Limited Liability Partnerships – interesting type of company

A Limited Liability Partnership is a form of legal business entity, a body corporate with unlimited capacity and with a legal personality separate from that of its members. An LLP does not have directors or

shareholders; it has members who have the benefit of limited liability and has the flexibility of a general partnership. The mutual rights and duties of the members of an LLP are governed by agreement between members.

 
An LLP is formed under the Limited Liability Partnerships Act 2000 and the Companies Act 2006. Other than the subscription by two or more persons, other requirements for the incorporation are that the incorporation document must have been delivered to Companies House along with a statement made by a solicitor or a subscribing member. If the LLP does not start its business within a year from its incorporation or suspends its business for a year, it may be wound up by the court (Insolvency Act 1986).

The main difference between an LLP and general partnerships where partners are jointly and severally liable is that members of an LLP enjoy limited liability up to the amount of any financial contribution to the LLP when referring to the debts of an LLP. The designated members of an LLP can be compared to the director of a company; however their liability is far more restricted and does only extend to private assets in exceptional cases. A member of an LLP can never be held  personally liable for the fault of another member and a member can exclude his liability by including certain terms in the contract with third parties.

Non-competition clauses in Franchise Agreements

The basic position under law is that restrictive covenants in restraint of trade are contrary to public policy and accordingly prima facie unenforceable. The only way they can be enforced is if the protected business can show that they were designed to protect its legitimate business interests and they went no further than necessary to achieve that purpose (Carewatch Care Services Limited v Focus Caring Services Limited).

Commercial agent’s payment on termination according to § 89 German Commercial Code (“HGB”)

The claim for a payment on termination of a commercial agent according to the German Commercial Code can be claimed under certain circumstances even if according to the agreed contract English law is applicable. This is especially interesting because English law does not automatically provide such a payment on termination of a commercial agent.