University of Law LLP Agreement Essay

Dear Zac

I have met briefly with Josefina Del Largo who is hoping to set up in business with two friends, Pete Mayland and Mani Raja, designing and manufacturing baby clothes from organic cotton, sourced from sustainable and ethically farmed land. Pete is a CAD (computer aided design) specialist and engineer and will deal with all the technical issues of design and manufacture. Mani has the funds to set up the business and he also owns freehold premises; he owns a large unit on the outskirts of Sheffield which he is prepared to transfer to the business as part of his capital contribution. He also has the contacts in the cotton industry and will source and contract for the cotton. Josefina is the creative heart of the business and will produce all the drawings and colour boards and designs for the clothing to be inputted into the technical process. Pete and Mani have worked together on other projects for many years.

Pete and Mani each have separate legal representation and the details of their solicitors are attached. [Note to candidates: the details are not provided and are not relevant to the question]

Josefina is pregnant and her baby is due in 6 months’ time. She will work from home on her designs and meet the others on a face-to-face basis once a month.

They are planning to incorporate a limited liability partnership shortly and all three will be members. Mani will contribute £2.5 million pounds as capital to start the business, consisting of the unit in Sheffield valued at £1.5 million and the rest in cash. He will work part-time in the business. Pete will work full time in the business but cannot put in any capital at the moment. Josefina will also work full time until her baby is born. She will then need some time off and will return and work 3 days each week. She will put in £500,000 capital.

Josefina wants to ensure that all matters are agreed as soon as possible, and a meeting is planned for next week with the other parties and their solicitors to hammer out a written limited liability partnership (LLP) agreement. A name is yet to be chosen for the business, that is something to be decided at the joint meeting. [Note to candidates: you are NOT required to advise on any issues relating to the choice of name in your answer to Part A]

I am meeting with Josefina tomorrow to discuss what should go in the agreement. It has been agreed that we will prepare the first draft and circulate to all parties in advance of the meeting for their comments and any suggested amendments.

Can you please produce a memorandum for me in preparation for the meeting with Josefina outlining the key matters to be included in the LLP agreement and why?

BUSINESS LAW 1
WORKSHOP 9
Task Grid
LLP PARTNERSHIP AGREEMENT CHECKLIST
Provision
Explanation
Parties
All the members: Ayeleen, Rick, Nyla,
Jana, Rory and Mandla
Definitions
Terms that are used throughout the
agreement (saves repetition), e.g.
Designated Members
Operative part
In an LLP Agreement this will set out the
provisions governing the running of the
business together with the rights,
obligations and duties of the LLP
members
Name and registered office
Details of the name to be used and
address of registered office. An LLP
must be incorporated with a name
ending in LLP and a registered office.
Accounts and banking
How and when the accounts are to be
drawn up and where they are kept.
Annual accounts must be filed in
accordance with the Companies Act and
the members have the right to inspect
them.
Duration of business
Not essential. An LLP has perpetual
succession – it will not be dissolved by
the death or leaving of a partner. – and
will subsist until it is taken off the register
(or struck off). If the partners want it to
subsist for a limited period of time or for
it to be dissolved by a specific event, this
should be specified. [NB if this was a
general partnership this would be crucial
otherwise partnership at will]
Nature of business
Under the default regulations Reg 7(6) any
change to the nature of the business needs
unanimity – so may be useful for the
Document1
1
© The University of Law Limited
agreement to consider both the nature and
how it can be changed
Capital
Profits
Salary
Assets of LLP/LLP Property
Decision making
Duties of members
Commitment/hours of work
Appointment of new members
Retirement/death of partners
Expulsion of partners
Holiday rights/maternity/paternity leave
Boilerplate
Standard clauses which would be
included in all LLP Agreements such as
Law and Jurisdiction, Confidentiality,
Notices, Arbitration etc
Execution block
Signed by all members individually
© The University of Law Limited
2
Document1
Document1
3
© The University of Law Limited