Information Technology Law, Electronic Commerce, Illegal Use of the Internet & Acceptable Usage Policies for Internet and Email-the Essentials

information-technology-law

Information technology law covers a very diverse range of topics for businesses and consumers alike in Ireland.

It ranges from data protection to electronic commerce to illegal use of the internet to acceptable usage policies for employees’ use of the internet and email in the workplace.

This article attempts to provide an overview of these areas but do bear in mind that it can only be a brief overview.

However, whether you are a business or consumer or employee hopefully it will point up areas of potential breach of rights and/or obligations so that you can avoid them or seek redress where appropriate.

Electronic Commerce

The Electronic Commerce Regulations 2003

These regulations implement an EU directive which covers the whole area of electronic commerce and the provision of services and goods online.

A key feature is that once a provider of these goods or services is established in a member state of the EU he is entitled to provide his goods/services into any other member state. Nevertheless in Ireland our common law rules regarding the formation of contracts will continue to apply.

Country of origin principle

This states that providers of goods/services will only have to comply with the rules of the country in which those service providers are established.

Information before contract

One of the principle effects of the Regulations is the list of information which must be provided by businesses operating online. This list includes

  • The name of the business
  • The address where established
  • Details of the business including email
  • Details of how people can elect not to receive unsolicited commercial communications
  • The trade register applicable to the business, if the business is registered on a trade register
  • Any supervisory/regulatory authority governing the industry
  • Vat no. of business
  • Prices must be shown clearly and unambiguously

Internet law has a huge impact on internet marketing and the various laws surrounding how we communicate by email and other electronic forms in our marketing efforts.

Rules re emails/direct marketing

All commercial communication should be clearly identified as such

  1. The sender should be clearly identified
  2. Details about how the recipient can register their choice re unsolicited communication should be provided
  3. Promotional offers should be clearly identifiable as such
  4. Competitions and/or games should have their rules of participation clearly accessible

Internet law also requires that other information and the steps taken to communicate are done within certain boundaries….

Other information required re electronic contracts

  • The steps needed to be taken to conclude the contract
  • The means for correcting input errors before placing the order
  • Whether the concluded contract will be filed by the service provider
  • However this does not apply when the contracts are concluded exclusively by email.

Procedures to be followed when contracting online with consumers

When the order is placed by the consumer the supplier should acknowledge it’s receipt without delay by electronic means.

The order and acknowledgment are deemed to have been received when the party to whom it is addressed is able to access it. It is not a defence to refuse to open email when you know it contains acceptance of an offer for example.

European Communities (distance contracts) 2001

This is of enormous significance for any business which provides goods/services by means of distance communication which includes selling on the internet, digital tv, mail order, telephone, tv, radio and newspapers and magazines.

This legislation provides most significantly for a cooling off period allowing the consumer the opportunity to cancel the contract.

These regulations do not apply to

  • Auctions
  • Vending machines
  • Contracts in connection with property.

The distance communication must be the only method of communication with the consumer for these regulations to apply-if a face to face meeting was involved then the regulations do not apply.

A contract will not be enforceable against the consumer unless all of the information outlined above in the Electronic Commerce Regulations 2003 is provided.

In addition details must be provided to the consumer of

  • The main characteristics of the goods/services
  • Price
  • Delivery costs if any
  • Arrangements for payment, delivery
  • The right of cancellation
  • The period for which the price remains valid.

A distance contract will not be enforceable against a consumer unless the consumer has been provided with a written confirmation of the information outlined above.

Written confirmation must be provided during the performance of the contract.

Cooling off period

The consumer has a right to a cooling off period of 7 days during which he can cancel without giving a reason.

If the confirmation obligations have not been complied with then the cooling off period is extended by up to 3 months.

However the consumer’s right to cancel does not apply..

  • For services if performance has already commenced with the consumer’s agreement
  • Goods/services which are subject to change in the financial market
  • For perishable or customised goods
  • For newpapers, magazines and periodicals
  • For audio or video recordings or computer software which was unsealed

If the consumer exercises his right to cancel during the cooling off period then he is entitled to a reimbursement even if the condition of the product is perfect. This is unique in consumer legislation.

The supplier must execute performance of the contract within 30 days and inertia selling is prohibited.

Inertia selling is a demand for an unsolicited product or service.

A person who fails to comply with these regulations will be guilty of an offence and can be fined up to €3,000

These regulations are obviously of enormous importance to internet sellers and must also be read in conjunction with other consumer protection legislation which is covered in this website including sale of goods and supply of services legislation, misleading advertising legislation, unfair contracts and defective products legislation.

Liability of Internet Service Providers

Internet law also lays down rules in respect of internet service providers.

An ISP is not liable for the information it transmits where it is merely acting as a conduit for such information (But the ISP must be passive in this regard)

ISPs are also excluded from liability regarding hosting of websites when the information is provided by third parties. However the ISP will not be excluded from liability when they know that the information being hosted concerns unlawful activities.

ISPs are also exempt from being sued re breach of copyright where they cache information which is copyrighted.

Defamation

The Electronic Commerce Act 2000 makes it clear that the normal rules of defamation apply to information transmitted online and published on websites. However they may have a defence if they are unaware that the material published is defamatory; once on notice of the defamation though they will have no defence.

For this reason it is prudent for website owners to utilise well drafted limitation and exclusion of liability clauses and incorporate them into their standard terms and conditions.

Child pornography

The main act dealing with this issue is The Child Trafficking and Pornography Act, 1998 (amended in 2004).

This act is very broad and wide ranging and even covers ‘depictions of children’ with no need to prove that the images are actually children.

For this reason website owners must make provisions in their terms and conditions to ensure that contributors to blogs, chat rooms etc are aware of this and should be forced to scroll down through the terms and conditions and signal acceptance before being allowed to post comments, material etc.

Illegal use of the internet

1) Hacking-difficult to prosecute but The Criminal Damage Act 1991 makes provision for this.

2) The Criminal Damage Act 1991 covers damage to property and property includes data; damage can include altering, corrupting and erasing data.

3) It also covers the offence of threatening to damage property so even an unsuccessful hacker can be charged under this section.

4) Another section covers the situation where a person has in their possession the means to hack-again they may be charged under this section even though they have caused no damage to data.

5) The act also includes an offence of unauthorised access and this offence relates only to computer crime.

The act also provides very extensive powers to search and arrest under this legislation.

The Criminal Justice (Theft and Fraud Offences) Act 2001 can also be used to prosecute as it provides that it is an offence to use a computer to make a gain or cause a loss to another. This is an example of our ordinary legislation being amended to accommodate the reality of internet law in the 20th century.

