There are many reasons for which people enter into partnerships.
A partnership could be set up for the execution of a particular
project only, or it could be set up for some ongoing business.
Partnerships in Nigeria are regulated by the Partnership Act of
1890 and the Partnership Law 1958 (Western Region).
What is a partnership? Section 1(1) of the Partnership Act
states that a Partnership is the relation which subsists between
persons carrying on a business in common with a view to making
profit. Section 4(1) says that persons who have entered into
partnership with one another are collectively called a firm, and
the name under which their business is carried on is called the
firm-name. Each partner has the power to bind the firm for the
purpose of the business of the partnership, unless the partner is
not acting with the authority of the firm in that particular matter
and the person dealing with the partner knows that the partner has
no authority to deal in that matter and still goes ahead.
The courts in Nigeria have defined Partnership as a legally
recognised organisation structure, an association of a business
owned by two or more people who share the profits and are
personally liable for all business debts. A partnership is a
voluntary association or coming together of two or more persons who
jointly own and carry on a business for profit. A joint venture
akin to partnership is a business undertaking by two or more
persons engaged in a single defined project. For instance, Mr A has
a contract to supply goods to Company X. He does not have the money
to execute the contract. He calls on his friend Mr B to join in the
venture, give him some money and when the contract is performed,
and monies paid, they will share the profit. Will this be
considered a loan from Mr B to Mr A, or is this a partnership? It
will depend on their intentions and agreement, which will more
easily be deciphered through a written agreement. The courts it
seems make a distinction between a partnership and a joint venture,
but the rules are pretty much the same.
Partnership agreements can be oral, written or implied by the
conduct of the parties. It is always a good idea to put the
partnership agreement in writing. Even between a husband and wife
going into partnership in business, it is a good idea to put the
details into a written document. There are instances where you hear
someone say of a woman, “She helped her husband build his company.”
The question is, in what capacity was she “helping”? Was she
helping as a partner in the legal sense, or just doing her bit as a
dutiful wife? When all is well, this question may never arise. But
if, as a result of the business or some other reasons the marriage
packs up, the answer to the question becomes important and if there
is no written agreement, an arbiter will have to wade into all
sorts of extrinsic facts and evidence to come up with an
answer.
A written agreement will state how the parties are to conduct
the business and address issues such as profit and loss sharing,
capital contributions, etc. Where there is a written agreement, it
makes the work of the arbiter easier should a dispute arise. It is
settled law that parties are bound by the contracts that they
voluntarily enter into and must keep to the terms and conditions
contained in the contract. Neither party to the contract can
unilaterally alter the agreement or read into it a term that is not
contained in it. If a dispute arises and the matter gets to court
or before some other arbiter, the terms of the agreement, freely
entered into by the parties, will be treated as sacrosanct. We all
enjoy a freedom to contract on the terms that please us as far as
those terms are lawful and we have the legal capacity to contract.
Faced with a written agreement, the courts will not attempt to
rewrite the terms of a written agreement. The courts will look only
within the written agreement for assistance in interpreting its
terms. Unless one of the parties can show that he entered into the
agreement under coercion, duress, undue influence, mistake or
misrepresentation, he cannot resile from an agreement freely
entered into.
The fact that business partners are married does not in any way
disadvantage the fact that a partnership can be implied by the way
and manner they carry on their business. The law recognises family
partnership. What is important is that the elements of a
partnership are present – (a) an express or implied agreement; (b)
a common purpose; (c) shared profit and losses; and (d) equal voice
in controlling the project.
Every partner is jointly and severally liable with his
co-partner for everything for all debts and obligations of the firm
incurred while he is a partner. Even after death, the estate of a
partner is severally liable for such debts and obligations. It is
important therefore that you go into partnership with someone whose
credibility you can vouch for.
Another good reason to have a written agreement defining the
partnership is to avoid certain presumptions as to the interests
and duties of partners. For instance, without an agreement stating
otherwise, all partners are entitled to share equally in the
capital and profits of the business and must contribute equally
towards the losses whether of capital or otherwise sustained by the
firm. To avoid this, the agreement could state that profits and
losses will be shared in the same ratio as the amount of capital
which each partner put into the business.
As we know, even some good things must come to an end. The law
provides for the ways in which a partnership may be dissolved. A
partnership comes to an end if it was entered into for a fixed
term/purpose by the expiration of that term or conclusion of the
purpose. If it was entered into for an undefined time, any partner
can give notice to the other(s) of his intention to dissolve the
partnership. In that case, the dissolution is effective from the
date mentioned in the notice and if no date is mentioned, then from
the date of the communication of the notice. Subject to any
contrary agreement, a partnership is dissolved on the bankruptcy or
death of one of the partners. Any event which makes it unlawful for
the business of the firm to be carried on or for the members of the
firm to carry it on in partnership will act to dissolve the
partnership. A partnership may also be dissolved by an order of the
court.
There are many reasons for which people enter into partnerships.
