Notes on Partnerships

1. PARTNERSHIPS

2. Definition of a Partnership
 A partnership consist of two (2) to 20 part
owners engaged in business with a view to
making a profit.

3. Characteristics of
Partnerships
 Partners usually run their business based on
what is written in their partnership deed. In
the absence of this deed, partners make
reference to the British Partnership Act of
1890. This act, among other things, states
that profits and losses are to be shared
equally.
 Agreement on the conduct of the business is
usually by unanimous vote.

4. Characteristics of
Partnerships
 Such businesses should be registered with
the Companies Office of Jamaica who will
require information such as the name of the
business, type of business, names and
occupations of the partners, etc.
 Partners will either share management
functions, agree that one partner should
serve as manager, or employ a manager.

5. Characteristics of
Partnerships
 When a partner leaves or dies, the
partnership is dissolved.
 There are four basic types of partners:
ordinary partners (active or general partners);
sleeping (dormant) partners; limited liability
partners and unlimited liability partners.
There must be at least one ordinary partner in
limited partnerships. Limited partners do not
take part in management.

6. Legal Aspects of
Partnerships
 Partners have a partnership deed which is
normally written up by a lawyer.
 The business should be registered with the
Companies Office of Jamaica.

7. Advantages of a Partnership
 More capital can be raised than in the sole-
trader type business.
 Partnerships are fairly easily formed and
start-up costs are low.
 The business benefits from the varied ideas
and abilities of partners.
 Specialization among managers increases
output.

8. Advantages of a Partnership
 The partnership is a more efficient and more
controlled business than the sole trader.
 The workload can be shared. This allows
partners to be able to take holidays.
 There is limited government interference.
 Partners maintain close contact with
employees and customers.

9. Disadvantages of
Partnerships
 There is unlimited liability for ordinary
partners and for unlimited partnerships.
 There can also be a lack of continuity.
 Disagreements often occur among partners.

10. Disadvantages of
Partnerships
 All partners will lose if one partner makes a
bad decision.
 Capital is still limited since there can only be a
maximum of 20 partners.
 There is a difficulty in finding suitable
partners.