BUSINESS NAME VS PARTNERSHIP

I got this message from one of my readers on BBM, please read below her question.

If one needs to collaborate with a friend/sister and register a business name in that regard, a business name alone, but something that allows for partnership between both parties, what are the steps required? Help me reframe the question, can i post it on the blog-ASABI

Thank you Asabi ,from your question i can see you want to know the necessary steps to take when starting business with a friend, if business name will be appropriate , partnership or even both. I will be discussing Business name and Partnership, also differentiate between both.

Section 1 of the Partnership Act 1890 defines Partnership as a relationship which subsists between persons carrying on business in common with a view of making profit. The elements of a partnership includes there must be business, must be to make profits, must be carried on by or on behalf of the parties, must be between at least two or more persons.(partnership cannot be formed by one person) two corporations can form partnership.

The fundamental attribute of a corporate personality from which indeed all other consequences flow is that corporation is a legal entity distinct from its members hence it is capable of enjoying right of being subject to duties which are not same as those enjoyed by its members, in the other words it has legal personality and often described as natural persons in contracts with a human being, a natural person immediately a company is required under the Company Act .it becomes a legal person and its members becomes anonymous SALOMOM V. SALOMON that the company is at law different from its subscribers thus the identity of its members is lost unless the veil of incorporation is lifted. Lifting the veil of incorporation will be discussed later.

Partnership, however the Registration of Business Name Act NO.17 1961 does not confer on it legal personality which unless the article of Partnership otherwise provide, a partner has unlimited liability on what is done on behalf of the firm by other partners while liability of the members of a company usually is limited by share and guarantee.

Partnership according to the Company Act a partnership for the purpose of banking shall not consist of more than ten persons but in case of other businesses it shall not consist of more than twenty persons else it becomes illegal association as held in  AKINLOSE & ORS V.A.I.T CO LTD (1961) WNLR 213.

WHO CAN BE A PARTNER?

An infant can enter into partnership unlike registration of company  and the contract shall be binding on him , unless he repudiates the partnership agreement within a reasonable time after attaining full age, an infant in a partnership is not liable for trade debt.

An insane person may become a partner and subsequent insanity does not operate to dissolve the partnership.

Conclusively, i will advise you to register a business name both of you as proprietors , then contact a lawyer to draft a memorandum of understanding stating the terms agreed upon by the parties, these terms include contribution of parties, how to share profit and losses and many more.

Thank You.

Oyenike Alliyu-Adebiyi LLB(hons)BL