Partnerships: Agency and Liability PDF

Notarial Academic Training Course The Law and Practice of Companies and Partnerships Topic 13. Agency and L...

Notarial Academic Training Course The Law and Practice of Companies and Partnerships Topic 13. Agency and Liability in Partnerships: Rights, Duties, and Legal Implications Law Training Centre (Kent) All rights reserved. These publications are for the personal use of the individual studying for the relevant qualification and may not be offered for sale to or by any third party.  Topic 13. Agency and Liability in LAW TRAINING CENTRE (KENT) LTD Partnerships: Rights, Duties, The Law and Practice of Companies and Legal Implications Version: 2 Introduction Partnerships can be complex entities with different types of partners, each bearing distinct rights and responsibilities. It is essential to differentiate between partners and employees within a partnership, as they have contrasting roles and legal statuses. This reading delves into the various types of partners, their rights and responsibilities, and the critical distinction between partners and employees in a partnership setting. Partners and employees: A crucial distinction Partnerships have the flexibility to employ individuals, but it's essential to recognise the fundamental distinction between partners and employees: Profit entitlement: Partners typically have a stake in the profits of the firm, whereas employees do not share in these profits. However, partners also bear liability for the firm's debts, which employees do not. Statutory rights: Employees are entitled to specific statutory rights, such as protection against unfair dismissal, which do not apply to partners. Determining whether an individual is a partner, or an employee can be intricate, and there is no one-size-fits-all test. Factors like profit-sharing rights may indicate partnership status. Each case must be evaluated based on its unique circumstances. The Relationship between partners Partnership agreements can set forth express duties and obligations for partners. Additionally, the Partnership Act 1890 introduces implied rights and duties to regulate partner relationships. Notably, partnership agreements are contracts of the utmost good faith (uberrimae fidei), imposing fiduciary duties on partners. Three key fiduciary duties under the Partnership Act 1890 include: 1. Duty to render true accounts: Partners must provide accurate information about partnership matters to other partners or their legal representatives (Section 28). 2. Duty to account for benefits derived: Partners must account for any benefits they gain without the consent of other partners from partnership transactions or property (Section 29(1)). 3. Duty to avoid competition: Partners are prohibited from competing with the partnership's business without consent and must account for profits made in competing ventures (Section 30). Page 1 LAW TRAINING CENTRE (KENT) LTD Topic 13. Agency and Liability The Law and Practice of Companies in Partnerships: Rights, Duties, and Legal Implications Version: 2 The Relationship between partners and third parties The Partnership Act 1890 governs how partners can contractually bind the firm and their co-partners to third parties. Section 5 of the Act defines every partner as an agent of the firm and co-partners for the partnership's business. Partners can bind the firm and co-partners to third parties when acting within their authority and in the usual course of business. However, partners cannot bind the firm or co-partners when they lack authority, and the third party either knows of the lack of authority or does not believe the individual to be a partner. Partnership activities must be within the usual course of business, with distinctions between trading and non-trading firms. Trading firms involve buying and selling goods, while the phrase ‘business of the kind carried on by the firm’ aligns with the concept of the ‘ordinary course of business’. Liability for tortious and wrongful acts Section 10 of the Partnership Act 1890 addresses liability for wrongful acts or omissions of partners within the ordinary course of the firm's business or with their co-partners' authority. Partners and the firm can be vicariously liable for these acts. Notable cases, such as Dubai Aluminium Co Ltd v Salaam, emphasize that even if acts are undertaken unlawfully or without authorization, liability under Section 10 still applies if the act is within the firm's ordinary course of business. However, the extent of liability can depend on the closeness of the connection between the wrongful act and the partner's authorised actions. The liability imposed under Section 10 is joint and several, allowing claimants to pursue each partner individually or collectively until the full amount of loss is recovered. This contrasts with Section 9 liability, which is joint, where all partners are collectively liable for the loss. In conclusion, the legal intricacies of partnerships involve defining partner types, delineating their rights and duties, and distinguishing between partners and employees. Understanding fiduciary duties, agency relationships, and liability for wrongful acts is essential for partners and third parties alike in navigating the complexities of partnership law. Page 2  Notarial Academic Training Course The Law and Practice of Companies and Partnerships Topic 12. Dissolution Law Training Centre (Kent) All rights reserved. These publications are for the personal use of the individual studying for the relevant qualification and may not be offered for sale to or by any third party. LAW TRAINING CENTRE (KENT) LTD Topic 12. Dissolution The Law and Practice of Companies Version: 2 Introduction Dissolution is a crucial