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ACCA Applied Skills · Corporate and Business Law (Global) · Partnerships

Chen, Dalia and Emil run a general partnership under a written agreement which says nothing about admitting new partners. Chen and Dalia wish to admit Farid as a new partner, but Emil objects. Applying the default rules for partnerships, what is the position?

Farid cannot be admitted without Emil's consent. Under the default rules, a new partner needs the agreement of all existing partners because of the personal trust in partnerships. A majority cannot override a dissenting partner unless the partnership agreement expressly allows it.

  1. AFarid is admitted because a majority of the partners agree
  2. BFarid is admitted if Chen and Dalia pay Emil compensation
  3. CFarid cannot be admitted without Emil's consent, as a new partner requires the consent of all existing partnersCorrect
  4. DFarid is admitted but only as a partner with no management rights

Explanation

A partnership rests on mutual trust, so under the default rule no person may be introduced as a partner without the consent of all existing partners. A majority vote is insufficient unless the agreement provides otherwise, and this agreement is silent. Compensation to Emil does not replace his consent.

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