CONTENTS

1. Introduction……………………………………………………………………………02
2. Essential elements of partnership…………………………………………………….02
3. Rights of a partner in partnership business………………………………………….03
4. Responsibilities of a partner in partnership business……………………………….03
5. Law of partnership in Bangladesh……………………………………………………04
6. Law of partnership in United Kingdom………………………………………………04
7. Comparative analysis of the law of partnership of Bangladesh and law of partnership
of United Kingdom……………………………………………………………………...05
I. Similarities of the law of partnership in Bangladesh and the law of partnership
in United Kingdom……………………………………………………………...05
II. Dissimilarities of the law of partnership in Bangladesh and the law of
partnership in United Kingdom………………………………………………..06
8. Limited liability partnerships in the United Kingdom……………………………….07
9. Conclusion………………………………………………………………………………08

BIBLIOGRAPHY & REFERENCES ……………...........................…………………09

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Law of Partnership: A Comparative Analysis between the Laws of Bangladesh

And the United Kingdom

Introduction: Partnership is a legal relationship between two or more individuals who come
together for the purpose of carrying out a lawful business with a view to sharing profit. The
business shall be operated either by all or any of them performing on behalf of all.1 In Bangladesh,
the law governing the partnership business is the Partnership Act, 1932. Whereas, in United
Kingdom the laws related to partnership are Partnership Act, 1890, Limited Partnerships Act, 1907
and Limited Liability Partnerships Act, 2000.

Essential elements of partnership: The essential elements of partnership are:

1
https://businessjargons.com/partnership.html

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  Contract for Partnership: A partnership is the result of a contract or agreement
between two or more persons. It is neither the result of operation of law nor it can
be inherited.

 Association of Two or More Persons: A partnership is an association of two or

more persons. Here person includes both natural and legal persons. A minor cannot
be a partner of a firm but he can take the benefits of partnership.

 Carrying on of Business: The partnership firm must carry on some business

including any trade, profession or occupation for the purpose of earning profit. The
main goal of partnership firm is to gain profit from the business carried by the
partners of the firm.

 Profit Sharing: Sharing of profit arising out of the partnership business is one of
the basic features of a partnership firm. If there is no sharing of profit between the
partners, there exists no partnership at all.

 Mutual Agency: From the definition of partnership, we find that the partnership
business should be carried by all the partners or any of the partner on behalf of the
all. This is called contract of mutual agency. Every partner is both a principle and
agent of the other partners.2

Rights of a partner in partnership business:

 Taking part in the conduct of the business;

 Expressing opinion regarding partnership business;

 Sharing profits of the business;

 Accessing the books of accounts;

2
https://www.toppr.com/guides/business-laws/the-indian-partnership-act/elements-of-a-
partnership/#:~:text=Elements%20of%20a%20Partnership%201%20%5D%20Contract%20for,carrying%20on%20so
me%20business.%20...%20More%20items...%20

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  Earning interest on capital;

 Retiring and sharing subsequent profit post retirement;

 Ownership of firm’s property;

 Not to be expelled from the partnership etc.3

Responsibilities of a partner in partnership business:

 Rendering true accounts and full information;

 Covering up for any loss caused by the fraud;
 Working for a maximum common interest;
 Being accountable for any personal profits earned by the partners;
 To work diligently in the conduct of the firm’s business;
 To use the property of the firm for the business purpose only etc.4

Law of partnership in Bangladesh: In Bangladesh, the law which is governing partnership

business is the Partnership Act, 1932. A partnership is defined as the relation between persons who
have agreed to share the profits of a business carried on by all or any of them acting for all which
is said under section 4 of the said Act. This Statute does not demand written partnership agreement
between the partners to establish a partnership firm. A partnership firm does not also required to
be registered, however an unregistered partnership firm has a number of limitation regarding
enforcing its rights in any court. A partnership is considered as a separate legal identity in
Bangladesh only if the partnership is registered. There must be a minimum of 2 partners and
maximum of 20 partners in a partnership firm.

3
https://www.preservearticles.com/business/rights-duties-and-liabilities-of-partners/1862

4
https://www.yourarticlelibrary.com/accounting/partnership-account/partnership-definition-rights-and-duties-of-
partner/54055

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Law of partnership in United Kingdom: United Kingdom partnership law regulates the way that
partnerships are formed or governed within the United Kingdom. Depending upon where the
partnership was formed, English law, Scots law or Northern Irish law may apply in addition to
statutes that create a framework across the UK. Under Scots law a partnership is a separate legal
entity and can borrow money from a bank in the name of the partnership, while English law only
allows borrowing in the names of individual partners. Partnership is a form of business association,
which arises automatically when people carry on business with a view to earning profit
(Partnership Act, 1890, s.1). Partners are jointly and separately liable, just as they own the property
in common. A limited partnership, under the Limited Partnerships Act, 1907 may have sleeping
partners, who if they do not take part in any business administration will not be responsible more
than their investments (s 6). A ‘partnership’ under the Limited Liability Partnerships Act, 2000 is
now regarded a separate legal person (s.11) with limited liability (ss. 1 and 14), though it is
regarded as a partnership for tax, and is not subject to so much regulation as would be a company.
There must be at least two partners.

