Legal Aspects of Business Legal Aspects of Business Tasks based assignment 04-Jan-18

Legal Aspects of Business
Tasks based assignment
04-Jan-18
(Student Details: )

Legal Aspects of Business
Contents
Task 1..............................................................................................................3
Task 2..............................................................................................................6
Section 175...................................................................................................6
Section 176...................................................................................................8
Section 177...................................................................................................8
References.....................................................................................................10
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Legal Aspects of Business
Task 1
There are different modes in which a business can be run in UK and these
include sole trader, partnership, company, LLPs, and limited partnerships.
Each of these business structures have different features, and are marked
with different merits and demerits (Rush and Ottley, 2006). When two or
more people form a business and run it in a common manner, along with
sharing the profits/ losses, a partnership is created. In UK, the partnerships
are governed by the Partnership Act, 1890. Section 1 of this act provides the
definition of partnership, where it is deemed as the relationship present
between individuals who carry on a business for earning profits and this is
done in a common way (McLaughlin, 2015). This discussion is focused on the
four elements of the definition given in this section.
Under section 1 of the governing act, the very first element of partnership is
that it is a relationship which exists between a set of people. A partnership is
not like a company, where owing to the separate legal entity status given to
the companies, the shareholders are treated differently from the company.
In partnership, the partners are not different from partnership and due to
these reasons, the partners can be made liable for the acts of other partners,
and also the partnership can be held accountable for the actions of the
partners of the firm (Morse, 2010). The partnership is created through a
written contract which is known as a partnership deed; however, even in the
absence of a partnership deed, a partnership can be created. A partnership
differs from sole trader due to the requirement of having two or more people
in partnership. A company does have the power of being a member of a
partnership firm, but a company cannot be a partnership owing to the two
being different business structure forms (Jones, 2015).
Partnership involves the business of the firm being carried on by two or a
higher number of people. For the purpose of this point, reliance needs to be
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Legal Aspects of Business
placed on
Joyce v Morrissey [1998] TLR 707, which was a case related to the
famous rock band of 1980s. In this case a dispute had taken place between
the band members in context of profit sharing. The members of the band
never knew that they were creating a partnership as they simply created a
band for performing. However, the court stated that a partnership was
present between them as they were working together in a common manner
for the purpose of earning profits and satisfied the conditions laid down
under the governing act (Cox, 2012). This is an important case in context of
the definition of partnership as it shows that a partnership can be created by
two or more people coming together for a common purpose. This case shows
that a rock band is a partnership for the purpose of the quoted act as was
seen in the case of
Joyce v Morrissey. A key point which has to be noted in
this regard is that the promoters of the company are not given the status of
partners as was seen in
Keith Spicer Ltd v Mansell [1970] 1 All ER 462, even
when the objective of the promotes is to earn profits (Gibson and Fraser,
2014).
As per the definition, the next element is that the business is to be carried
out. Business in this sense covers trade, occupation and profession and is
stemmed from section 45 of the Partnership Act. The act has to be
undertaken in a constant and regular manner in order to be construed as a
business. Thus, an isolated event is not deemed as business being carried on
for the purpose of this section and
Smith v Anderson (1880) 15 Ch D 247 is
an example of this (Cassidy, 2006). Though, when based on the specific
situations in a case, a single event can also be deemed as business being
carried on, and
Mann v D'Arcy [1968] 2 All ER 172 is an example of this
(Morse, 2010).
To further explain the impact of elements given under section 1 of this act,
reference needs to be made to
Khan v Miah [2000] 1 WLR 2123. This case
saw the House of Lords stating that a partnership had been present even
when the partnership was broken up before opening up of the business
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