Partnership and Agency Law
The law governing partnerships (general and limited), limited liability partnerships, and the agency relationships through which businesses act.
Introducere
Partnership and agency together govern how businesses other than companies act and are bound. The Partnership Act 1890 defines a partnership as 'the relation which subsists between persons carrying on a business in common with a view of profit'. The Limited Partnerships Act 1907 and the Limited Liability Partnerships Act 2000 add specialised forms. Across them all, the law of agency determines when a partner (or other agent) can bind the firm — through actual, apparent, or usual authority, and through ratification. Agency also governs the relationship between principals and their employees, brokers, solicitors, and other intermediaries.
In Brief
A partnership is a relationship between persons carrying on a business in common for profit (Partnership Act 1890 s.1). Each partner is an agent of the firm (s.5) and binds the firm for acts within the firm's ordinary business. LLPs and limited partnerships modify the basic structure — LLPs grant limited liability and separate personality; limited partnerships have unlimited general partners alongside passive limited partners.
Principii fundamentale
Definition of partnership — Partnership Act 1890 s.1.
Partners are agents of the firm (s.5) and bind the firm for acts in the ordinary course of business.
Actual authority (Hely-Hutchinson v Brayhead) vs apparent (ostensible) authority (Freeman & Lockyer v Buckhurst Park Properties).
Usual authority — Watteau v Fenwick (heavily criticised; rarely relied on today).
Ratification — the principal adopts an act done by an agent who lacked authority at the time (Bolton Partners v Lambert).
LLP — separate legal personality with limited liability (LLP Act 2000); partners (members) generally do not have personal liability for LLP debts.
Limited Partnership — at least one general partner with unlimited liability and one or more limited partners (Limited Partnerships Act 1907); cannot take part in management.
Statute cheie
Partnership Act 1890
Limited Partnerships Act 1907
Limited Liability Partnerships Act 2000
Cazuri de referință
Khan v Miah
[2000] 1 WLR 2123
Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd
[1964] 2 QB 480
Hely-Hutchinson v Brayhead Ltd
[1968] 1 QB 549
Watteau v Fenwick
[1893] 1 QB 346
Hurst v Bryk
[2002] 1 AC 185
Tann v Herrington
[2009] EWHC 445 (Ch)
Frequently Asked Questions
What's the difference between an LLP and a limited partnership?
An LLP (Limited Liability Partnership Act 2000) is a separate legal person with limited liability for all members. A limited partnership (Limited Partnerships Act 1907) is not a separate legal person; it has at least one general partner with unlimited liability and one or more limited partners who cannot take part in management on pain of losing their limited status.
Can a partnership exist without a written agreement?
Yes — the Partnership Act 1890 governs relationships that fit s.1 even where no written deed exists. Default profit-sharing, decision-making, and dissolution rules apply unless varied by the partners' agreement. A written deed is strongly advisable for any partnership of substance.
When is a partner personally liable for the firm's debts?
In a general partnership, every partner is jointly liable for the firm's debts and obligations incurred while they are a partner (s.9). They may also be liable for the wrongful acts of co-partners committed in the ordinary course of business (ss.10–11). In an LLP, members are not personally liable for the LLP's debts (LLP Act 2000 s.1(4)).
What is apparent (ostensible) authority?
A representation by the principal that the agent has authority to act on its behalf, on which a third party reasonably relies. Even without actual authority, the principal is bound. The leading case is Freeman & Lockyer v Buckhurst Park Properties.
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