phase in the lifecycle of a partnership. It marks the end of the partnership's existence, whether due to mutual agreement or a fixed term expiration. In some cases, dissolution can also occur when one partner leaves, leading to the formation of a new partnership if at least two partners remain. This reading explores the methods of dissolution, including general dissolution and technical dissolution, and their effects on the partnership. Methods of dissolution 1. General dissolution General dissolution is a comprehensive termination of the partnership. It involves winding up the partnership's affairs and settling its accounts. There are various causes of general dissolution as outlined in the Partnership Act 1890 (sections 32 - 44): Mutual agreement: Partners can agree to dissolve the partnership, either informally or as stipulated in the partnership agreement. Notice by a partner: A partner can serve notice for dissolution if allowed by the partnership agreement. Specific power in the agreement: The partnership agreement may grant a partner the power to initiate dissolution. Legislation: Partnerships can dissolve due to events outlined in legislation, such as the death or bankruptcy of a partner, unless otherwise agreed. Misconduct: Fraud, misrepresentation, rescission, or engagement in illegal activities can trigger dissolution. Court order: A court can order dissolution in cases of mental incapacity or other ill-health. Operational loss: If the business can only operate at a loss, dissolution may be necessary. Page 1 LAW TRAINING CENTRE (KENT) LTD Topic 12. Dissolution The Law and Practice of Companies Version: 2 Technical dissolution Technical dissolution occurs whenever there is a change in the partnership's composition. For example, the partnership dissolves when one partner leaves and is replaced by another, or when a new partner joins. In such cases, there is typically no interruption in the partnership's operations, and the ‘new’ partnership takes on the assets and liabilities of the ‘old’ one. Effect of dissolution The effect of dissolution on a partnership depends on whether there is a partnership agreement in place or not. Profits and losses: In the absence of a specific provision in the partnership agreement, the Partnership Act 1890 (section 24) dictates that profits and losses should be divided equally among partners. This can be problematic if the partners have different profit-sharing expectations, such as a part-time partner expecting a pro-rata share or a silent partner contributing more capital seeking a higher profit share. Dissolution and retirement: According to section 26 of the Partnership Act 1890, any partner can dissolve the entire partnership by giving notice to the other partners, effective immediately. This dissolution means that the business halts its operations, assets are realised, liabilities are settled, and any surplus is distributed among the partners. To avoid abrupt dissolution, partnerships often include provisions for an orderly retirement of a partner by requiring advance notice to the other partners. Death: The Partnership Act 1890 mandates that the death of any partner results in the dissolution of the entire partnership. This triggers the realization of partnership assets and settlement of its liabilities. However, if partners wish to continue the business in the event of a partner's death, an express provision must be included in the partnership agreement to ensure continuity. Expulsion: In the absence of a provision to the contrary, section 24 of the Partnership Act 1890 prohibits the expulsion of a partner. This can lead to challenges when dealing with a partner's serious breach of duty, criminal convictions, or disqualification from a compulsory body. In such cases, partners may desire the ability to remove an offending partner, necessitating explicit terms in the partnership agreement. Page 2 LAW TRAINING CENTRE (KENT) LTD Topic 12. Dissolution The Law and Practice of Companies Version: 2 In conclusion, understanding the methods and consequences of partnership dissolution is critical for partners to navigate this phase effectively. A well-drafted partnership agreement can provide clarity, avoid disputes, and ensure a smooth transition in the event of dissolution, whether general or technical. Page 3  Notarial Academic Training Course The Law and Practice of Companies and Partnerships Topic 11. Formation of a Limited Liability Partnership Law Training Centre (Kent) All rights reserved. These publications are for the personal use of the individual studying for the relevant qualification and may not be offered for sale to or by any third party. LAW TRAINING CENTRE (KENT) LTD Topic 11. Formation of The Law and Practice of Companies a Limited Liability Version: 2 Partnership Introduction A Limited Liability Partnership (LLP) is a distinctive form of business entity that combines elements of both partnerships and limited companies. Unlike a traditional partnership, an LLP offers its members limited liability, shielding their personal assets from business debts and liabilities. This reading will delve into the intricacies of forming an LLP, covering essential aspects such as the approved name, documentation requirements, the method of incorporation, and ongoing filing obligations. Approved name The naming of an LLP is a crucial step in its formation. The chosen name must adhere to specific regulations. Firstly, it cannot be identical to the name of an existing LLP. Additionally, it must conclude with either ‘Limited Liability Partnership’ or its abbreviation ‘LLP’. In Wales, an alternative ending is allowed, which includes ‘partneriaeth atebolrwydd cyfyngedig’, ‘pac’, or ‘PAC’. The regulatory framework governing LLP