We dealt with the sole proprietorship business structure the last time. Now, when two or more people come together to form a for-profit business venture; a partnership is formed when the members are directly personally responsible for profit and liabilities.

Partnership, Connectedness, Personal

Remember the business “collaboration” between Pokuwa Donda and Maathai Bundu in our last article. Here is a background to how their business collaboration came about. Pokuwa and Maathai were among the most prominent back benchers during classes in the department of geography. One particular lecturer had frankly stated that they were both going to come to nothing with the unbecoming attitude they displayed towards their academics.

Two, Handsome, Black, Men, Rappers

Upon their graduation, they watched in awe as two students who graduated summa cum laude and magna cum laude respectively got instant job offers from globally recognized institutions. They glanced at their own results and were only able to say thank you laude. Then and there, they decided to come together and do something with their lives. They both decided on a business and started working towards it. Two years down the line, Maathai Bundu started misbehaving. He felt cheated. Once, he stated plainly that Pokuwa Donda had ulterior motives to most of the suggestions he gave regarding the business. They never really saw eye to eye and were in a deadlock from time to time.

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One day, Maathai told his boys to recover some of the assets of the business, together with the most important machinery the business could boast of, and just like that the business collaboration was dissolved.

Pokuwa is perplexed. He never thought he would need a lawyer at all, but here he is on his way to one.  At once, the lawyer explained to him that this business collaboration is indeed a partnership. He told Pokuwa he was sorry that his life savings and for-profit collaboration took a nosedive. In fact, from what the lawyer explained to him, Pokuwa realized that there were a number of things he could have done differently starting from being diligent in choosing a partner.

Typically, Pokuwa and Maathai equally owned the partnership especially because there was no agreement otherwise. This means that the law will presume that they both owned the partnership business equally. This is good news to Pokuwa, as he has a concrete cause of action against his partner who had unscrupulously converted some of the business equipment to his own.

Ordinarily, a partnership should not comprise of more than twenty partners (joint owners) except the profession is that of accountants or lawyers. All partners are individually liable for risks, losses, lawsuits, and all of that. It may be formed informally as Pokuwa and Maathai formed theirs orally; they may also opt to have a paperwork that acts as a guide for the course of their partnership business. Although, opting to have a paperwork is not necessary, it has a lot of benefits! Had Pokuwa and Maathai gone for this option, it would have helped minimize misunderstandings regarding each persons’ rights and liabilities.

This paperwork or partnership agreement will contain all the terms and conditions of the partnership business.

person writing on white paper

The parties will be able to explicitly provide terms as to what they want the duration of the partnership to be, they will also be able to include terms regarding ownership, operation, termination, property protection and the likes.

Now, if you fail to explicitly spell out the terms and conditions that regulate your partnership. Equality is the rule that will bind such partnership. This means that if Maathai decides to incur liabilities via the partnership, at law, both Pokuwa and Maathai will share the liabilities equally. Good thing is, they both get to  share the gains equally too.

Without an agreement otherwise, Maathai can dissolve the partnership at will. This means that he can just up and leave; just as he suddenly decided he was over the partnership.

A foreigner may also decide to partner with a Nigeria in a partnership business located in Nigeria.  If an alien decides to do this, he must comply with all the laws relating to foreign participation in Nigeria based businesses.

Take note that co-owning a real property with another person does not automatically equate to you both being in a partnership of some sort.  Before your relationship will be deemed to be a partnership, both of you must run the same business together (with the intention of doing so) and it must bring in profit.

Also, employees of the partnership are not partners. While partners take out of the profits of the business, employees are entitled to emoluments.

Again, a partnership does not constitute a different legal personality outside of the partners, this means that the partners are answerable to obligations and liabilities that may rear their head in the course of the partnership regardless of whether they agreed to them or not.

Should you want to enter into a partnership with another person? Going in impulsively may end in tears. Although, getting a paperwork done may not be a legal requirement, why not get it done? In fact, prospective partners should spell out every term that is important to them in the partnership. You may want to insert clauses as to the duration of the partnership so that a partner will not wake up and have the partnership dissolved at will, you may also insert clauses that protect your personal properties in the case that you have major assets invested in the business. Upon dissolution, it will be easy for you to take what is yours, if you had inserted a clause to that effect.

To answer the question whether there is truly a partnership. The law has to be looked at as well as the peculiar facts of each case.  A partnership may prove to be a desirous business structure when entered into after due diligence has been done.

So the next in this article series is the REGISTERED COMPANY.

Should you have comments or questions, kindly comment below.


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Hi! I'm Taiwo. I love God! He's like at the center of everything for me. Then, I love people, wierd people, meeting new people and all of that. I hope to travel to every country in THE WORLD and meet new people and experience different cultures! Professionally, I am a Corporate and Commercial Lawyer in Nigeria. I help nurture businesses and non-profit entities from the stage of conception (registration) through obtaining relevant licenses (where applicable), building the right organizational structure, and even obtaining funds via equity and debts. I provide cutting edge business advise tailored towards the vision of the founder(s) in different sectors, particularly emerging technologies. Just because I am more than my profession, I will also be using this space to speak to our souls by publishing truths that can help us all heal, grow together and be whole. Trust me, that’s not all, every now and then, you will stumble on publications that show fashion, art and style. Just fasten your belt and enjoy the ride through my space! Wanna reach out to me? Kindly call me via: 08143817162 or send an email to taiwodamilolalawal@gmail.com.


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