(Notes) Business Organisations - Unincorporated vs...

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BUSINESS ORGANISATION (Pg 237) Unincorporated vs Corporated entities Unincorporated entities (firms) - sole proprietorships, partnerships, unincorporated joint ventures - unincorporated business entity does not have separate legal entity - Unlimited personal liabilities: rights/liabilities of unincorporated business entity = rights/liabilities of owners Incorporated entities (company/corporation) - Separate legal entity with its own rights and liabilities - Existence separate & independent of people who establish it - Corporation can continue to function even when original founders die Sole Proprietorship (Pg 239) Business owned by single person Not a separate entity Unlimited personal liability: Rights/liabilities of business = sole proprietor The sole proprietorship is not separate from its creator. Personal assets may be seized to satisfy business debts. Registration Business Registration Act BRA S5(1) - the business must be registered under the Business Registration Act. People exempted from act are taxi drivers, licensed hawkers and trishaw riders. Effect of non- registration - amount to an offence & liable to a fine S12(2) BRA - can’t enforce contracts against 3 rd party using unregistered business name S21(1) BRA - 3 rd party can enforce contract against him S21(5) BRA Registration process Registrar can refuse to register name identical/resembles already registered business name or company name S13(1)(b) BRA No proprietary rights Mere registration of business name does not create property rights over that name. Thus sole proprietor who uses business name which infringes upon another person’s proprietary right in that name will not enjoy protection simply because he has registered business name: s12 (3) BRA Dissolution - Dissolved voluntarily: give notice to Registrar of Business within 14 days S15(1) BRA - Dissolved involuntarily: when sole proprietor dies or is made a bankrupt. Evaluation - Sole proprietor not protected or shielded from business debts, thus some risk involved - Ease & low costs in setting up & closing down formalities; relatively simple requirements to maintain
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Partnership (Firm) (Pg 242) Relationship that subsists between persons carrying on business in common with a view for profit S1(1) Partnership Act – a) participation of 2 or more persons (usually max 20) b) carrying on business with c) common objective of generating profits - persons can include companies & other corporate bodies - carrying on business = any undertaking involving sale/supply of goods or services. Also includes every trade, occupation and profession S45 PA - Not separate legal entity - Unlimited personal liability: Rights/liabilities of partnership = partners - Partners personally liable for debt of firm (1) Joint tenancy, tenancy in common, joint property, common property, or part ownership does not of itself create a partnership as to anything so held or owned, whether the tenants or owners do or do not share any profits made by the use thereof.
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