names is rooted in the Companies Act 2006 (CA 2006). Companies House, the registrar responsible for LLP registration, will reject a name under certain conditions. These include if the name implies an offense or is offensive, if it suggests a connection with government or public authorities, or if it contains sensitive words or expressions. The Secretary of State can also establish regulations regarding these matters. Furthermore, the name should not include characters, signs, symbols, or punctuation that are not permitted. Finally, it must not misuse terms like 'limited,' 'ltd,' 'unlimited,' 'public limited company,' or 'plc' in a way that misleads or causes confusion. Documentation The formation of an LLP hinges on the submission of specific documents to the Registrar of Companies, accompanied by the requisite fee, all under an approved name. Section 2(1) of the LLP Act 2000 outlines the key requirements: a) Two or more individuals associated for the purpose of conducting a lawful business with a profit motive must have their names on an incorporation document. b) The incorporation document, or a copy of it, must be submitted to the registrar. c) A statement, made by a solicitor engaged in formation or any subscriber to the incorporation document, affirming compliance with requirement (a). Page 1 LAW TRAINING CENTRE (KENT) LTD Topic 11. Formation of The Law and Practice of Companies a Limited Liability Version: 2 Partnership b) Importantly, making a false statement knowingly or without belief in its truthfulness can result in a criminal offense, punishable by imprisonment, a fine, or both. The incorporation document, as specified in section 2(2) of the LLP Act 2000, must provide essential details. These include the LLP's name, the registered office's location, the office's address, particulars of the initial members, designation of designated members, and a statement of initial significant control. While an express agreement can govern the LLP, it is not mandatory, and the default position, in the absence of an agreement, is set by the Limited Liability Partnership Regulations 2001. Method of incorporation An LLP can be incorporated either electronically or through paper filing. Electronic applications, especially if straightforward, are typically processed within 24 hours, with an option for same-day service at an additional fee. Conversely, paper applications take longer, usually around 5 days for straightforward cases. The application form to be used is the ‘Form LL IN01 Application for the incorporation of a Limited Liability Partnership (LLP)’. This form is divided into several parts, each collecting specific information. Upon successful registration, Companies House issues a certificate of incorporation, containing vital information such as the LLP's name, registered number, date of incorporation, registered office location, and the registrar's signature or seal. Ongoing filing requirements In addition to the initial registration, an LLP has ongoing filing obligations with Companies House, ensuring transparency and compliance with legal standards. These requirements include: 1. Changes to LLP details: LLPs must notify Companies House of any changes in membership using various forms, such as LL NM01 (Change of LLP name), LL AP01 (Appointment of an individual member), and LL AP02 (Appointment of a corporate member). 2. People with Significant Control (PSC): Initial PSC details must be provided on registration, and any subsequent changes must be reported within 14 days using forms LLPSC01-09. Page 2 LAW TRAINING CENTRE (KENT) LTD Topic 11. Formation of The Law and Practice of Companies a Limited Liability Version: 2 Partnership 3. Charges: When creating a charge, an LLP must submit a statement of particulars, a copy of the charge (if applicable), and the necessary fee to Companies House within 21 days, utilising the LLMR01 form. 4. Confirmation statement: An annual confirmation statement, submitted through form LL CS01, is required to affirm the accuracy and currency of information held by Companies House. 5. Annual accounts: LLPs are obligated to file annual accounts with Companies House every year, ensuring financial transparency and accountability. In conclusion, the formation of a Limited Liability Partnership involves several steps and legal requirements, from choosing an approved name to ongoing compliance and reporting. Understanding and adhering to these processes are vital for the successful establishment and operation of an LLP, offering members the benefits of limited liability while engaging in a lawful business with a view to profit. Page 3  Notarial Academic Training Course The Law and Practice of Companies and Partnerships Topic 10. Formation of a Partnership Law Training Centre (Kent) All rights reserved. These publications are for the personal use of the individual studying for the relevant qualification and may not be offered for sale to or by any third party. LAW TRAINING CENTRE (KENT) LTD Topic 10. Formation of The Law and Practice of Companies a Partnership Version: 2 Introduction The formation of a partnership is a flexible and straightforward process, governed by the Partnership Act 1890 in the UK. Partnerships can be established through oral agreements or implied through the actions of individuals carrying on a business together with the intent to make a profit. However, it is advisable to formalise the terms and conditions of the partnership in a written partnership agreement to avoid potential disputes and clarify the rights and responsibilities of each partner. Key provisions of partnership formation 1. Implied Terms in the Absence of a Partnership Agreement In the absence of a written partnership agreement, the Partnership Act 1890 provides default terms that apply to the partnership. These terms include: Equal profit and loss sharing: All partners are entitled to share profits and losses equally, regardless of their capital contribution. Indemnification: The partnership must indemnify each partner for payments made and personal liabilities incurred in the ordinary course of business or for preserving partnership assets. Interest on capital: A partner who contributes more capital than agreed upon is entitled to interest at a rate of five percent per annum. Capital interest: Partners are not entitled to interest on their capital until profits are ascertained. Management participation: Each partner may participate in the management of the partnership. Remuneration prohibition: Partners cannot receive remuneration for their role in the partnership. New partner consent: Introducing a new partner requires the unanimous consent of all existing partners. Page 1 LAW TRAINING CENTRE (KENT) LTD Topic 10. Formation of The Law and Practice of Companies a Partnership Version: 2 Nature of business change: Altering the nature of the partnership's business requires the consent of all existing partners. Access to partnership books: Every partner has the right to access, inspect, and copy partnership books. Contents of a partnership agreement A comprehensive partnership agreement should address the following key aspects: Name of the partnership: If the partnership's name includes the surnames of all partners, no restrictions apply. Other names must comply with the Companies Act 2006 (CA 2006) disclosure requirements. Partnership commencement date: Partnerships can begin through common business activities. The agreement establishes the date when partners agree to the terms. Place of business: Specify the business address and geographic coverage. Nature of business: Describe the primary business activities and any provisions for future expansion or change in direction. Names and roles of each partner: Define each partner's role, such as general partner, fixed equity partner, silent partner, or salaried partner, along with their respective responsibilities and profit-sharing arrangements. Page 2 LAW TRAINING CENTRE (KENT) LTD Topic 10. Formation of The Law and Practice of Companies a Partnership Version: 2 Financial provisions in the partnership agreement Capital contribution: Detail the amount of capital each partner will contribute to the partnership. This forms the basis for calculating interest on capital and ownership percentages. Profit sharing: Specify the ratio or percentage of profits each partner is entitled to. This can vary among partners and should reflect their contributions and roles. Salary: If applicable, outline the salaries paid to partners. Salaries are deducted from profits before profit sharing calculations. Interest on capital: Define the interest rate (usually expressed as a percentage) paid on capital contributions exceeding the agreed-upon amount. Drawings: Set limits on the amount partners can withdraw from the business account, preventing excessive or unauthorized withdrawals. Asset ownership: Allocate ownership percentages for partnership assets, such as property or vehicles. Compliance with the Companies Act 2006 (CA 2006) When selecting a partnership name other than the surnames of partners, CA 2006 regulations apply. These include: Disclosure requirements: Partnership names must be included on business letters, invoices, orders for goods or services, receipts, and written demands for payment of debt. Prominent notice: Display partner names and UK service addresses in a prominent location at the business premises. Restrictions on business names: Business names should not suggest a government or local authority connection, use sensitive words without permission, or include terms like 'limited,' 'Ltd,' 'limited liability partnership,' 'LLP,' 'public limited company,' or 'plc.' Page 3 LAW TRAINING CENTRE (KENT) LTD Topic 10. Formation of The Law and Practice of Companies a Partnership Version: 2 Conclusion The formation of a partnership in the UK is relatively simple, often beginning through informal agreements or common business activities. However, to ensure clarity and avoid future disputes, it is advisable to draft a comprehensive partnership agreement. This agreement should address key elements such as partner roles, capital contributions, profit sharing, salaries, and the use of partnership assets. Additionally, compliance with the Companies Act 2006 regarding business names and disclosure is crucial to avoid legal issues and maintain transparency. A well-structured partnership agreement is a vital tool for partners to outline their rights and responsibilities and create a solid foundation for a successful business venture. Provisions relating to a partner leaving the partnership: Rights, responsibilities and liability Introduction In a partnership, the departure of a partner can significantly impact the dynamics and operations of the business. Whether a partner leaves voluntarily through retirement or is expelled from the partnership, there are specific provisions and considerations outlined in the partnership agreement to address these situations. Additionally, issues such as payment for the departing partner, restraint of trade clauses, arbitration, and the duration of the partnership play pivotal roles in managing partner exits. Moreover, the Partnership Act 1890 defines the legal framework for these scenarios, ensuring clarity in partnership law. Retirement of a partner Retirement is a common way for a partner to exit a partnership. As long as there are at least two remaining partners, the business can continue as a partnership even when one partner retires. Unless the