Uni of Law 2018/2019
Business Law & Practice Prep & Workshop Notes
Workshop 1: Partnerships
Prep Task 1: Is there a Partnership?
There is no intention in the definition of partnership so you get partnerships forming involuntarily.
Is there a partnership or not?
S1 PA 1890: ‘partnership is the relation which subsists between persons carrying on a business in
common with a view of profit’.
- They’re making managerial decisions (Representatives from each company meet on a
quarterly basis to discuss progress and to take decisions affecting future development
strategy)
- Common objective: to develop, produce and distribute speech recognition technology.
- Share profit: The parties propose to share any profits of the new venture which may arise as
a result of the production and sale of the products, or the sale/licensing of any intellectual
property that may arise from the development stage of the project, in proportion to their
initial capital contributions.
- Does it matter that they are not making a profit atm? No. “The view of profit” means you
don’t need to have a profit just look to making it.
- Sharing of capital contributions: Yes, looks like a business in common. It’s the beginnings of
the business, you’re not just discussing an idea we’re putting money in.
Business in common: Mayson is working with Donaldson plc (“Donaldson”) and Enrichment Limited
(“Enrichment”) on a project to develop speech recognition technology.
NB:
S.2(2) sharing of gross returns does not create partnership in itself
S.2(3): the receipt by a person of a share of profits of a business is prima facie evidence that he is a
partner in the business.
Thus, it is a partnership.
What if they are not a partnership:
- The running of the business is segmented each part of company has its own area of
expertise.
- Mayson could argue that his involvement is less than involvement of others, atm they are
not that involved in early stages.
Joint ventures can be a company or partnership.
What should they have done?
They should have come right from the beginning and drafted a partnership agreement.
Note even if the agreement says there is no partnership till a certain time does not stop the
operation of section 1 PA 1890. Many have a starting date in the agreement but again this is not a
determining factor.
1
Business Law & Practice Prep & Workshop Notes
Workshop 1: Partnerships
Prep Task 1: Is there a Partnership?
There is no intention in the definition of partnership so you get partnerships forming involuntarily.
Is there a partnership or not?
S1 PA 1890: ‘partnership is the relation which subsists between persons carrying on a business in
common with a view of profit’.
- They’re making managerial decisions (Representatives from each company meet on a
quarterly basis to discuss progress and to take decisions affecting future development
strategy)
- Common objective: to develop, produce and distribute speech recognition technology.
- Share profit: The parties propose to share any profits of the new venture which may arise as
a result of the production and sale of the products, or the sale/licensing of any intellectual
property that may arise from the development stage of the project, in proportion to their
initial capital contributions.
- Does it matter that they are not making a profit atm? No. “The view of profit” means you
don’t need to have a profit just look to making it.
- Sharing of capital contributions: Yes, looks like a business in common. It’s the beginnings of
the business, you’re not just discussing an idea we’re putting money in.
Business in common: Mayson is working with Donaldson plc (“Donaldson”) and Enrichment Limited
(“Enrichment”) on a project to develop speech recognition technology.
NB:
S.2(2) sharing of gross returns does not create partnership in itself
S.2(3): the receipt by a person of a share of profits of a business is prima facie evidence that he is a
partner in the business.
Thus, it is a partnership.
What if they are not a partnership:
- The running of the business is segmented each part of company has its own area of
expertise.
- Mayson could argue that his involvement is less than involvement of others, atm they are
not that involved in early stages.
Joint ventures can be a company or partnership.
What should they have done?
They should have come right from the beginning and drafted a partnership agreement.
Note even if the agreement says there is no partnership till a certain time does not stop the
operation of section 1 PA 1890. Many have a starting date in the agreement but again this is not a
determining factor.
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