Harvesting

This is the operation of collecting email addresses for the purposes of spamming. This clearly is in breach of the Data Protection act 1988 and 2003.

If the data harvested is not personal data it is conceivable that the harvesting may be an offence under the Criminal Damage Act, 1991.

Other offences which may occur include Framing, trade mark infringements when using meta tags, linking to other sites which may breach copyright of the site to which you link. If in doubt consult your solicitor.

Electronic Commerce Act, 2000

This law will not apply to the sale of land or wills which must still be evidenced in writing. This act makes a distinction between electronic signatures and advanced electronic signatures.

This act also recognises that electronic communications, signatures and contracts cannot be denied legal effect simply because they are in this form. However the parties must consent to the information being provided in electronic form for it to have full legal recognition.

Electronic signature

This can include your name typed at the end of an email or a scanned version of a handwritten signature. Generally this type of signature has the same effect as a hand written signature.

Advanced electronic signature

This is uniquely linked to the signatory, created by means under the sole control of the signatory and linked to the data in such a way that any subsequent change of the data is detectable.

Managing employess access to email and internet

Internet law also plays a role in how we manage our employee’s access to internet and email. And there is a tension between internet law and a person’s human rights, it has been held in the UK.

Employment law

You as an employer can face difficulties when it comes to the use of the internet and email by your employees. A range of problems can arise such as

1) employees abusing companies email for personal gain
2) emailing confidential information out of the organisation
3) employees viewing unsuitable content and making unauthorised use of the company’s computer system.

You as an employer can face a tough balancing act between allowing employees reasonable access to email and internet and inappropriate use. emails sent by employees can often cause offence and possibly result in legal action against you by the recipient or offended person.

The commercial reality for you as an employer is that you can not afford to ban employees use completely and it can be useful and efficient to let employees do their personal banking online for example.

The Employment Equality Act defines sexual harassment very widely and because an employer is liable for acts done by it’s employees in the course of their work it can create difficulties for you as an employer and perhaps legal action by an aggrieved party if your employees send emails which sexually harass or bully.

There is also the possibility of a recipient of an email receiving an email that he considers blasphemous.
This too is covered under the Employment Equality legislation and could be considered to be discrimination.

Acceptable Usage Policy

For these reasons you need to have an acceptable usage policy for your employees when it comes to their use of the internet and email.

If you accept that the reality of the situation nowadays is that you will not prevent your employees use of the internet then your Acceptable Usage Policy should cover issues such as to what extent email usage can take place for private purposes…..

  • Can you as an employer access and intercept and review all messages which are sent and received on the computer system?
  • Is internet surfing prohibited?
  • Are outgoing emails on behalf of the company vetted be senior staff?

Because that email could bind your company contractually.

  • Have you a policy for the opening of external emails?….Because they can contain harmful viruses which can threaten your computer system.
  • Have you advised your staff about the possibility of breaching somebody elses copyright by retransmitting or copying their documents or software?
  • Are your employees informed that the downloading of obscene or pornographic material can be a criminal offence?
  • Will your acceptable usage policy set out the procedures and penalties for breach of your policy?
  • If you decide to monitor employees usage is it justifiable and not excessive?

Because if it is over the top you could be held in breach of your employee’s human rights as happened in a 2007 case Copland v United Kingdom.
In this case the European Court of Human Rights held that a college had violated an employee’s human rights by the way in which it monitored her use of the telephone.

It has been held by the courts that phone calls from business premises have rights of privacy.

The important point about your acceptable usage policy is that you have the consent of your employees.

In Ireland the Data protection commissioner is of the view that it is necessary to get the express(in writing) consent of your employees if you wish to monitor their emails.

It is worth remembering that your company’s electronically stored information can be used in evidence in legal proceedings.

And remember that just because you have deleted the files or emails does not actually mean that they do not exist…..Because they can be dragged back up from your computer by computer experts.

You need to accept that without an acceptable usage policy and a prior written warning it is unlikely that you can dismiss an employee for unauthorised usage of your computer.

But a possible exception to this general rule is the use of the computer to download pornography…….especially Child porn.
The Child Trafficking and Pornography Act 1998 contains such severe penalties that if you as an employer are aware that this is happening you should refer the matter to the Gardai.

Conclusion

You should consider drawing up an acceptable usage policy for your employees.

The balancing of your rights as an employer with the employees rights as human beings needs to be carried out by a suitably qualified legal professional.

Related topics that may also concern you include data protection law in Ireland and having an acceptable usage policy for employees’ use of the internet and email .

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Residential Letting Agreements in Ireland-An Overview

residential-letting-ireland

The Residential Tenancies Act, 2004 applies to every dwelling which is the subject of a tenancy, subject to some exceptions.

The most important exceptions are

  • a dwelling let for holiday purposes
  • a dwelling within which the landlord resides
  • a dwelling within which the spouse, parent or child of the landlord resides.

In fact, there are nine categories of dwelling not covered by the Residential Tenancies Act, 2004 which are set out in section 3(1) (subsection 2) of the Act:

(2) Subject to section 4 (2), this Act does not apply to any of the following dwellings—
(a) a dwelling that is used wholly or partly for the purpose of carrying on a business, such that the occupier could, after the tenancy has lasted 5 years, make an application under section 13 (1)(a) of the Landlord and Tenant (Amendment) Act 1980 in respect of it,
(b) a dwelling to which Part II of the Housing (Private Rented Dwellings) Act 1982 applies,
(c) a dwelling let by or to—
(i) a public authority, or
(ii) a body standing approved for the purposes of section 6 of the Housing (Miscellaneous Provisions) Act 1992 and which is occupied by a person referred to in section 9 (2) of the Housing Act 1988 ,
(d) a dwelling, the occupier of which is entitled to acquire, under Part II of the Landlord and Tenant (Ground Rents) (No. 2) Act 1978 , the fee simple in respect of it,
(e) a dwelling occupied under a shared ownership lease,
(f) a dwelling let to a person whose entitlement to occupation is for the purpose of a holiday only,
(g) a dwelling within which the landlord also resides,
(h) a dwelling within which the spouse, parent or child of the landlord resides and no lease or tenancy agreement in writing has been entered into by any person resident in the dwelling,
(i) a dwelling the subject of a tenancy granted under Part II of the Landlord and Tenant (Amendment) Act 1980 or under Part III of the Landlord and Tenant Act 1931 or which is the subject of an application made under section 21 of theLandlord and Tenant (Amendment) Act 1980 and the court has yet to make its determination in the matter.

