Respending to challenges of Limitations of Restricting Liability in Partnership in Iran by Using Partnership Rules of English Law

Partnership, in the Iranian Legal System of Iran, is not considered as a legal entity and -according to common views- partners’ liability to third parties is unlimited. Partners have joint liability to third parties. Profits and losses are divided between partners according to the proportion of capital they have invested. Irrespective of being possible for partners to agree that profits and losses be divided otherwise or not, we believe what was said in Iran Civil code, so did in Islamic Jurisprudence, about dividing profits and losses according to the proportion of partners’ capital, only covers the partners’ liability to third parties when it is not agreed otherwise between partners and third parties. As the partnership in Iran has no separate legal personality, restricting partners’ liability to third parties is covered by general rules of restricting persons’ liability, so if it was not against imperative law, it is possible to be agreed otherwise among partners and third parties to divide partners’ responsibility or restrict it. This possibility can encourage people to invest their property in the form of partnerships in order to manage a business. But without an agreement among partners and third parties, restricting liability is not possible for partners. Thus, it is impossible to rely on restricted liability in tortious liabilities, so do in contractual liabilities where limited liability is not agreed with third parties. To reach this possibility in the legal system of Iran, using the rules of English Partnership Law (both of limited liability partnership and limited partnership) in Iran, has been proposed in this essay article.