third parties. It also indicates that members are not entitled to salaries for services they give but a share of the profits of the business. Graw argues that partnership by estoppels occurs when a person is not formally included in the partnership but permits the use of his name by the partners.

Browne, Brennan, and kubasek have argued that a partnership is not classified as an entity for paying tax but an entity for reporting tax. All the profits are shared with the owners in proportion to what is specified in the partnership agreement. Profits are not restricted in their allocation and partners are allocated income depending on which partners have the best rates. Macey and Hamilton proposed that the partners have unlimited personal liability, each partner has a joint liability to the others and they can be sued as a group. Each partner is liable where there is several liabilities. Graw noted that a partner is jointly liable with the other partners for the damages incurred during the operations of the partnership business. The name of the business must be registered with the state if it chooses a fictitious name other than that of the members. Where there is no agreement the Partnership Act gives the members equal voting rights despite variations in their capital contribution. Each partner has a contractual duty to one another and should subordinate his personal interest for the benefit of the others.

Hamilton and Macey have suggested that property acquired in the partnership stock by purchase or grants for the purpose of the business is classified as partnership property and is governed by the partnership agreement. Where property or land has become partnership property, it is treated as between the partners, and the beneficiaries of the deceased person or administrators. A partner cannot be expelled by others unless it has been conferred in the partnership deed and may retire at will by giving a notice of intention where no fixed term has been agreed upon in the partnership and in writing signed notice where there is a fixed term.

Brown et al., have argued that where a fixed term of a partnership expires and they opt to continue the partnership the components of their partnership agreement will continue to govern the running of the business. Partners should maintain accurate accounts that are disclosed to themselves and their representatives. Any benefit derived by a partner without the consent of the others in the partnership business must be accounted for. Graw argues that a partner should not carry on a business that gives competition to the partnership without the consent of the others and should pay to the partnership the profit he makes in the business. An assignee of shares in partnership is entitled to receive profits entitled to the assigning partner and must accept the partner’s agreed profits. In case of dissolution, the assignee gets the share of the assigning partner from the date of dissolution by ascertaining.

Brown et al., suggested that a partnership that is in a fixed term can be dissolved by expiry or notice if entered in an undefined term and dissolves on the date mentioned or from the communication date of the notice. A partnership business that indulges in illegal operations when carrying out its business operations is dissolved according to the law because a company is void when it is involved in illegal operations. Macey and Hamilton proposed that a partnership is dissolved by bankruptcy, death, or charge on any partner for his shares in a separate debt. If a partner applies to the court the partnership can be dissolved if it is repealed, a partner is permanently incapable of doing his duties in the contract, is guilty of conduct that prejudices the business operations, if a partner willfully breaches the partnership agreement and when the business can only be carried on a loss. A court may declare it equitable and just for the dissolution of the partnership (Graw).


  1. Graw. An Outline of the Law of Partnerships. 3rd Edition. New York: Thomson Legal & Regulatory Group, 2007.
  2. Halmiton, WR & Macey,RJ. Cases and Materials on Cooporations Including Partnerships and Limited Companies(American Case book). New York: Hard Cover, 2007.
  3. Handy, C. Understanding Organizations. 4th Edition. Penguin Business, 1993.
  4. Kubasek, K N, Brennan, AB & Browne M N. The legal Environment of Business: A Critical Thinking Approach. New York: Hardcover, 2002.
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