Residential Tenancies Act 2004

Part 2 of the Residential Tenancies Act, 2004 is divided into 2 chapters. Chapter 1 deals with the landlord’s obligations and chapter 2 deals with the tenant’s obligations.

Landlord’s Obligations

Section 12 sets out the landlord’s obligations:

12.—(1) In addition to the obligations arising by or under any other enactment, a landlord of a dwelling shall—
(a) allow the tenant of the dwelling to enjoy peaceful and exclusive occupation of the dwelling,
(b) subject to subsection (2), carry out to—
(i) the structure of the dwelling all such repairs as are, from time to time, necessary and ensure that the structure complies with any standards for houses for the time being prescribed under section 18 of the Housing (Miscellaneous Provisions) Act 1992 , and
(ii) the interior of the dwelling all such repairs and replacement of fittings as are, from time to time, necessary so that that interior and those fittings are maintained in, at least, the condition in which they were at the commencement of the tenancy and in compliance with any such standards for the time being prescribed,
(c) subject to subsection (3), effect and maintain a policy of insurance in respect of the structure of the dwelling, that is to say a policy—
(i) that insures the landlord against damage to, and loss and destruction of, the dwelling, and
(ii) that indemnifies, to an amount of at least €250,000, the landlord against any liability on his or her part arising out of the ownership, possession and use of the dwelling,
(d) subject to subsection (4), return or repay promptly any deposit paid by the tenant to the landlord on entering into the agreement for the tenancy or lease,
(e) notify the tenant of the name of the person, if any, (the “authorised agent”) who is authorised by the landlord to act on his or her behalf in relation to the tenancy for the time being,
(f) provide to the tenant particulars of the means by which the tenant may, at all reasonable times, contact him or her or his or her authorised agent,
(g) without prejudice to any other liability attaching in this case, reimburse the tenant in respect of all reasonable and vouched for expenses that may be incurred by the tenant in carrying out repairs to the structure or interior of the dwelling for which the landlord is responsible under paragraph (b) where the following conditions are satisfied—
(i) the landlord has refused or failed to carry out the repairs at the time the tenant requests him or her to do so, and
(ii) the postponement of the repairs to some subsequent date would have been unreasonable having regard to either—
(I) a significant risk the matters calling for repair posed to the health or safety of the tenant or other lawful occupants of the dwelling, or
(II) a significant reduction that those matters caused in the quality of the tenant’s or other such occupants’ living environment,
(h) if the dwelling is one of a number of dwellings comprising an apartment complex—
(i) forward to the management company, if any, of the complex any complaint notified in writing by the tenant to him or her concerning the performance by the company of its functions in relation to the complex,
(ii) forward to the tenant any initial response by the management company to that complaint, and
(iii) forward to the tenant any statement in writing of the kind referred to in section 187 (2) made by the management company in relation to that complaint.
(2) Subsection (1)(b) does not apply to any repairs that are necessary due to the failure of the tenant to comply with section 16 (f).
(3) The obligation under subsection (1)(c) does not apply at any particular time during the term of the tenancy concerned if, at that time, a policy of insurance of the kind referred to in that provision is not obtainable, or is not obtainable at a reasonable cost, by the landlord in respect of the dwelling.
(4) Subsection (1)(d) applies and has effect subject to the following provisions:
(a) no amount of the deposit concerned shall be required to be returned or repaid if, at the date of the request for return or repayment, there is a default in—
(i) the payment of rent and the amount of rent that is in arrears is equal to or greater than the amount of the deposit, or
(ii) compliance with section 16 (f) and the amount of the costs that would be incurred by the landlord, were he or she to take them, in taking such steps as are reasonable for the purposes of restoring the dwelling to the condition mentioned in section 16 (f) is equal to or greater than the amount of the deposit,
(b) where, at the date of the request for return or repayment, there is a default in the payment of rent or compliance with section 16 (f) and subparagraph (i) or (ii), as the case may be, of paragraph (a) does not apply, then there shall only be required to be returned or repaid under subsection (1)(d) the difference between the amount of rent that is in arrears or, as appropriate, the amount of the costs that would be incurred in taking steps of the kind referred to in paragraph (a)(ii).
(5) For the avoidance of doubt, the condition in subsection (1)(g)(i) is satisfied if, after all reasonable attempts, the landlord or his or her authorised agent could not be contacted to make the request concerned.

In addition to the above obligations, the landlord is also prohibited under section 14 from:

14.—(1) A landlord of a dwelling shall not penalise a tenant for—
(a) referring any dispute between the tenant and the landlord to the Board for resolution under Part 6,
(b) giving evidence in any proceedings under Part 6 to which the landlord is a party (whether the tenant is a party to them or not),
(c) making a complaint to a member of the Garda Síochána or to a public authority in relation to any matter arising out of, or in connection with, the occupation of the dwelling or making an application regarding such a matter to a public authority, or
(d) giving notice of his or her intention to do any or all of the things referred to in the preceding paragraphs.
(2) For the purposes of this section a tenant is penalised if the tenant is subjected to any action that adversely affects his or her enjoying peaceful occupation of the dwelling concerned.
(3) Such action may constitute penalisation even though it consists of steps taken by the landlord in the exercise of any rights conferred on him or her by or under this Act, any other enactment or the lease or tenancy agreement concerned if, having regard to—
(a) the frequency or extent to which the right is exercised in relation to the tenant,
(b) the proximity in time of its being so exercised to the tenant’s doing the relevant thing referred to in subsection (1), and
(c) any other relevant circumstances,
it is a reasonable inference that the action was intended to penalise the tenant for doing that thing.
(4) This section is without prejudice to any other liability (civil or criminal) the landlord may be subject to for doing a thing prohibited by this section.