A partnership could be set up for the execution of a particular
project only, or it could be set up for some ongoing business.
Partnerships in Nigeria are regulated by the Partnership Act of
1890 and the Partnership Law 1958 (Western Region).
What is a partnership? Section 1(1) of the Partnership Act
states that a Partnership is the relation which subsists between
persons carrying on a business in common with a view to making
profit. Section 4(1) says that persons who have entered into
partnership with one another are collectively called a firm, and
the name under which their business is carried on is called the
firm-name. Each partner has the power to bind the firm for the
purpose of the business of the partnership, unless the partner is
not acting with the authority of the firm in that particular matter
and the person dealing with the partner knows that the partner has
no authority to deal in that matter and still goes ahead.
The courts in Nigeria have defined Partnership as a legally
recognised organisation structure, an association of a business
owned by two or more people who share the profits and are
personally liable for all business debts. A partnership is a
voluntary association or coming together of two or more persons who
jointly own and carry on a business for profit. A joint venture
akin to partnership is a business undertaking by two or more
persons engaged in a single defined project. For instance, Mr A has
a contract to supply goods to Company X. He does not have the money
to execute the contract. He calls on his friend Mr B to join in the
venture, give him some money and when the contract is performed,
and monies paid, they will share the profit. Will this be
considered a loan from Mr B to Mr A, or is this a partnership? It
will depend on their intentions and agreement, which will more
easily be deciphered through a written agreement. The courts it
seems make a distinction between a partnership and a joint venture,
but the rules are pretty much the same.
Partnership agreements can be oral, written or implied by the
conduct of the parties. It is always a good idea to put the
partnership agreement in writing. Even between a husband and wife
going into partnership in business, it is a good idea to put the
details into a written document. There are instances where you hear
someone say of a woman, “She helped her husband build his company.”
The question is, in what capacity was she “helping”? Was she
helping as a partner in the legal sense, or just doing her bit as a
dutiful wife? When all is well, this question may never arise. But
if, as a result of the business or some other reasons the marriage
packs up, the answer to the question becomes important and if there
is no written agreement, an arbiter will have to wade into all
sorts of extrinsic facts and evidence to come up with an
answer.
A written agreement will state how the parties are to conduct
the business and address issues such as profit and loss sharing,
capital contributions, etc. Where there is a written agreement, it
makes the work of the arbiter easier should a dispute arise. It is
settled law that parties are bound by the contracts that they
voluntarily enter into and must keep to the terms and conditions
contained in the contract. Neither party to the contract can
unilaterally alter the agreement or read into it a term that is not
contained in it. If a dispute arises and the matter gets to court
or before some other arbiter, the terms of the agreement, freely
entered into by the parties, will be treated as sacrosanct. We all
enjoy a freedom to contract on the terms that please us as far as
those terms are lawful and we have the legal capacity to contract.
Faced with a written agreement, the courts will not attempt to
rewrite the terms of a written agreement. The courts will look only
within the written agreement for assistance in interpreting its
terms. Unless one of the parties can show that he entered into the
agreement under coercion, duress, undue influence, mistake or
misrepresentation, he cannot resile from an agreement freely
entered into.
The fact that business partners are married does not in any way
disadvantage the fact that a partnership can be implied by the way
and manner they carry on their business. The law recognises family
partnership. What is important is that the elements of a
partnership are present – (a) an express or implied agreement; (b)
a common purpose; (c) shared profit and losses; and (d) equal voice
in controlling the project.
Every partner is jointly and severally liable with his
co-partner for everything for all debts and obligations of the firm
incurred while he is a partner. Even after death, the estate of a
partner is severally liable for such debts and obligations. It is
important therefore that you go into partnership with someone whose
credibility you can vouch for.
Another good reason to have a written agreement defining the
partnership is to avoid certain presumptions as to the interests
and duties of partners. For instance, without an agreement stating
otherwise, all partners are entitled to share equally in the
capital and profits of the business and must contribute equally
towards the losses whether of capital or otherwise sustained by the
firm. To avoid this, the agreement could state that profits and
losses will be shared in the same ratio as the amount of capital
which each partner put into the business.
As we know, even some good things must come to an end. The law
provides for the ways in which a partnership may be dissolved. A
partnership comes to an end if it was entered into for a fixed
term/purpose by the expiration of that term or conclusion of the
purpose. If it was entered into for an undefined time, any partner
can give notice to the other(s) of his intention to dissolve the
partnership. In that case, the dissolution is effective from the
date mentioned in the notice and if no date is mentioned, then from
the date of the communication of the notice. Subject to any
contrary agreement, a partnership is dissolved on the bankruptcy or
death of one of the partners. Any event which makes it unlawful for
the business of the firm to be carried on or for the members of the
firm to carry it on in partnership will act to dissolve the
partnership. A partnership may also be dissolved by an order of the
court.
Read more https://nairalaw.com/partnerships-and-joint-ventures/