Comparative analysis of the law of partnership of Bangladesh and law of partnership of

United Kingdom: The law governing the partnership firms in Bangladesh is the Partnership Act,
1932. On the other hand, the laws governing the partnership firms in United Kingdom are
Partnership Act, 1890, Limited Partnerships Act, 1907 and Limited Liability Partnerships Act,
2000.Thelawsofthesetwocountriesbothhavesomesimilaritiesanddissimilarities.

Similarities of the law of partnership in Bangladesh and the law of partnership in United
Kingdom:

 Number of minimum member: According to both the law of partnership of Bangladesh and
United Kingdom, the minimum number of partners needed to form a partnership firm is two.

 Contractual relation: In both the countries, partnership is a contractual relation between the
partners. There must be an agreement by the partners who want to form a partnership. The
agreement may be in writing or it can be made orally. A partnership is the result of a contract

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 or agreement between two or more persons. It is neither the result of operation of law nor it can
be inherited.

 Purpose of forming partnership firm: According to both the laws, the purpose of forming
partnership firm is to carry on a business to gain profit. If there is no business to gain profit,
there exists no partnership at all.

 No limited liability: Both the statutes of these two countries provide unlimited liability of the
partners. A partner is jointly and separately liable for the debts of the others; there is no limited
liability.

 Management and earning profit: Every partner is empowered to take part in the operation
and get an equal share from the profit earned from the partnership business.

 Implied authority: Both in Bangladesh and United Kingdom, there exist risk of implied
authority. In Bangladesh, partners of a business firm are bound by the work of other partners.
This is also true in case of general partnership under Partnership act, 1890 in the United
Kingdom.

 Mutual Agency: In both the countries under the Partnership Act, 1932 and Partnership Act,
1890, we find that the partnership business should be carried by all the partners or any of the
partner on behalf of the all. This is called contract of mutual agency. Every partner is both a
principle and agent of the other partners.5

 Partnership at will: The Partnership Act, 1932 and Partnership Act, 1890 provides provisions
regarding partnership at will. If there duration is fixed by the contract of the partnership or no
determination of the partnership given in the partnership agreement, it is called partnership at
will.

Dissimilarities of the law of partnership in Bangladesh and the law of partnership in United
Kingdom:

 Statutes: In Bangladesh, the only law governing partnership firms is the Partnership Act,
1932. On the other hand, In United Kingdom, the laws governing partnership firms are

5
ibid

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 Partnership Act, 1890, Limited Partnership Act, 1907 and Limited Liability Partnerships
Act, 2000.
 Types of Partnership: In Bangladesh, there exists only one type of partnership: general
partnership. In United Kingdom, there exists three types of partnership: general partnership,
limited partnerships and limited liability partnerships. A limited partnership consists of
consist of at least one general partner and one limited partner. A limited liability partnership
is one where the liability of partners are limited.
 Separate legal entity: In Bangladesh, there is no separate legal entity of the partnership
firms apart from its members. In United Kingdom, under Partnership Act, 1890 there is no
separate legal entity of the partnership firms apart from its members, but under Limited
Liability Partnership Act, 2000, a partnership firm is a separate legal entity apart from its
members.
 Maximum number of members: In Bangladesh, the maximum number of members of
partnership firm is 20 and 10 in case of banking business. But in United Kingdom, there is
no maximum number of member is fixed.
 Need of incorporation: In Bangladesh, partnership firms are not necessarily be registered.
But in United Kingdom under both Limited Partnership Act, 1907 and Limited Liability
Partnership Act, 2000 registration or incorporation is a must to run business.
 Liability: In Bangladesh, liability of the partners of a partnership firm is unlimited. On the
other hand, under Limited Partnership Act, 1907 the limited partner and under Limited
Liability Partnership Act, 2000 the liability of the partners are limited to the extent of their
respective share.

Limited liability partnerships in the United Kingdom: The concept of limited liability
partnership is introduced in United Kingdom in 2000 through the Limited Liability Partnership
Act, 2000. It is a hybrid system of corporation and partnership. Under this Act, Limited Liability
Partnership is a separate legal entity from its members. This type of partnership must be
incorporated. The members of an LLP are not jointly and separately liable for the actions of
another member.

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Conclusion: The Partnership Act, 1932 is a law which was legislated in the British reign was
influenced by the British Partnership Act. In the passage of time, the British Partnership Law has
been developed but not the Law of partnership of Bangladesh. To encourage the partnership business
in Bangladesh the limited liability partnership should be introduced.

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BIBLIOGRAPHY & REFERENCES

Ballentine, on Corporation Ed. 1947

Singh, Avtar: Company law, 16th Ed.2009

John Whittaker and John Machell QC: The Law of Limited Liability Partnerships, (4th edn,
Bloomsbury Professional 2016), 688pp., hardback, ISBN: 9781784510763
526504852

Chan, Stephen: A Practical Guide to Partnership Law in Scotland, (W Green 2018), 250pp,
hardback, ISBN

https://www.lawdepot.co.uk/law-library/faq/partnership-agreement-faq-united-
kingdom/#.Xzo4x7puLIU

https://thelawreviews.co.uk/edition/the-public-private-partnership-law-review-edition-
6/1225149/united-kingdom

http://en.banglapedia.org/index.php?title=Partnership_Business

The Partnership Act, 1932

Partnership Act, 1890

Limited Partnership Act, 1907

Limited Liability Partnership Act, 2000

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