# Partnership law overview

> **Key takeaway:** PA 1890: business in common with view of profit; mutual agency; unlimited liability defaults. Agreement can vary many internal rules. LLP 2000: separate personality + limited liability. Get terms in writing.

- **Jurisdiction:** England & Wales
- **Practice area:** Commercial
- **Last reviewed:** 2026-08-04
- **Interactive page:** https://kttclegal.info/library/notes/Commercial/partnership-law-overview
- **Keywords:** partnership, Partnership Act 1890, LLP, joint and several liability, dissolution, partners, Limited Liability Partnerships Act 2000, business in common

## What is this about?

General partnerships under the Partnership Act 1890 remain a common business form: partners share profits, agent for each other, and usually unlimited liability. LLPs under the Limited Liability Partnerships Act 2000 offer separate legal personality with partnership-like internal flexibility.

## What is the core rule?

A partnership is the relation between persons carrying on a business in common with a view of profit (PA 1890 s.1). Partners are agents of the firm and jointly (and for some obligations jointly and severally) liable for debts. Property and fiduciary duties among partners are governed by the Act and any partnership agreement. Dissolution follows notice, expiry, illegality, or court order on statutory grounds. LLPs are bodies corporate with members; internal relations are largely contractual/default regulations, with limited liability for members subject to personal guarantees and wrongdoing exceptions.

## What are the elements or test?

1. Partnership or LLP or company?
2. Is there a partnership agreement governing profit share and expulsion?
3. Authority of a partner to bind the firm?
4. Dissolution and winding-up accounting?
5. LLP: members' agreement and designated members' duties?

## Which authorities matter?

- **Partnership Act 1890** — Foundational statute for general partnerships.
- **Limited Liability Partnerships Act 2000 and LLP Regulations** — LLP corporate partnership vehicle.
- **Khan v Miah [2000] 1 WLR 2123** — House of Lords on when a partnership begins — view of profit, not necessarily trading commenced in a formal sense.
- **Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48, [2003] 2 AC 366** — Vicarious liability of partnerships for partner wrongs in certain contexts.

## How does this apply in practice?

Default PA 1890 rules are often unsuitable — written agreements are essential. Tax and regulatory status differ from companies. Pair with agency and fiduciary notes.

## What are common pitfalls?

- Informal 'partnerships' without clarity on liability
- Assuming limited liability without LLP/company incorporation
- Missing holding-out liability to third parties
- No expulsion/retirement provisions causing deadlock

## When would a practitioner use this?

Business formation advice; partner disputes; conversion to LLP/company.

## Quick reference

PA 1890: business in common with view of profit; mutual agency; unlimited liability defaults. Agreement can vary many internal rules. LLP 2000: separate personality + limited liability. Get terms in writing.

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*Reference material from [KTTC Legal](https://kttclegal.info/), not legal advice. Work product supports instructing solicitors and barristers under their supervision. England & Wales.*