Are You Thinking Of Buying a Business?
Are you thinking of Buying a Business or taking a Lease of Business Premises with another person? If you are then to avoid future disputes and problems you would be strongly advised to instruct the Solicitor acting for you to purchase the business property as tenant in common rather than beneficial joint tenants In addition we advise that and should instruct that Solicitor to prepare a simple Partnership Agreement between you and that other person. If you do not have a Partnership Agreement and a dispute arises then you will be bound in respect of any partnership created by the terms of The Partnership Act 1890.
In simple terms in the absence of a Partnership Agreement between you and that other person the Partnership Act 1890 will provide that a partnership exists if persons carry on a business in common with a view of profit. A Limited Company is not a Partnership.
If the 1890 Act needs to be used then consideration will need to be given as to whether the business premises were purchased as tenants in common or beneficial joint tenants and whether any profit is shared. There are certain exemptions to this presumption which your Solicitor will be happy to advise you on.
People who have entered into a partnership are called a Firm and the name of the business carried on is the Firm Name.
Each Partner is an agent of the Firm and has the power to bind the other Partner by their actions.
This would cover a situation where the other person pledges the credit of the Firm even if the other person has no knowledge of this.
Each of the Partners in a Firm are jointly severable and liable with the other Partner and any debtor can claim the whole of the debt against one or other person which could mean that you would be responsible for a debt which has arisen within the course of business which the other person had created and of which you had no knowledge.
Where one Partner acting within the scope of his apparent authority within the Firm received money or property belonging to another person and misapplies misuses it then the firm will be liable to make good the loss.
A Court Order could be obtained on an application by the judgment creditor of a Partner to charge the Partner’s interest in the partnership property or profits – this could result in a charge being registered against a Lease of business premises,
These few examples are some of many problems that could be put forward arise should you need to rely on The Partnership Act 1890 in the absence of a Partnership Agreement.
We would therefore advise that on creating or taking over a business with another person you should ensure that your Solicitor is instructed to prepare a Partnership Agreement on your behalf which will record the agreement reached between you and that other person and in that event . You could then rely on that Partnership Agreement in case of a dispute arising rather than having to rely on an Act of Parliament which is 117 years old.
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