There are two types of partnerships, unlimited and limited liability partnerships.
A partnership is the relationship between two or more people carrying on a business together with a view to making profit. It is always best that when starting up a partnership that all partners draw up a 'Deed of Partnership' is governed by the Partnership Act 1980.
'Unlimited' partnerships are the most common and are neither incorporated nor registered. Unlike a company, an unlimited partnerships has no separate legal identity. For the purposes of legal transactions or litigation, only the members of a partnership can employ people, own property, enter into contracts or be sued.
'Unlimited' partnerships have unlimited liability, and partners are regarded as being liable both ' jointly and severally'. This means that partners are regarded as liable for transactions or contracts entered into by any of the partners. The personal assets of a partner may be seized to pay off debts incurred in the course of the partnership business. Similarly, all aprtners may be held responsible for one partner's negligence.
A limited liability partnership is governed by the Limited Liability Partnership Act 2000. This allows the creation of a new legal entity known as a Limited Liability Partnership (LLP). However, with regards to insolvency, an LLP is treated very similarly to that of a limited company. LLP's are required be reigistered with Companies House and adhere to the provisions of the Insolvency Act 1986.