Masters of Law: Partnership Firm Formation, Agreement & Dissolution

This video presentation provides comprehensive insights into partnership firms. It begins by outlining the process of forming a partnership business, emphasizing the need for an Australian Business Number and business name registration. The presentation then delves into the importance of partnership agreements, advocating for written agreements to clarify capital investment, profit-sharing ratios, and responsibilities, and to serve as evidence in case of disputes. The discussion also covers profit-sharing ratios, explaining how profits and losses are distributed and highlighting the legal assumption of equal distribution when no ratio is specified. Finally, the presentation addresses the dissolution of partnership firms, detailing various scenarios that may lead to dissolution and explaining the payment methods to different parties according to the Partnership Act 1958. The presentation aims to clarify the complexities of partnership firms for the audience.

Video Presentation
Hello everyone! Greetings to all of you! This oral advice has the objective to resolve and
resolve the concerns raised by you. I would discuss the areas and concerns related to
the partnership firms such as the formation of the same, partnership agreement, profit
sharing ratio, and dissolution. Firstly, to resolve one of your basic concerns, which is
regarding the process to form a partnership business, I would like to inform you that it is
an easy business structure which demands two or more persons to be there. The very
first requirement is to obtain an Australian business number that is issued by Australian
Business Registrar. If you want to start the partnership business under your name, there
is no requirement to get the same registered. However, if a business name is there the
same must be registered. In such a case, there is an additional requirement of business
name registration, which is not a very complicated process. Australian Government
provides electronic business registration services. Authority does not register a
business name permanently but partnership firms may do so for either one year or three
years. Businesses have to pay $34 for one-year registration and $80 for three years. It
is advisable to get a registration of three years as is comparatively cost less to firms.
The second necessary thing to do is the determination of aspects related to
administration. Parties would be required to determine their capital investment, profit
sharing ratio, authority, and liability of each partner and other related aspects. Such
aspects may be discussed and decide orally or in a written manner. Such a
document/discussion is named as a partnership agreement. In my opinion, written
agreements are more valid and legal as they work as a piece of evidence at the time of
conflicts. Many times, partners decide terms and conditions mutually in oral mode but
later forgets the same or do not agree on the same point. In such a way, written
partnership agreements have their crucial value where the same may act as a
reference. Many times where matters of the dispute go into court, a written and signed
partnership agreement helps judges to provide a suitable and fair judgment. Another
important reason for that written agreement seems effective and valuable is related to
changes in the same. In case of any further alteration, a written agreement keeps all the

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records that can be used during the settlement of entitlements of parties. These are
some reasons due to that I recommend a written partnership agreement. A general
partnership is not required to be registered anywhere and come into existence merely
by signing the agreement.
Profits and losses are some likely results of business activities. Nevertheless keeping a
positive view is to assume that the business would warn profit, any ration of distribution
is known as profit sharing ratio. Partners are not liable to divide profit and loss equally
among them and the same can be distributed in any ratio. Partners decide such a profit-
sharing ration in their partnership agreement. It is advisable to identify and decide the
profit-sharing ratio. However many times, no ratio is decided between the parties hence
law takes an assumption that an equal ratio exists among the partners where they
entitled to divide profits equally and also liable to divide losses in an equal manner as
well.
You have raised another concern, which is related to the dissolution of the firm where
you want to know how payments are to be made to various parties in such a situation.
In reply to your query, I would like to bring your attention to the various ways in which a
partnership business may be dissolved. For instance, if a partner becomes bankrupt, or
a formal partnership agreement gets expire, one of the partners dies, court issue order
of dissolution and so on. Subject to the partnership agreement, there is a particular
method in which liabilities of business may be paid out. The rules related to the
distribution of assets are given under section 48 of the Partnership Act 1958. As per this
section the deficiencies and losses of the firm shall be paid from profits first, then capital
and at last assets of partners in their profits sharing ratio. Further, the assets and funds
of the firm shall be used to pay those debts and liabilities that are not related to
partners. Afterward the due of partners is to be paid which has not been paid as part of
the capital and which have been paid as capital. Lastly, if even after these payments
and adjustments, something left there, then partners are entitled to divide profits as per
their profit sharing ratio.
I hope that I have resolved all of your confusion and doubts and you have found the
provided information useful.

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Thank you

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