can ‘rat out’ anonymously – rev Canada just wants the cash)ESPOTTEL utilized throughout the law (doesn’t only apply to partnerships), but it gets used in a partnership situation when:Not a partner, but hold you liable (sue you and collects from you) as if you are When person A makes a representation to a third party that something is true. The third part relies on this representation, andthe third party suffers a detriment (damage) as a result of their reliance on the representation. Person A will then be estopped (prevented) from denying the truth of their representation.In some situations it is obviousThe worst case is considered fraudE.g. In the context of partnership there is a partnership of three people. One of the partners decided to leave the partnership, but fails to tell people that he/she has left and it is still on the letterhead, bank accounts etc.†Somebody enters into an agreement with the firm based on the fact that on of the partners has not left, when the payment is not received they want to sue, but there is no money with the remaining partners, therefore they sue saying the guy who left is still a partner (inorder to get the money). This would be partnership by estoppel.Certain things need to be done to end the partnership and cover your ass!Reason that it matters to know that you are in a partnership (although you many not know you are) is LIABILITYPeople don’t really understand the rules of partnership before they enter into it.In come situations people are not allowed to incorporate (i.e. doctors, lawyers and accountants) but even if they can they may be left with the same liability.Be careful who you become partners with because the liability is highPotential Advantages* 1.New admitted partners are not liable for obligations existing prior to their joining.†Novation agreeing to become liable when you take another persons place. This may be a condition of becoming a partner, or it may reduce the price to buy into the business.2.Partnership allows multiple people to carry out common goals together with a set of rules governing their relationship 3 sources of law3.Partnership allows owners to pool knowledge, skills and financial and physical resources.4.Cheaper than incorporation not that important of significant according to Harrison.
Disadvantages * 1. unlimited liability every partner has unlimited personal liability. (like a sole proprietorship, when you sue the business you sue the partners) 2. joint and several liability on each partner. Joint if you sue a partnership you sue all partners immediately. Several One partner has no assets, so the other partner is forced to pay up when sued and you are in charge of getting it back from your partner. (potentially riskier than sole proprietorship) 3. Every partner is an agent of the firm and all the partners for business of the kind carried on by the firm. A partner can take the partnership into a contract > Agent has the ability to bind the principal to a contract. The contract you enter into
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- Summer '14