Business law assignment Essay Example | Topics and Well Written Essays - 1000 words

Business law assignment - Essay Example Additionally, the tax rates and reliefs are more favourable. Nevertheless, there are numerous administrative requirements in order to commence trading and companies are subject to strict financial reporting requirements, which can be cumbersome. Another option would be to set up a partnership, which can open up other business opportunities. The Partnership Act 1890 (the Act) regulates partnerships at common law. Unlike sole traders, partners share the business and control, decision making and profit and losses. All partners are jointly and severally liable for debts and â€Å"owe duty of good faith to each other5†. Section 28 of the Act further imposes a statutory duty to account and Law v Law6 determined that the impact of section 29 of the Act was to prohibit secret profits. The Act governs liability of partners and their legal obligations and provides that each partner is equally liable for the business regardless of their share of the ownership. Additionally, depending on the number of partners, partners can terminate and dissolve the partnership at any point resulting in automatic dissolution7. Therefore the main disadvantage of this trading medium is exposure to potential liability for acts of other partners under section 10. The other alternative would be to set up a limited liability partnership (LLP) under The Limited Liability Partnerships Act 2000 (LLPA). The LLP has certain similarities to limited companies and section 1(2) of the LLPA states that an LLP is a separate corporate entity with legal personality separate to its members. Accordingly, the distinct advantage compared to a general partnership is that an LLP can hold land and other assets in its own name, enter intro contracts with its own name and goes further in protecting partners from wrongful acts of other partners8. Moreover, in contrast to a limited liability company, as an LLP does not have any share