Keenan and Riches’BUSINESS LAW

Part 2Business organisations

140

(iii) All outgoings incurred for or in carrying on the partnership

business and all losses and damages which shall happen or be incurred in

relation to the business are to be paid out of the moneys and profits of

the partnership and if there is a deficiency shall be contributed by the

partners in the shares in which they are for the time being respectively

entitled to the profits of the partnership.

Comment Clause 6(ii) gives the partners power to make regulations as to who may draw

cheques in the name of the firm. In many cases this will be each partner alone, though where

there are more than two partners it is usual to provide that all cheques over a certain amount are

to be signed by at least two of the partners.

7. (i) The initial capital of the partnership shall be a sum of £30, 000 to
   be contributed by the partners in equal shares together with such further
   cash capital (if any) as the partners may from time to time agree to
   be required (in addition to any loan capital) for the purposes of the
   partnership and which shall be provided (except as may from time to time be
   otherwise agreed by the partners) in the proportion in which the partners
   are for the time being entitled to share in the profits of the partnership.

(ii) Five thousand pounds (£5,000) being the agreed value of the goodwill of

the business carried on at10 Sandy Lane, Barchester by the said John Jones

which will be taken over by the said partnership and which shall be

credited in the books of the firm as part of the capital brought in by

the said John Jones.

(iii) The said sum of £30, 000 and any further capital provided by the

partners shall carry interest at the rate of ten (10) per cent per annum to

be payable half-yearly in arrears on 30th June and 31st Decemberor at such other

rate and payable at such other times as the partners shall from time to

time decide.

Comment Unless there is a specific provision, such as the one in (iii) above, interest on capital

is not payable.

8. The partners shall be entitled to the net profits arising from the
   business in equal sharesor such other shares as may from time to time
   be agreed by the partners. Such net profits shall be divided among the
   partners immediately after the settlement of the annual accounts in
   the manner hereafter provided.

Comment Oddly enough, although the 1890 Act says that partners are in business with a view of

profit, it says nothing about dividing profit. This special provision makes the matter of division clear.

9. The control and management of the partnership shall remain in the hands
   of the partners and salaried partners (if any) shall not be entitled to
   take part therein.


10. All agendas and minutes of partners’ meetings and balance sheets and
    profit and loss accounts shall be circulated to all partners.


11. At the close of business on the 31st May in the year two thousand and
    eight and on the same day in each succeeding year the accounts of the
    partnership shall be made up.

Each partner may draw on account of his share of profit to such extent as

may be decided by the partners from time to time.

Capital

Profits

Management

and

control

of the

partnership

Circulation

of

agendas

and other

information

Partnership

accounts

and

partners’

drawings