Dealing with a limited partnership in a finance transaction—investigating capacity and authority
Dealing with a limited partnership in a finance transaction—investigating capacity and authority

The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:

  • Dealing with a limited partnership in a finance transaction—investigating capacity and authority
  • Why is it important to understand the acts an LP will perform in a finance transaction?
  • Acts of an LP in a finance transaction
  • Taking security from an LP
  • What is meant by 'capacity and authority'?
  • Investigating the capacity of an LP
  • Investigating the authority of an LP
  • Restrictions on authority to bind the LP
  • Authority of a partner to bind the LP arising by 'holding out'
  • Execution by LPs

This Practice Note considers the acts typically carried out by limited partnerships (LPs) in the context of finance transactions and covers the steps which can be taken to investigate capacity and authority of LPs under English law.

When two or more people are carrying on business with a view to a profit there may be a partnership. A partnership is often the type of body used for small businesses or for professional services.

There are two different types of partnerships in English law—general partnerships and LPs. Each is governed by legislation:

  1. partnerships are governed by the Partnership Act 1890 (PA 1890)—see Practice Note: The nature of a general partnership and its legal framework, and

  2. limited partnerships are governed by the Limited Partnerships Act 1907 (LPA 1907)—see Practice Note: The nature of a limited partnership and its legal framework

For there to be an LP there must first be a partnership with at least one general partner and one limited partner and particulars must be registered with the Registrar of Companies. An LP only exists from the date when the Registrar of Companies issues a Certificate of Registration in respect of it.

Partnerships and LPs are distinct from limited liability partnerships (LLPs) which are corporate bodies established under the Limited Liability Partnerships Act 2000 (LLPA 2000). See Practice Note: