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A group of people carrying on business together, and not incorporated into a registered company (see: Registered company). A partnership is recognized in law, but it does not have strict legal identity apart from its members. Partnership is controlled by the Partnership Act (1890), a stipulation of which is that a partnership is assumed to exist whenever the members of a business share profit, whether they contract to a specific partnership agreement or not. This means that partners are bound by the provisions of the Act by default, not by action.
The Act makes some important provisions with respect to partners. Unless the partners contract otherwise:
- all are entitled to a say in the running of the business;
- all are entitled to enter the partnership into contracts;
- they are jointly liable for debts, and the consequences of torts (see: Tort), to the limits of their own estates. However, some partners can contract to be 'limited partners', with their liabilities covered by the other partners. In exchange for the loss of liability, they also lose their ability to make decisions for the partnership, as outlined in the Limited Partnership Act 1907.
A partnership can be dissolved by the agreement of the partners, or in circumstances set out in the partnership contract. It can also be dissolved by a court. Note that unlike a registered company, the death of any partner dissolves the partnership.