Partnership Case Study

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Recommended: Ways in which a business might be structured

QUESTION 1
Determining the right business structure is an integral part of establishing and managing a successful business. The characteristics of each business structure are an important part of determining whether it is the right structure for a wide range of businesses.

Partnerships
Due to its characteristics, many people will choose to conduct business as a partnership. A partnership is defined as a relationship between two or more bodies who have shown that they are carrying on a business in common, with a view of making profit.
Partnerships are a common business structure for mainly small businesses and professional practices such as accountants. This business structure has many advantages for parties wishing to start a business who …show more content…

Partnerships have no separate legal existence, all partners have joint and separate liability to third parties for the actions of other partner(s) this includes debts and other liabilities. This liability is unlimited for all partners and may prove to be a disadvantage when all partners must be liable for the poor decision of one partner, however if a partner performs an action which they do not have the authority to perform, then they may be found to be legally liable for their actions and will be liable to the third party (Collen v Wright (1857) ). In addition to this, differing opinions between partners may make decision making for the business difficult, as partners must ideally agree on decisions for the business and act in good faith so conflict may arise if all partners are not in agreement all of the time. If partners wish to grow their business it may be difficult with this business structure, there is a maximum of 20 partners allowed in a partnership business structure and in order to grow they may have to …show more content…

The facts in this case can be applied to this scenario as the parties went in to business with a view to profit, it is outlined in their agreement that they agreed to share the profits – nothing was mentioned about losses but if the structure is indeed a partnership then losses are shared between the four parties –, it may also be concluded that the parties in this scenario were somewhat concerned with the financial stability of one another because they agreed to pay Charlottes loan back out of the profits of the business although this fact alone is not a strong

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