Partnership Act 1890

The Partnership Act 1890 codified the law of partnership in the United Kingdom, defining a partnership as ’the relation which subsists between persons carrying on a business in common with a view of profit’. The Act established the legal framework for general partnerships, including the rules for formation, the relations of partners to each other and to third parties, the dissolution of partnerships, and the rights and liabilities of partners. The Act implies terms into partnership agreements unless varied by express agreement, including the rule that partners share equally in capital and profits. The Act remains in force and continues to govern the many businesses that operate as partnerships.

Legal area: Corporate law governs the formation, operation, and dissolution of business organisations, including the rights and duties of directors, shareholders, and other stakeholders.

Citation: Partnership Act 1890 (1890 c 39)

Full text: https://www.legislation.gov.uk/ukpga/1890/39

Key Provisions

• Section 1: Definition of partnership
• Section 4: Meaning of firm (partners collectively called a firm)
• Section 5: Power of partner to bind the firm
• Section 9: Liability of partners (joint and several liability)
• Section 10: Liability for wrongs of partners (tort liability)
• Section 24: Rules as to interests and duties of partners (implied terms)
• Section 32: Dissolution by expiration or notice
• Section 45: Definition of ‘court’ and other interpretive provisions

Significance

The Partnership Act 1890 has survived for over 130 years with minimal amendment, a testament to its clarity and effectiveness. The Act’s implied terms (section 24) provide a default partnership structure that can be varied by express partnership agreement. The Act’s treatment of partnership as an aggregate of individuals rather than a separate legal entity (unlike a limited company) is fundamental to partnership law. The Limited Liability Partnerships Act 2000 created a hybrid structure (LLP) with separate legal personality. The Act continues to govern traditional professional partnerships in law, accountancy, and medicine.