partnership agreement specifies a different procedure, the retirement process involves the departing partner giving notice of their intention to dissolve the partnership. The remaining partners can then reform the partnership. The partnership agreement should clearly outline the procedure for partner retirement, including any financial requirements and restraint of trade provisions. These provisions help manage the exit process and protect the interests of both the retiring partner and the business. Page 4 LAW TRAINING CENTRE (KENT) LTD Topic 10. Formation of The Law and Practice of Companies a Partnership Version: 2 Expulsion of a partner In contrast to retirement, expulsion involves removing a partner from the partnership against their will. The grounds and procedure for expelling a partner should be clearly defined in the partnership agreement. It is crucial to specify the financial obligations and restraint of trade clauses applicable to an expelled partner. The use of an arbitration procedure can also be outlined in the partnership agreement to resolve disputes related to partner expulsion, reducing the need for court litigation. Payment for departing partner Determining the amount payable or the method of calculating payment to a partner retiring from the partnership is a critical aspect of managing partner exits. The partnership agreement should specify the basis for calculating the departing partner's share of the partnership's assets and profits. This provision helps ensure a fair and transparent process for settling financial matters when a partner leaves. Restraint of trade Restraint of trade clauses in the partnership agreement can prevent an exiting partner from engaging in specific activities that might compete with the partnership or harm its interests. These clauses may include: Prohibitions on soliciting or canvassing the partnership's clients. Restrictions on engaging in business with existing clients of the partnership. Geographical area restrictions. Prohibitions on soliciting partnership staff or employing them after leaving the partnership. These provisions protect the business from unfair competition and the departing partner from potential legal issues. Page 5 LAW TRAINING CENTRE (KENT) LTD Topic 10. Formation of The Law and Practice of Companies a Partnership Version: 2 Arbitration Partnership agreements can include provisions specifying the circumstances in which disputes must be resolved through arbitration rather than civil court actions. Arbitration offers a more confidential and efficient way to address conflicts within the partnership. The partnership agreement may also designate an arbitrator, emphasising the importance of arbitration as the preferred method for dispute resolution. Initiating a civil action outside of arbitration can be considered a breach of the agreement. Duration of the partnership By default, a partnership can continue indefinitely unless a specific duration is specified. In cases where the partnership agreement does not set a fixed duration, Section 26(1) of the Partnership Act 1890 allows any partner to dissolve the partnership by giving notice to all other partners. Alternatively, the partnership agreement can include provisions that dictate the conditions under which the partnership continues, such as requiring a minimum number of partners. Agency and types of partners Partnerships can consist of various types of partners, each with different rights and responsibilities. Importantly, partners are distinct from employees. This distinction is crucial because partners have a share in profits and liability for debts, while employees have statutory rights and protections that partners do not possess. The Partnership Act 1890 imposes fiduciary duties on partners, regardless of whether they are explicitly stated in the partnership agreement. These duties include rendering true accounts and full information, accounting for benefits derived from transactions concerning the partnership, and avoiding competing businesses. Liability for wrongful acts The Partnership Act 1890 also outlines liability for wrongful acts of partners. Partners may be liable for tortious or unlawful actions of a partner committed within the ordinary course of business or with the authority of other partners. The Act specifies that both the partnership and individual partners are vicariously liable for these actions. The liability can be in contract, tort, or other fault-based common law or statutory wrongs. Page 6 LAW TRAINING CENTRE (KENT) LTD Topic 10. Formation of The Law and Practice of Companies a Partnership Version: 2 Conclusion Partnership agreements play a pivotal role in managing partner exits, protecting the interests of both departing and remaining partners. Clear provisions related to retirement, expulsion, payment, restraint of trade, arbitration, and the duration of the partnership are essential for a smooth transition. Furthermore, understanding the fiduciary duties imposed by the Partnership Act 1890, as well as the distinctions between partners and employees, is crucial for operating a partnership effectively and ensuring legal compliance. Properly drafted partnership agreements provide clarity, reduce conflicts, and facilitate the orderly continuation of the business when partners leave the partnership. Liability in partnership: Holding out, new partners, and retirements Introduction Partnerships are dynamic entities that often see changes in composition over time. New partners may join, while others retire or leave. These changes raise important questions about the liabilities of partners and how third parties perceive these partnerships. In this reading, we explore the legal aspects of ‘holding out’ in partnerships and discuss