Tenant’s Obligations

A tenant’s obligations are set out at section 16 of the Act:

16.—In addition to the obligations arising by or under any other enactment, a tenant of a dwelling shall—
(a) pay to the landlord or his or her authorised agent (or any other person where required to do so by any enactment)—
(i) the rent provided for under the tenancy concerned on the date it falls due for payment, and
(ii) where the lease or tenancy agreement provides that any charges or taxes are payable by the tenant, pay those charges or taxes in accordance with the lease or tenancy agreement (unless provision to that effect in the lease or tenancy agreement is unlawful or contravenes any other enactment),
(b) ensure that no act or omission by the tenant results in there not being complied with the obligations of the landlord, under any enactment, in relation to the dwelling or the tenancy (and in particular, the landlord’s obligations under regulations under section 18 of the Housing (Miscellaneous Provisions) Act 1992 ),
(c) allow, at reasonable intervals, the landlord, or any person or persons acting on the landlord’s behalf, access to the dwelling (on a date and time agreed in advance with the tenant) for the purposes of inspecting the dwelling,
(d) notify the landlord or his or her authorised agent of any defect that arises in the dwelling that requires to be repaired so as to enable the landlord comply with his or her obligations, in relation to the dwelling or the tenancy, under any enactment,
(e) allow the landlord, or any person or persons acting on the landlord’s behalf, reasonable access to the dwelling for the purposes of allowing any works (the responsibility for the carrying out of which is that of the landlord) to be carried out,
(f) not do any act that would cause a deterioration in the condition the dwelling was in at the commencement of the tenancy, but there shall be disregarded, in determining whether this obligation has been complied with at a particular time, any deterioration in that condition owing to normal wear and tear, that is to say wear and tear that is normal having regard to—
(i) the time that has elapsed from the commencement of the tenancy,
(ii) the extent of occupation of the dwelling the landlord must have reasonably foreseen would occur since that commencement, and
(iii) any other relevant matters,
(g) if paragraph (f) is not complied with, take such steps as the landlord may reasonably require to be taken for the purpose of restoring the dwelling to the condition mentioned in paragraph (f) or to defray any costs incurred by the landlord in his or her taking such steps as are reasonable for that purpose,
(h) not behave within the dwelling, or in the vicinity of it, in a way that is anti-social or allow other occupiers of, or visitors to, the dwelling to behave within it, or in the vicinity of it, in such a way,
(i) not act or allow other occupiers of, or visitors to, the dwelling to act in a way which would result in the invalidation of a policy of insurance in force in relation to the dwelling,
(j) if any act of the tenant’s, or any act of another occupier of, or visitor to, the dwelling which the tenant has allowed to be done, results in an increase in the premium payable under a policy of insurance in force in relation to the dwelling, pay to the landlord an amount equal to the amount of that increase (“the increased element”) (and that obligation to pay such an amount shall apply in respect of each further premium falling due for payment under the policy that includes the increased element),
(k) not assign or sub-let the tenancy without the written consent of the landlord (which consent the landlord may, in his or her discretion, withhold),
(l) not alter or improve the dwelling without the written consent of the landlord which consent the landlord—
(i) in case the alteration or improvement consists only of repairing, painting and decorating, or any of those things, may not unreasonably withhold,
(ii) in any other case, may, in his or her discretion, withhold,
(m) not use the dwelling or cause it to be used for any purpose other than as a dwelling without the written consent of the landlord (which consent the landlord may, in his or her discretion, withhold), and
(n) notify in writing the landlord of the identity of each person (other than a multiple tenant) who, for the time being, resides ordinarily in the dwelling.

Rent/Rent review

Rent may not be set at an amount greater than the market rent for the tenancy in question and any disputes can be referred to the Tenancy Tribunal of the Private Residential Tenancies Board (www.prtb.ie) as per Part 3 of the Act.

Part 4 Tenancy

One of the most important effects of the residential tenancies act is that where a person has been in occupation, under a tenancy, for a continuous period of 6 months then, provided no notice of termination has been served, then the tenancy will continue for 4 years.

This right of the tenant is of huge significance for many landlords and this tenancy is then called a Part 4 tenancy.

Termination of Residential Tenancies

Tenants of fixed term tenancies ie the standard 12 month letting agreement common in Ireland have security of tenure from the word go as a result of their 12 month agreement.

Termination of a Residential Letting by the Landlord

A landlord can terminate a Part 4 tenancy prematurely on one of 6 grounds laid down by the legislation and only then when he serves a notice of termination stating the ground and has served the notice in accordance with the notice periods laid down by the act.

The 6 grounds for premature termination of a Part 4 tenancy by the landlord are

  1. The tenant has failed to comply with their obligations. However the landlord has to notify them of their failure and give them a reasonable time to remedy the failure.
  2. The property is no longer suitable for the tenant.
  3. The landlord intends entering into an agreement within 3 months to sell the property.
  4. The landlord requires the property for his own use or for a family member (but he must specify who he needs it for and for how long)
  5. The landlord intends refurbishing or renovating the property.
  6. The landlord intends changing the use of the property to some other use.

The above grounds are provided for in section 34 of the Residential Tenancies act, 2004.

If the landlord uses one of these grounds dishonestly then the tenant can make a complaint to PRTB and they can award compensation to the tenant.
PRTB awarded over €5,000 to a tenant who had been illegally evicted in Galway in 2006.

Termination of a Residential Letting by the Tenant

The tenant may terminate by giving a notice of termination to the landlord with the required notice period.(Section 36) Unlike the landlord the tenant can bring a Part 4 tenancy to an end without giving a reason.

Section 37 provides for a deemed termination by the tenant:

37.—(1) Subject to subsection (3), a Part 4 tenancy shall be deemed to have been terminated by the tenant on his or her vacating the dwelling if—
(a) before or on or about that vacating, he or she serves a notice of termination in respect of the tenancy that does not give the required period of notice, and
(b) before or on that vacating the rent has fallen into arrears.
(2) Subject to subsection (3), a Part 4 tenancy shall also be deemed to have been terminated by the tenant upon any rent owed by him or her being in arrears for a period of 28 days or more if—
(a) whether before or after the end of that period, the tenant has vacated the dwelling, and
(b) no notice of termination has been served by the tenant in respect of the tenancy.
(3) Subsections (1) and (2) do not apply if the Part 4 tenancy has been sub-let or assigned.
(4) Nothing in the preceding subsections affects the liability of the tenant for rent for the period that would have elapsed had a notice of termination giving the required period of notice been served by him or her.
(5) This section is subject to Chapter 6.

A landlord can terminate a tenanc, provided it is not a fixed term tenancy, within the first 6 months without giving a reason.

However he must give the statutory notice period.

12 Month Fixed Term Tenancy

Where there is a fixed term tenancy, the right to terminate prematurely in this instance is limited to situations where either party is in breach of the agreement or in breach of their statutory obligations.

Landlords need to be careful here as the fixed term tenancy gives more protection to the tenant than they would have if they only had a Part 4 tenancy as this can be terminated in the first 6 months without giving a reason.

Further Part 4 Tenancies

Where a tenancy continues to the end of the 4 years of the part 4 tenancy and neither party serves notice of termination then a further Part 4 tenancy will arise and will last for 4 more years.

Multiple Occupants-Chapter 6

Security of tenure applies to any premises occupied by multiple tenants from the earliest date at which any of them has 6 months occupation clocked up. The rules for multiple occupants are set out in chapter 6 of the Act.

