Formation and dissolution

In this lesson

1. 0:00 How partnerships form and operate
2. 0:27 Written partnership agreements explained
3. 1:12 Types of partners and their liability
4. 2:47 Sleeping and salaried partners
5. 3:46 Partnership Act 1890 default rules
6. 5:37 Partner duties and fiduciary obligations
7. 7:19 How partnerships dissolve
8. 10:14 Asset distribution on dissolution

About this lesson

This is essential knowledge for the Corporate and Business Law paper, where partnership law is a core topic tested in both objective tests and case studies. The video covers how ordinary partnerships are created through formal written agreements or informal arrangements under the default rules of the Partnership Act 1890. You'll understand the critical distinction between general partners (who manage the business and are jointly and severally liable for all debts), sleeping partners (who invest but don't participate), salaried partners (who have limited liability), and fixed share partners. The concept of joint and several liability is explained clearly with practical examples, showing why one partner can be held responsible for another's share of partnership debts if the other cannot pay. You'll also learn the default rights and duties of partners under partnership law, including equal profit sharing, the fiduciary duty of good faith, and restrictions on competing or making secret profits. The lesson then walks through the various ways a partnership can be dissolved—from expiry of a fixed purpose or term, to death or bankruptcy of a partner, legal prohibition, or court order—and explains why a written partnership agreement is crucial to protect yourself in these situations. Finally, you'll see how partnership assets are distributed on dissolution: external creditors are paid first, then partner loans, then remaining capital is returned to partners, with any surplus split according to profit share. Understanding these principles will help you answer partnership law questions confidently across ACCA qualifications.

Duration: 11m