What is a partnership: Introduction
England** and Wales, Northern Ireland
A partnership is, ‘the relation which subsists between partners carrying on a business in common with a view to profit’, s.1 Partnership Act 1890.
Partnerships can be created orally but partners often draw up an agreement in writing called Articles of Partnership, Partnership Agreement or Partnership Deed. This sets down how the partnership is to work and also the rights and obligations of each partner. The agreement can be changed at any time if all the partners agree to do so.
Unlike a limited company (e.g. Marks and Spencer PLC) where shareholders’ liabilities are limited to the fully paid‑up value of their shares, partners are jointly and severally liable for the full value of any partnership debts, unless it is a limited liability partnership (IHTM25094).
Another difference is that partnerships have no separate legal existence of their own, the firm’s name is merely that, it is not a legal entity: e.g. when suing a limited company, you sue the company itself, not the directors or staff. But when you sue a partnership you sue the partners themselves.
If the deceased has an interest in a partnership formed under another jurisdiction e.g. Scotland - refer the case to your manager before taking any other action.
In Scotland the partnership (or firm as it is more correctly referred to in Scotland) is a legal personality distinct from the persons who compose it. The Partnership Act 1890 provides that ‘In Scotland, a firm is a legal person distinct from the partners of whom it is composed, but an individual partner may be charged on a decree or diligence directed against the firm and on payment of the debts is entitled to relief pro rata from the firm and its other members.’ The partnership property is held by all the partners jointly and one of the consequences of this is, that all heritable property belonging to the partnership is moveable in succession since the only right in it which any partner possesses is a mere right to a debt. Moreover, since the firm is a separate legal personality, it has long been held that partnerships may sue and be sued in the firm name.