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BUSINESS LAW – COMPANY LAW (lecture 7 AND 8) – Business Organisations
Unincorporated: no legal difference between the business and the owner! non-business and business types; does not have a separate legal identity; unlimited
liability; few formalities – flexible, but could lack clarity
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UNINCORPORATED: SOLE
TRADER
*One-person business, commonly
found in trades where only small
amounts of finance are required to
set up
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ST is meant to
inform HM Revenue and Customs re
finance
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*Advantages –lack of formalities;
flexibility; have full control of the
business and enjoy all the profits; can
bring business to an end at any time
without need for formalities
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UNINCORPORATED
ASSOCIATIONS:
PARTNERSHIP
*Association of individuals
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*Each partner is responsible for the
debts of the partnership and therefore
you would need to choose your
partners carefully and draw up an
agreement on the responsibilities and
rights of each partner (Deed of
Partnership or The Articles of
Partnership)
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This
is where a partnership may wish to
raise additional finance, but does not
wish to take on any new active
partners
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–M Young Legal
Associates ltd v Zahid
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Maximum
– none although used to be 20
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*Equity partner (sharing in the profits) – Stekel v
Ellice – have to look at facts and circumtsances to
determine ‘title’

INCORPORATED - LIMITED LIABILITY
PARTNERSHIP (LLP) -The Limited Partnership Act
2000
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They can cease to be members without it
affecting the business (like a shareholder)
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Cannot link your
name to government, bank, etc or similar to an
existing name, or could be subject to passing off
proceedings – Ewing v Buttercup Margarine ltd;
Croft v Day
*Same rule applies with domain name – check with
‘nominate
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*Specific duties- PA 1890 ss28-30 – s28: duty to
disclose (Law v Law); s29: duty to account
(Bentley v Craven); s30: duty not to compete (Don
King Productions Inc v Warren)
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Ending a Partnership
*Expelling a partner (PA 1890 S25) ie express
provision – Bliseet v Daniel; Kelly v Denman –
partners must exercise in good faith
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*Has to be registered at Companies House
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*Advantages – LLP is flexible and no formalities like
partnerships; internal working is private; income tax rather
than corporate tax
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*Members right will cease upon death, agreement with
members, or giving reasonable notice
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*LLPA 2000 and 2009 Regulations – equal share in capital
and profits, indemnity of members, management rights,
payment for participation, introduction of new members,
changes to type of business, availability of books and
records at place of business, provision of accounts and
information, disclosure of any benefit/connections,
expulsion
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NB Novation and buying a company ‘off the shelf’, which
can ratify contracts
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PUBLIC LIMITED COMPANIES – PLC - In order to
start up as a PLC have to have 2 directors and company
secretary, have an allocated share capital of at least £50k;
separate certification of incorporation confirming PLC
status; offer shares to public; shareholders have interest in
value of shares
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*Choosing a name- Part 5 CA 2006 (restrictions) –
ss58/59,ss54/55
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*Formalities a company must comply with – annual
return, audited accounts (criminal offence not to file),
provision of company name and address, filing obligations
with Companies House- change of name/directors
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*Corporate entity – separate legal personality –Salomon
v Salomon & Co; Lee v Lee’s Air Farming
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Along with a
common seal, it is one of features defining a corporation’s
legal existence as a separate from those of its owners
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