Contracting out

You can not contract out of Part 4 of the act which means no matter what you want to agree with the tenant he has his statutory entitlement to a Part 4 tenancy.

Termination Notices-Part 5

Notice must be served to terminate the agreement in all cases. The periods are different for tenants and landlords and are set out in part 5 of the Act in sections 65, 66, 67. 68, and 69.

A termination notice must

  • Be written
  • Signed by the landlord/tenant
  • Specify the date of service
  • If the tenancy is for more than 6 months state the reason
  • The date of termination

Notice Periods

66.—(1) This section applies where the tenancy is being terminated—
(a) otherwise than by reason of the landlord’s or tenant’s failure to comply with any of the obligations of the tenancy, or
(b) by reason of such a failure but a condition in another section of this Chapter is required to be satisfied if the period of notice provided by that section is to apply and that condition is not satisfied.
(2) Where this section applies the period of notice to be given by the notice of termination is—
(a) in the case of a termination by the landlord, the period mentioned in column (2) of Table 1 to this section opposite the mention of the duration of the tenancy concerned in column (1) of that Table, and
(b) in the case of a termination by the tenant, the period mentioned in column (2) of Table 2 to this section opposite the mention of the duration of the tenancy concerned in column (1) of that Table.
(3) This section is subject to section 69 .
TABLE 1
Termination by Landlord
Duration of Tenancy Notice Period
(1) (2)
Less than 6 months 28 days
6 or more months but less than 1 year 35 days
1 year or more but less than 2 years 42 days
2 years or more but less than 3 years 56 days
3 years or more but less than 4 years 84 days
4 or more years 112 days
TABLE 2
Termination by Tenant
Duration of Tenancy Notice Period
(1) (2)
Less than 6 months 28 days
6 or more months but less than 1 year 35 days
1 year or more but less than 2 years 42 days
2 or more years 56 days

The table above applies where neither  the landlord nor the tenant is in default.

Section 67 deals with notice periods where the tenant is in default; section 68 deals with the landlord being in default.

Where the landlord wants to terminate where the tenant is in breach the period depends on the default-anti social behaviour requires only 7 days notice.

For any other reason the period is 28 days and if it is non payment of rent then the landlord must first notify the tenant in writing that the rent is overdue. He must wait 14 days and then serve the notice of termination of 28 days.

Time limit for disputing a notice of termination

Must be referred to PRTB within 28 days of receipt of the notice.

Tenancy Disputes in Residential Letting Agreements

The tenancy tribunal plays an important role in the resolution of tenancy disputes.

The resolution of tenancy disputes in residential letting agreements is governed by Part 6 of the Residential Tenancies Act 2004. The dispute resolution committee of the PRTB replaces the courts.

The main areas of dispute
are

  • deposit retention
  • illegal evictions
  • invalid notices of termination
  • over-holding
  • rent arrears
  • breaches of obligations
  • anti-social behaviour

A dispute may be referred for Mediation, Adjudication, Tribunal Hearing.

If the dispute is not resolved by mediation or adjudication then it will be referred to a Tenancy Tribunal. The PRTB can refer directly to a tribunal if it chooses.

If mediation takes place and is unsuccessful then it must be referred to a tribunal. A party to a determination can also appeal a decision of an adjudicator to a tenancy tribunal.

Time limits

Generally a tenancy dispute must be referred within 28 days of notice being given which gives rise to the dispute or for example the termination of the tenancy.

The PRTB can refuse to deal with a complaint if it is

1. frivolous/vexatious
2. statute barred in the context of court proceedings
3. concerns a dwelling to which the Residential Tenancies act does not apply.

The PRTB will not deal with a reference to it by an unregistered landlord. However if the landlord registers the tenancy within a reasonable time it may then deal with it (if it chooses)

A tenant can always refer a dispute as the obligation to register the tenancy is the landlord’s.

2 stage procedure

PRTB uses a 2 stage procedure to resolve disputes. The first stage is mediation or adjudication.

The second stage is a public hearing by a tenancy tribunal if not resolved at the first stage.

Mediation

A mediator prepares a report and the PRTB makes a determination order within 7 days which contains the terms of the agreement reached by the parties.
If there is no agreement then the tenancy dispute goes to a tenancy tribunal.

Adjudication

An adjudicator reaches a decision him/herself. The adjudicator prepares a report for PRTB and they then issue a determination order.

This order is binding unless appealed by one or both of the parties to a tenanct tribunal within 21 days. There is a form of cross examination in an adjudication but the adjudicator controls the process.

Tenancy tribunal

A tenancy tribunal deals with

1. disputes referred directly by the PRTB
2. disputes where mediation has not worked
3. where the tenancy dispute is the subject of an appeal from a determination of an adjudicator.

Each party is entitled to be heard,  be represented, give evidence and call witnesses at the hearing. Costs of witnesses or professional representation will not generally be awarded.

Determination Order

PRTB makes this order after receiving a report from

1. a mediator
2. an adjudicator
3. a tenancy tribunal

It is binding when issued. A determination order from a tenancy tribunal determination may be appealed to the High Court within 21 days on a point of law only.
Failure to comply is an offence and the PRTB can prosecute people for failing to comply with a determination order or it can apply to the Circuit court for an order forcing compliance.

If the PRTB prosecutes instead  for failure to comply with a determination order the penalties possible are up to 6 months in jail or a fine up to €3,000 or both.

The resolution of tenancy disputes is an important skill for anybody letting residential property. Legal advice should be obtained if you are in doubt about your rights as a landlord or tenant.

Please use the contact form below if you need legal advice in relation to any aspect of residential letting agreements or need a letting agreement drafted.

How (and Why) To Make A Valid Will in Ireland

making-a-will

There are a number of important reasons why you should make a will in Ireland.

This piece will look at why you need to make a will, what are the requirements for a valid will, what a will should contain, some common mistakes made in drafting wills, what legal recourse has an unhappy child if (s)he feels that (s)he has not been provided for.

Why should you make a will?

Making a will in Ireland allows you to provide for the passing of your property with a clear legal document.

  • If you make a will you ensure that the minimum of Capital Acquisitions tax is paid by beneficiaries
  • You can provide for the special needs of a loved one by making a will
  • Administration of the estate is quicker and less expensive than if you do not make a will
  • You choose who handles your affairs on death rather than having the state do it for you

So in summary you keep control of your affairs and property on your death when you make a will.

What is will?

A will is a formal document which sets out how a person (the ‘testator’/ ‘testatrix’) wishes to dispose of his or her property on death.

