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Partnership scenerio
Chi, Di and Fi formed an ordinary partnership to run an art gallery. Each of them paid £100,000 into the
business. As Fi had no prospect of raising any more money it was agreed between them that her maximum
liability for any partnership debts would be fixed at her original contribution of £100,000. The partnership
agreement specifically restricted the scope of the partnership business to the sale of ‘paintings, sculptures
and other works of art.’ In January 20X0 Chi took £10,000 from the partnership’s bank drawn on its
overdraft facility. She had told the bank that the money was to finance a short-term partnership debt but in
fact she used the money to pay for a holiday. In February Di entered into a £25,000 contract on behalf of the
partnership to buy some books, which she hoped to sell in the gallery.Sir in the above scenerio , is this a limited partnership?
Only if it’s registered as such under the Limited Partnerships Act of 1907
The restriction of one partner’s liability is an internal affair and is of no relevance to any outsider dealing with the firm
OK?
Sir in the above scenario as it is mentioned that Chi, Di and Fi formed an ordinary partnership, but they had limit the liability of Fi till her original contribution of £100,000, so in this scenario, what would we assume that is it an Ordinary partnership OR is it Limited partnership?
Is it registered under the Limited Partnerships Axt of 1907?
If it isn’t and the limitation on Fi’s liability is not therefore public knowledge, then it’s an ordinary partnership with an internal domestic arrangement
If it IS registered under the Act, then it’s a limited partnership
OK?
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