This page mainly applies to England and Wales. Scotland and Northern Ireland may have different rules — check the jurisdiction before relying on this information.
Last amended by Limited Liability Partnerships Act 2000 in 2000. Created LLPs as an alternative to traditional partnerships with limited liability.
Independent editorial summary — not the official statute text. Read the official version on legislation.gov.uk.
Summary
The Partnership Act 1890 provides the default legal framework for partnerships in England & Wales. It defines partnership, sets out the rights and duties of partners, and governs the dissolution of partnerships. Its provisions apply unless varied by agreement between the partners.
Key Points
- Partnership defined as 'the relation which subsists between persons carrying on a business in common with a view of profit' (s.1)
- Every partner is an agent of the firm and the other partners (s.5)
- Partners share profits equally unless agreed otherwise (s.24)
- Partners are jointly liable for the firm's debts (s.9)
- A partner must account for private profits derived from partnership business (s.29)
- Partnership dissolves on notice, death, or bankruptcy of a partner (ss.32–34)
- Partners have a duty of utmost good faith to each other
- Partnership defined — business carried on in common with a view of profit (s.1)
- Partners are agents of the firm and each other (s.5)
- Joint and several liability for firm's obligations
- Default rules — equal sharing of profits and losses, no salary, mutual rights of management
- Good faith — duty of utmost good faith between partners (s.28-30)
- Dissolution by notice, death, or illegality
Parts & Sections
Amendments History
2000 — Limited Liability Partnerships Act 2000
Created LLPs as an alternative to traditional partnerships with limited liability.
Frequently asked questions
- How does the Partnership Act 1890 define a partnership?
- Under the Partnership Act 1890, a partnership is defined as the relation which subsists between persons carrying on a business in common with a view of profit. This definition establishes the fundamental legal relationship between the individuals involved in the joint business activity.
- What is the legal status of a partner regarding the firm?
- According to the Act, every partner acts as an agent for the firm and for the other partners specifically for the purpose of the partnership's business. This agency status allows partners to bind the firm in transactions conducted within the scope of the business.
- How are profits and losses shared in a partnership by default?
- Unless the partners agree otherwise, the default rule under the Act is that profits are shared equally among all partners. Similarly, losses are shared equally, and partners do not receive a salary for their work in the partnership by default.
- Who is responsible for paying the debts of a partnership?
- Partners are jointly and severally liable for the firm's debts and obligations. This means that the firm's creditors can pursue any individual partner for the full amount of the debt, not just their proportional share, unless limited by specific legal structures like an LLP.
- What events can cause a partnership to dissolve?
- A partnership can be dissolved by notice given by a partner, upon the death of a partner, or if a partner becomes bankrupt. Additionally, dissolution may occur if the business becomes illegal. These events trigger the winding up of the partnership affairs.
- What duties do partners have towards each other?
- Partners owe each other a duty of utmost good faith. This includes the obligation to account for any private profits derived from the partnership business. Partners must act honestly and in the best interests of the firm and their fellow partners.