A person may make as many wills as he wishes, but the only relevant one is the last valid will made before his death.

For a will to be valid in Ireland, the testator must

  • Have attained the age of 18 or is or has been married
  • Be of sound disposing mind

Requirements for a valid will
1.the will must be in writing,
2.testator must sign in the presence of each of 2 or more witnesses
3.witnesses must attest by their signatures the signature of the testator in the presence of the testator, but not necessarily in the presence of each other
4. The signature must be found at the foot (end) of the will

In Writing
The idea of a will having to be in writing has been generously interpreted by the courts and basically means some permanent evidence of the testator’s intention.

Contents of the will
A will should contain at least 10 basic elements:

  1. the testator’s name and address,
  2. a revocation clause (re previous wills),
  3. appointment of executors
  4. a list of legacies (gifts of money or goods)
  5. a list of devises (gifts of real property),
  6. a residuary clause, disposing of the remainder of the estate and dealing with all eventualities
  7. the date,
  8. the testator’s signature
  9. an attestation clause
  10. signature of the two witnesses with their addresses and descriptions.

Common mistakes in making a will

  1. A will is revoked by marriage but not by divorce
  2. Wills made in other jurisdictions-if a revocation clause revokes ALL previous wills then it will revoke foreign wills, which may not have been intended
  3. Problems arise if a will is destroyed but not by the testator as an act of destruction must be done with the intention of revocation by the testator

Good ideas when making a will

  1. Appoint more than 1 executor
  2. Do not appoint an alternative executor as this will fail for uncertainty (eg I appoint Tom or Sean)
  3. Get a solicitor to draft it.

It may be necessary to insert —

  • appointment of trustees
  • appointment of guardians
  • establishment of a trust
  • additional powers for executors and trustees
  • various enabling clauses

A witness or his spouse cannot benefit under a will.

Doctrine of lapse

If a beneficiary predeceases a testator, whatever was left to that beneficiary fails and that gift will be distributed as if the testator died intestate, unless he has an effective residuary clause in the will.

This shows again the need to have a properly drafted will and why it is not a job for a DIY enthusiast.

Enabling clauses in a will

It can be very important to insert appropriate enabling clauses in the will because if they are not present the Succession Act makes various provisions such as section 63 which deals with advancement and provides that any payments to a child during the life of the testator will be deducted in calculating the share of that child on the death of the testator.

If the testator leaves a business then if trustees are appointed they will need to have the power to borrow, lend and run a business.

Without these extra powers the trustees can not do so.

If a child predeceases the testator then the benefit that such child would have received goes to that child’s estate, not necessarily to the deceased child’s children.

This is contained in S98 of the Succession Act, 1965 and is very important if you want to ensure that whatever you leave to your child goes to your grandchildren then you have to insert an enabling clause (a gift over clause) to ensure the benefit goes to your grandchildren and not your errant son/daughter in law.

What actions can a child take against an estate?

Section 117 of the Succession Act, 1965 allows him to take an action where the testator has failed in his moral duty towards that child.

This is a matter for the court to decide and many cases have been thrashed out in the courts in order to make sense of this moral duty. Read more about children’s’ rights and wills here.

Testamentary capacity for making a will

A testator must:

  • understand that he is making a will,
  • a document that will dispose of his assets on death
  • must know the nature and extent of his estate
  • Must be able to have regard for those who might expect to benefit from his estate and decide whether he wants to benefit them

Capacity to make a will may be proved by a sworn statement from a doctor or solicitor who attended the deceased at the time the will was made. In the event of a challenge to the testamentary capacity of the testator, the Courts will decide and have been called upon to do so on many occasions.

An undated will is not necessarily invalid, but a witness will have to swear that the will was executed before the testator died to satisfy the Probate office.

Conclusion
Whilst making you own will is very doable it is not advisable for the reasons outlined above and the Succession Act 1965 has various provisions in it which will kick in if you have not made provision for them.

If legal challenges arise to the will the courts may award costs out of the estate, even to the losing challenger so it is crucial that you have properly drafted, legally sound will.

It is a supreme folly for anyone not to make a will and ensure the smooth passing of his/her property to those he loves.

To ensure that your will is sound and valid or to have a will made you can contact Terry through the Contact form on this site and he will be in touch with you within 24 hours to make an appointment.

For a more comprehensive view of probate law and making a will in Ireland visit this site.

Commercial Borrowing and Lending-Some Important Issues

Commercial borrowing and lending can be a trap for the unwary lender….and borrower.

commercial borrowing

The issues that arise can lead to borrowers and lenders losing out on what they perceive to be a technicality.

An individual borrower’s powers

An individual can borrow what he pleases and the only issues surrounding this revolve around 3 questions

1. Is the borrower 18 or over?
2. Is the borrower of sound mind?
3. Is the borrower a bankrupt?

For example many small businesses involved families living over pubs or shops.

However the Family Home Protection Act 1976 provides safeguards for the Family Home and if the lender in lending money to a borrower fails to divide out the family home from the business property then the security that the lender thinks it is obtaining may not be effective.

A number of issues which arise from an individual borrowing money arise in the whole area of consumer legislation.

Essentially the Consumer Credit Act, 1995 and the European regulations in 1995 dealing with Unfair terms in Consumer Contracts place fairly onerous obligations on lenders and there is the possibility that if the lending institution gets any of the procedural or substantive safeguards wrong then the security that the bank thinks they are obtaining may not be effective.

Partnership

Unlike a company a partnership does not have a separate legal personality so any issue surrounding the capacity of a partnership to engage in commercial borrowing really falls back on the capacity of the individual partner and this can be ascertained by looking at the partnership deed if there is one (if there is no partnership agreement drawn up then the Partnership Act, 1890 will apply).

Companies

A company is a separate legal entity but is an artificial one to some extent so the ability of the company engage in commercial borrowing depends on

1.The company still being in existence ie not having been struck off
2.Not being in receivership, liquidation or under the protection of the court.

It is interesting to note that if a company adopts the standard Table A articles of association and section 79 has not been excluded from it, then the powers of the directors to borrow on behalf of the company is ineffective.

Section 79 says that a company can only borrow an amount equal to the nominal value of the issued share capital unless the company in a general meeting authorises a higher amount. This can be of enormous significance if the legal team advising the bank overlook this point when granting loans to companies.

Security

A bank will usually take either a fixed charge (on a property) or a floating charge (on stock or debtors or assets that change)

A fixed charge has preference over a floating charge and preferential creditors such as employees and the Revenue Commissioners. But the latter have preference over a floating charge in a wind up situation.

