for the debts of the firm can arise even where profits are
not shared, as in the case of salaried partners and con-
sultant partners who receive a salary or fees. A ruling of
the Court of Appeal in M Young Legal Associates Ltdv
Zahid Solicitors (a firm)(2006) is to the effect that it is
not necessary to share profits before the legal status of
partner, at least in the context of debt liability, can be
established under the definition in s 1 of the Partner-
ship Act 1890 which states that the partners must be in
business ‘with a view of profit’ but says nothing about
sharing the profits. Becoming a partner by estoppel (see
below) is a different way in which a person can come to
be regarded as a partner (see further p 116 ). Others
may be liable by estoppel or under the definition as in
M Young Legal Associates Ltd vZahid Solicitors (a firm)
(2006) (above).
It is normally necessary for the partners to make a
contract called a partnership agreement which is often
in writing because it then provides a good record of
what was agreed about the business. However, writing is
not necessary; a verbal agreement will do and, indeed, a
partnership can in some cases be inferred from conduct.
For example, if A acts as if he were the partner of B he
may become one in law, at least to a creditor who has
relied on the apparent situation, even though there is no73Chapter 4 Classification and survey
of types of business
organisation
Learning objectives
After studying this chapter you should understand the following main points:
■the different types of business organisation, including advantages and
disadvantages;
■the nature and consequences of the use of juristic personality in relevant
organisations;
■methods of financing the organisations and the securities a lender may
require;
■the publicity requirement placed on relevant organisations in terms of
public disclosure.Classification of business
organisationsThe private sector
A business can be run in what is called the private sector
of commerce and industry through any one of three
types of business organisation. These are given below.
The sole trader
This means going it alone with a one-person business.
You can own all the assets and take all the profits of the
business but suffer all its losses and have all the problems
and worries.
The partnership – generally
There are three types of partnership that can be used as
a business vehicle.
1 An unlimited partnership
You can share the losses (if any) and the problems and
worries with a partner or partners but of course the
profits must also be shared. This is certainly the case
with what are called full or equity partners; but liability