the liabilities of new partners and partners who retire or leave the firm. Holding out Section 14(1) of the Partnership Act 1890 (PA 1890) addresses the concept of ‘holding out’ in partnerships. It stipulates that anyone who, by words or conduct, represents themselves or allows themselves to be represented as a partner in a partnership is liable as if they were a partner to any third party who has relied on this representation when extending credit to the partnership. In essence, this section establishes an estoppel principle that prevents the person who held themselves out as a partner (referred to as ‘X’) from denying their partnership status if such representation led a third party to grant credit to the partnership. Page 7 LAW TRAINING CENTRE (KENT) LTD Topic 10. Formation of The Law and Practice of Companies a Partnership Version: 2 To rely on Section 14(1), a third party must establish three key elements: A representation indicating that X was a partner Direct communication of this representation to the third party or through an intermediary The third party's reliance on this representation when extending credit to the partnership. Notably, the third party does not need to prove that they would not have extended credit if they knew the truth. The mere belief in the representation and acting upon it suffices. Liability of new partners Determining the liability of new partners in an existing partnership is not always straightforward. Section 17(1) of the PA 1890 appears to provide clarity, stating that a person admitted as a partner into an existing firm is not liable for anything done before they became a partner. However, complexities arise when examining the timing and nature of the acts in question. For instance, in cases involving single continuous acts, such as the signing of a contract before the new partner's admission but with breaches occurring afterward, the new partner is generally not liable. However, when the contract involves repeated acts or obligations continuing after the new partner's entry, they may be held liable for acts or breaches that occur during their partnership. Liabilities of Partners Upon Retirement When a partner retires from a partnership, their liability for partnership debts and obligations incurred before their retirement persists under Section 17(2) of the PA 1890. However, this is a general rule subject to exceptions. If the partnership's contractual obligations involve single continuous acts that span a period extending beyond the partner's retirement, that partner remains liable for those acts. Conversely, for contracts that require repeated acts, the retiring partner is liable only for acts occurring before their retirement. It's worth noting that a retiring partner may escape liability for debts incurred after their retirement if: The partnership agreement expressly relieves them of such liability. They enter into an agreement with the remaining partners and the third party releasing them from future obligations. Page 8 LAW TRAINING CENTRE (KENT) LTD Topic 10. Formation of The Law and Practice of Companies a Partnership Version: 2 Liabilities following retirement: Third party perspective From the perspective of third parties, Section 36(1) of the PA 1890 holds relevance. It states that if a person deals with a firm after a change in its composition, they can consider all apparent members of the old firm as still being members until they receive notice of the change. In practice, this means that if a retired partner appears to be an active partner, and a third party is unaware of the partner's retirement, the retired partner remains liable to that third party. To avoid such liability, the retiring partner should ensure that the third party is informed of their retirement. This is particularly crucial to protect against debts incurred after the partner's departure. Conclusion Partnerships are subject to changes in composition, and understanding the legal implications of these changes is essential. ‘Holding out’ provisions in the PA 1890 protect third parties who rely on representations of partnership status. The liabilities of new partners depend on the nature of the acts involved, while retiring partners retain liability for pre-retirement obligations, subject to specific conditions. From a third-party perspective, notice of changes in partnership composition is crucial to determining liability. This legal framework ensures that the evolving nature of partnerships is balanced with the protection of the interests of all parties involved. Page 9  Notarial Academic Training Course Law and Practice of Companies Topic 9. Introduction to Partnerships Law Training Centre (Kent) All rights reserved. These publications are for the personal use of the individual studying for the relevant qualification and may not be offered for sale to or by any third party. LAW TRAINING CENTRE (KENT) LTD Topic 9: Law and Practice of Companies Introduction to Partnerships Version: 1 Introduction To start a business as a partnership requires limited procedural formalities. A partnership is created when at least two people start a business together with a view of making a profit. There is no formal process or system of registration, however the individual partners must register with the HMRC as being self- employed. A partnership will invariably choose to have a partnership agreement in place which does not require any set formality. The same cannot be said for Limited Liability Partnerships (LLPs) which each have extensive requirements. In this topics 10, 11 and 12 you will consider: Formation of a partnership Formation of an LLP Relationship between partners, including partners as agents Dissolution of a partnership. Last edited 22-Sept-22 Page 1