Partnership under the 1890 Act
A Partnership under the Partnership Act 1890 Act does not have the benefit of being a separate legal entity. The members are jointly liable for the debts, liabilities, negligence or obligations of the Partnership unlike in LLP’s. This is the case whether it is them or any of their partners who has made the negligent act or not.
As with LLP’s, Partners are held under an implied duty of good faith. This means they must act in the best interests of the firm at all times, be truthful in their actions with the other partners, account for any benefit derived personally out of the partnership and to disclose information to the other partners in relation to any misconduct.
The duty of good faith applies at all times during the partnership, this includes before, during and right through the dissolution procedure.
The duty of good faith will not apply after the retirement of a member, however, the retired party will continue to be liable for any negligent work carried out whilst he was still a partner.
A decision of the majority of the members will not be able to be made without the minority of the members being taken into account. The duty of good faith makes sure that the minority are not rode over roughshod by the majority.
The duty of good faith will also work in reverse for the minority partner who may be forced to offer his shares to the majority partners rather than dissolving the partnership as a whole.
Any actions which are seen to breach the duty of good faith are voidable and the usual remedy in that case would be restitution.
A dissolution can come about by:
- agreement
- order of the court
- the happening of an event such as death
