Partnerships
A general partnership arises whenever two or more people carry on a business in common with a view of profit, often without any documentation. SQE1 tests the default rules of the Partnership Act 1890, partners' liability and how a partnership ends.
What "Partnerships" covers
- A partnership exists where persons carry on a business in common with a view of profit (s.1 PA 1890); no writing or registration is required.
- Each partner is an agent of the firm and of the other partners for the business (s.5), so acts done in the usual course bind the firm.
- Partners are jointly liable for the firm's debts and obligations (s.9) and jointly and severally liable for wrongs committed in the ordinary course (ss.10-12).
- The s.24 default terms apply unless varied by agreement: equal share of profits and losses, no interest on capital, no salary, and no partner may be expelled by majority.
- Bringing in a new partner or changing the nature of the business requires unanimous consent (s.24(7)-(8)); ordinary matters are decided by majority.
- Partners owe each other fiduciary duties: to render accounts (s.28), account for private profits (s.29) and not to compete with the firm (s.30).
- A person leaving must give notice to existing customers and public notice in the Gazette to avoid continuing liability by holding out (ss.14, 36).
Key cases & statutes
The authorities and provisions most likely to matter for this subtopic:
How it's tested in SQE1
SQE1 uses single best answer questions: a short factual scenario, one precise question, and five options of which only one is the best answer on the law applied to the facts. For partnerships, expect to be asked what the correct legal position is, what a party may or must do, or which outcome follows — with more than one option looking arguable. Reading the facts carefully and eliminating the near-misses is the skill that earns the mark.
Where candidates lose marks
- Assuming a written agreement exists — the s.24 defaults govern unless and to the extent the partners have agreed otherwise.
- Confusing liability under s.9 (joint) for debts with joint and several liability for wrongs (s.12).
- Overlooking the need for an outgoing partner to give both actual and Gazette notice (s.36) to cut off holding-out liability.
Learn this subtopic in the course
A video lesson, notes and exam-style practice on partnerships.
FAQ
Is partnerships tested on SQE1?
Yes — partnerships is part of the SQE1 Business Law and Practice syllabus (FLK1) and can appear in single best answer questions.
How is partnerships examined in SQE1?
SQE1 tests it by application: you're given a realistic scenario and choose the single best answer from five options. The focus is on using the law correctly, not reciting it — knowing the leading authorities (s.1 Partnership Act 1890, s.5 Partnership Act 1890) helps.