Skip to content

ACCA Applied Skills · Corporate and Business Law (Global) · Corporations and legal personality

Amara and Bruno run a bakery together and have not registered any separate legal entity. They simply share profits equally under an informal agreement. A supplier is owed 40,000 by the bakery business. Which statement best describes the position?

Amara and Bruno are general partners because they carry on business together to share profits. A general partnership has no separate legal personality, so the partners are personally liable for the business's debts, including the supplier's claim, not just the business assets.

  1. AThe supplier can only claim against the business assets because the bakery has separate legal personality
  2. BAmara and Bruno are in partnership and are personally liable for the business debtsCorrect
  3. COnly the partner who placed the order is liable for the debt
  4. DThe supplier must first sue a company that is deemed to exist after one year of trading

Explanation

Two people carrying on a business together with a view to profit are in a partnership, even without a written agreement. A general partnership has no separate legal personality, so partners are personally liable for its debts. The option limiting claims to business assets wrongly gives the bakery a separate legal personality.

Did you get it right without looking?

One question tells you little. A timed set on Corporations and legal personality shows your real accuracy, how long you take and where you lose marks.

Practise Corporations and legal personalityFree diagnostic mock

More Corporations and legal personality questions