General partnership

A buyer may meet a general partnership when buying out a partner or acquiring a business run by partners. Ontario’s Act says the relation between members of an incorporated company is not a partnership within its meaning. This entry cites only Ontario’s Partnerships Act and British Columbia’s Partnership Act. Check the statute of the province whose law governs the partnership.

What the Acts say

Both Acts define partnership as the relation between persons carrying on business in common with a view to profit (British Columbia says “of profit”). Both make a partner an agent of the firm and the other partners for the purpose of the partnership business. Both make partners jointly liable for firm debts and obligations incurred while a partner, subject to each Act’s limited liability partnership rules (subsection 10(2) in Ontario, section 104 in British Columbia). Ontario also says that, subject to any agreement between the partners, a partnership is dissolved by the death or insolvency of a partner.

What to ask

• Whether a written partnership agreement exists and what it says about a partner leaving
• Which debts and obligations the firm incurred, and while which partners were partners
• Whether the deal buys a partnership interest or the firm’s assets

See Is buying into a partnership the same as buying shares?