Types of commercial borrowing

Overdraft-normally repayable on demand

Term loan-repayable by negotiated amounts over a period of time
Revolving credit-these are loans which are (were!) popular with property developers allowing for the rolling over of the amount borrowed after 6 months depending on how sales of the development were going.

Factoring-this is essentially the sale of the book debtors of the company to the bank who then gather in the debtors and charge their client a percentage for having provided the finance up front for the book debtors

Leasing-legally the leased property remains the property of the lender although in practical terms the borrower has the use and enjoyment of the asset

Specific Assets in commercial borrowing

Property

This is usually secured by a fixed charge of the property and the company must have the powers in the memorandum and articles of association to mortgage land/property.

Stock

Stock is usually secured by way of a floating charge.

Plant/machinery

Can be secured by both floating and fixed charge depending on the value of the plant.

Debtors/cash

These can be secured by a floating or fixed charge and it has been held in the UK that it is possible for a bank to obtain a charge over the credit balance of a borrower with itself.

Guarantees/Indemnities

When a borrower is involved in commercial borrowing he must be aware of the difference between an indemnity and a guarantee.

A guarantee must be in writing whilst an indemnity need not be. The person giving the indemnity is primarily responsible for the debt whereas with a guarantee the guarantor is secondarily responsible after the borrower who is the first port of call if the loan goes wrong.

A guarantee will normally contain a clause preventing the guarantor from protecting himself by taking security from the borrower. The guarantee will also make provision for the money be repayable on demand which protects the bank from losing out by the running of the Statute of Limitations, 1957 which otherwise might prevent the bank from pursuing the debtor.

As outlined above a company must have the powers to execute a guarantee in it’s memorandum of association.

In a partnership a partner has no implied authority to bind the partnership in commercial borrowing unless it is expressly stated in the partnership deed so the lender will be anxious to get all partners to sign any guarantee.

Post Borrowing

Assuming that a company has the power to borrow and regulation 79 of Table A of the Articles of Association has been excluded then details of the borrowing and charge must be registered with CRO and the Registrar of Companies within 21 days of the creation of the charge.

This time may be extended with an application to court but if the charge becomes void as a result of the charge not being registered within time then the borrowing becomes payable and the lender may sue immediately for recovery of the sum.

Financial assistance re purchase of a company’s own shares

Section 60 of the Companies Act 1963 prohibits the provision of financial assistance for the purchase of shares in the company providing the assistance by anybody. This is to prevent asset stripping and the reduction of the share capital of the company.

However there is a procedure called the ‘whitewash procedure’ which allows certain exemptions which are set out in section 60(2-11).

The effect of this assistance being provided without this procedure is that the transaction is voidable at the choice of the company against any person who knew of the facts which cause the breach.

Conclusion

For many small business owners, the whole area of commercial borrowing is one that now, in 2009, should have been, with hindsight, treated with far more caution. As for the banks attitude to commercial borrowing….unfolding events will show how badly they got it wrong in the whole area of commercial borrowing and lending.

Partnership Law in Ireland-What You Should Know

Partnership.

partnership-law-ireland
When a partnership goes wrong, it can be catastrophic

You start out with such good intentions.

But when it goes wrong, it can be catastrophic.

That’s why the need for a written partnership agreement in any partnership is crucial.

Because if you do not have one, then the Partnership act 1890 will govern your relations with your partner.

Partnerships are an important part of business life in Ireland for a number of reasons including taxation, accounting, and disclosure advantages over limited companies.

1) any time 2 or more people come together to carry on business and do not form a company the law assumes they are in partnership.They are then subject to partnership law which dates back to the Partnership Act of 1890.

2) Professionals such as doctors,lawyers,dentists,vets,accountants are not allowed to form companies.

3) There are advantages over forming a company from the point of view of tax, accounting and disclosure requirements.

Unlike a company a partnership is not a separate legal identity which means that partners have unlimited liability, unlike directors or shareholders in companies.

And partnerships do not have to go through any registration process to be formed.

The downside is that each partner is liable for the losses of his co-partner in carrying on the partnership business, even where the other partner has defrauded clients of the business.

Definition of Partnership

Partnership Act 1890 defines a partnership and essentially states that where 2 or more people carry on business with a common view of profit, then a partnership exists.

A written partnership agreement is not necessary.

And where 2 or more companies come together to carry on business to make a profit then unless they have set up a special purpose joint venture company a partnership will be deemed to exist.

However it is important to note that Co-ownership of property alone does not mean that a partnership exists; there must be a sharing of any profits between partners.

Generally the maximum number of partners allowed is 20;however there are exceptions made for solicitors and accountants.

Types of Partnership

There are 2 types of partnership:

  1. an informal partnership (partnership at will) and 
  2. formal partnership (fixed term partnership).

Why is it important to have a written partnership agreement?

Because if there is not either an implied or express agreement the partnership will be considered in the eyes of the law a partnership at will and will be governed by an act from 1890….which in most cases is wholly inappropriate for modern business.

For example without a written partnership agreement the 1890 Partnership act will mean that

1) there is no right to expel a partner

2) any partner may dissolve the partnership

3) if a partner dies, the firm will automatically dissolve

4 ) there is no power to resign under the Partnership act, although a partner can retire by dissolving the partnership.

These are pretty crucial reasons for partners to set down their agreement and understanding in a written partnership agreement.

Business Name of Partnership

If the partnership is carried on under a name which does not consist of the surnames of the partners, then the partnership must register a business name and publish the names of the partners on the firm’s stationery.

In the event of a dispute, this may be very important as it may indicate when somebody became or ceased to be a partner.

Partners rights under the 1890 act

1) every partner may take part in the management of the business so if this in not desired then a written agreement should reflect the wishes of the partners.

2) a simple majority of partners is all that is required to make a decision.Again if this is not desired then a written agreement is a must.

However this is tempered by the requirements that

a) all the partners must exercise their powers for the benefit of the partnership as a whole

b) to change the partnership business there must be unanimity

c) no partner may be introduced without the consent of all the partners

d) a partner may not be expelled by a majority.

Majority Rule in a Partnership

There are 2 restrictions on the capacity of partners to bind the whole partnership by a majority vote:

  1. partners have a fiduciary duty to each other and must exercise their rights for the benefit of the partnership as a whole
  2. sections 24 and 25 of the Partnership Act, 1890 limit the powers of partners to use majority rule.

