What is a partnership? A partnership is a relationship between two or more persons carrying on a business in common with a view of profit.
Strictly speaking, while “persons” is understood in law to include companies, when “partnerships” are being referred to in the business world, the term is usually used to refer to individuals who are doing business together. It is usual to refer to some partnerships, for example, more than one attorney-at-law or accountant working together, as a “firm”.
While case-law has created confusion as to whether the Partnership Act of the UK applies to Grenada, the following generally represents the law relating to partnerships:
About partnerships
- A partnership is created by agreement, whether oral, implied or written. It may become effective immediately or at a date agreed by the partners.
- A partnership may be for a definite period, purpose or for an unspecified period. It may be terminable upon notice or upon the happening of an event, for example, death or bankruptcy of one of them, or upon application to the Court.
- A partner may be active or sleeping.
- Any partner may bind the other partner in relation to the firm’s business unless the person with whom that partner was dealing knew that the partner had no authority to bind the firm.
- A partner may sell and buy goods for the purpose of the partnership business, give discharge for money received from debtors, hire employees for the partnership business, and draw cheques in the usual course of business.
- In some types of partnerships, a partner may also: contract and pay debts; draw, make, sign, endorse, accept, transfer, negotiate and discount negotiable instruments; borrow money, and give partnership assets as security for loans.
- Every partner is jointly and severally liable to a third party for the debts of the firm incurred while he is a partner. After he dies, his estate becomes liable in the same manner, subject to the payment of his own individual debts.
- Partnership property is owned by the firm, not the individuals. It is easy for the distinction to become blurred where individuals use personal property for the business.
- As against each other, a partner:
- Must act in utmost fairness and good faith;
- Must not compete with the firm;
- Is entitled to take part in the management of the partnership business, unless he is a sleeping or salaried partner;
- Is not entitled to any remuneration for his management of the business;
- Can prevent the introduction of a new partner;
- Cannot change the nature of the business without unanimous consent;
- Is entitled to inspect and copy business records;
- Cannot be expelled by a majority of the partners unless a written partnership agreement contained a term to allow this;
- Is entitled to be repaid by the partnership for payments/expenses personally incurred by him for the business of the partnership;
- In the absence of any special agreement, is entitled to share in the profits and losses equally; and
- Can assign his share in the partnership, e.g., by way of security for a loan.
Grenada Bar Association
NOW Grenada is not responsible for the opinions, statements or media content presented by contributors. In case of abuse, click here to report.
