Publication
Horizon Scanning: Investigations and Enforcement
In this horizon scan, we focus on key developments affecting companies operating in the UK, including in light of the recent change in UK government.
United Kingdom | Publication | April 2021
A joint venture may take many forms with more or less formality. Whilst it is common for joint ventures to be incorporated (with shares in a special purpose private limited company being held by the joint venture participants), this form is not universally used.
In some cases or at the early stage of a collaboration where the viability of the joint venture’s business proposition remains to be validated, the parties may prefer the relative simplicity of a contractual joint venture.
A point to watch in the context of a contractual joint venture is the inadvertent creation of a partnership under the Partnerships Act 1890 (PA 1890).
S.1 (1) PA 1890, states that ‘Partnership is the relation which subsists between persons carrying on a business in common with a view of profit’. Taking each element in turn:
Factors which may be taken into account to determine the existence of a partnership include:
It is a mixed question of law and fact whether the conditions set out in PA 1890 are satisfied and it is for a person seeking to establish a partnership to prove that such a relationship exists.
The label given to an arrangement will not necessarily be conclusive and so a statement in a contractual joint venture agreement that it is not intended to create and does not constitute a partnership, may not be definitive.
If a partnership is established, the key consequence is that the liability of the partners is unlimited and they have joint and several liability for:
Whilst a partnership does not have separate legal personality, some obligations arise with respect to partnership business, for example, it has obligations to file tax returns in respect of the tax obligations of the partnership such as employment tax or VAT.
Although the parties to the venture may agree cross indemnities between them in respect of the potential risks of a partnership, the effectiveness of these in the event of a third party claim obviously depends on the credit strength of the contracting parties.
If the commercial imperative dictates a contractual joint venture rather than any other legal form of joint venture, practical steps to minimise or mitigate against the risk of a partnership arising under PA 1890 may include:
Publication
In this horizon scan, we focus on key developments affecting companies operating in the UK, including in light of the recent change in UK government.
Publication
As you begin planning for the upcoming financial year, it is likely that legal operations projects are on your radar. However, securing the necessary budget can be challenging. Our roundtable on October 1, ‘Preparing for FY2025 - Building a compelling business case’, will help you create compelling business cases for your legal initiatives.
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This briefing is an updated version of our briefing first published in December 2017 and sets out some practical pointers for employers who wish to make changes to a pension scheme which may fall within the statutory definition of a “listed change”.
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