Section 24 (8) requires unanimity for a change in the partnership business;

section 24 (7) provides that no partner may be introduced without the consent of all the partners

section 25 prohibits the expulsion of a partner by a majority of the partners unless all partners have expressly agree to such a power being conferred. However there is no right to expel under the default agreement situation.

Fiduciary Duty of Partners

A partner has a fiduciary duty to co-partners under common law.

However, the Partnership Act, 1890 also provides as follows:

section 28 provides that partners are bound to render through accounts and full information of all things affecting the partnership..

section 29 provides that a partner must account to the partnership for any profits made from partnership property

section 30 provides that “If a partner, without the consent of the other partners, carries on any business of the same nature as, and competing with that of the firm, he must account for and pay over to the firm all profits made by him in that business.”

However this does not prevent a former partner from competing with the former partnership.

Written Partnership agreement

It is pretty clear that having a written partnership agreement is crucial to the smooth running of the partnership and to ensure that the wishes of the partners at the outset are carried out.

The Partnership act 1890 does not prevent a former partner from competing with the firm after he leaves and for this reason it is common for modern partnership agreements to have a non compete agreement…generally for a maximum of 2 years.

Financial rights of partners

The default position from the 1890 act is that all partners are entitled to share equally in the profits and capital of the partnership and must contribute equally to the losses.

This means that even if a partner does not contribute capital in the same proportions as the other partners he is still entitled to share in the profits equally.

The 1890 Act also deals with interest on capital, interest on loans, remuneration of partners, and drawings.

Remuneration of Partners

The Partnership act 1890 states that no partner is entitled to remuneration for acting in the partnership business.Clearly a written agreement is a necessity and should also set out the provisions for the drawings of partners.

Partnership Property

It is very important to decide at the outset which is partnership property and which belongs to individual partners. It is important to note that the 1890 act presumes that property used in the partnership is partnership property and that property bought with partnership funds is partnership property.

So it should be clarified from the start who owns what……and what is partnership property and what is not.

Liability of partners to third parties

Partners are liable for the debts and obligations of the partnership without limitation.

And where a creditor can not get money due to him from the partnership he is entitled to get his money from the partners personally.Generally a partner acting within the scope of his authority binds the whole partnership legally.

However he must act as a partner and it must be within the ordinary course of business of the partnership.

If a partner can wiggle his way out of binding his firm to an outsider then he himself will be made personally liable.

A partner can bind the partnership arising from his authority which may be

  • express authority
  • implied authority
  • ostensible authority.

However, the act must be done by a partner as partner of the partnership within the ordinary course of business of the partnership. If a partner was acting outside the partnership in a different capacity, she would not bind the firm.

Actions Between Partners

Rows and disputes between partners are, unfortunately, quite common.

Any litigation between partners will be strongly influenced by 2 factors:

  1. courts are reluctant to allow partners to sue other partners on foot of a single partnership obligation. Instead they tend to prefer that all partnership obligations be determined as part of a general settlement of accounts on the dissolution of the partnership;
  2. courts are reluctant to compel an unwilling partner to be a partner of another. Accordingly the specific performance of partnerships are only granted reluctantly and not too often.

Dissolution of Partnership

Dissolution of a partnership can occur by
1)  automatically eg on the death or bankruptcy of a partner

2 ) by notice (section 26 or 32 (c)  ie any partner can just dissolve the partnership by giving notice in the absence of any express or implied contrary agreement. The notice will take effect from the date set out in the notice, but this date cannot be before the date of receipt of the notice.

Once the partnership is dissolved, any partner can demand the sale of partnership assets in order to discharge the liabilities of the firm.

3)  illegality-partnerships formed to carry out an illegal activity or an activity contrary to public policy are automatically dissolved

4) by expiration-either at the end of the partnership term or on the completion of a specific undertaking for which the partnership was formed

5) dissolution by the court-section 35 provides statutory grounds for dissolution by a court including where

  • a partner is of unsound mind
  • a partner becomes permanently incapable of performing his part of the partnership contract
  • a partner’s behaviour is prejudicially affecting the partnership business
  • a partner is in breach of the partnership agreement
  • where the partnership can only be carried on at a loss
  • where it is just and equitable to dissolve the partnership.

Dissolution of Partnership by Court as a Remedy in a Dispute

The court can dissolve a partnership under section 35 of the Partnership Act, 1890 where it decides that

a)  a partner has carried on in a way that is damaging to the business

b)  where a partner commits a breach of the agreement consistently

c) whenever the court decides that is just and reasonable to dissolve it.

Courts can also appoint a receiver/manager to preserve partnership assets where it decides it is appropriate to do so.

Types of Partnership Dissolution

There are two types of dissolution of partnership:

  1. A general dissolution and
  2. A technical dissolution.

General Dissolution of Partnership

This occurs where the partnership is ended and the business is wound up and the partnership assets are sold. Section 39 of the Partnership Act, 1890 allows a partner to force the general dissolution of the firm.

Technical Dissolution of Partnership

A technical dissolution will occur where there is a change in partners, either by a partner leaving or a new partner joining the firm. The death or bankruptcy of a partner will also lead to a technical dissolution.

It will become a general dissolution if the remaining partners decide to sell the assets of the partnership and wind up the business.

No right to expel a partner

Under the Partnership act 1890 there is no right to expel a partner,no matter how negligent or unprofessional he is, so this is another important reason to have a written partnership agreement drawn up.

Consequences of dissolution of Partnership

Where a firm goes into general dissolution the assets of the partnership will be sold to pay the debts of the partnership.

It is important to be aware that if there is insufficient funds to pay creditors then in the absence of an agreement to the contrary each partner will have to contribute equally to those losses…..regardless of the contributions of capital by each partner at the outset.

In order for a partner to protect himself after dissolution he must give notice to all existing customers to avoid any liability after the dissolution.

It is vital that a former partner notifies customers of the partnership that he is no longer a partner or he could be held liable under the Partnership act 1890 for any obligations incurred by the partnership after his departure.

Any partnership agreement must provide for the share of the departing partner to be purchased by the continuing partners and must provide for what will occur on the death of a partner.

As you can see there are many, many good reasons to have a written partnership agreement drafted if you are going into a partnership.

If you do not then the Partnership Act 1890 will govern your relationship with your partners and as you can see it is completely inappropriate for modern commercial activity.

(NOTE: there are 2 other types of partnership recognised by Irish law which have not been considered here-a limited partnership and the investment limited partnership.)

You should consult a solicitor or other suitably qualified professional to have your partnership agreement drafted and which will provide for all of the issues outlined above.

We would be happy to do so for you.

Simply use the contact form below to make an enquiry.

By Terry Gorry