Partnership Case Law Flashcards
Implied authority of the partners
Bryan v Brothers & Co (1892)
Case: A Glasgow business had been made a loan by the wife of one of its partners. The wife had been approached by her husband who had asked her to advance the loan to the business. This arrangement was understood by the wife to have the approval of her husband’s partners. The wife later sued the firm to recover the loan that she had made to the business. It was argued by the firm that her husband’s request for the loan was not binding on the firm or the other partners.
Held: The husband had implied authority to bind his fellow partners when he had solicited the loan on behalf of the firm and, therefore the business was liable to the wife to repay to her any outstanding debt.
Does a partnership exist?
Owning property jointly
Sharpe v Carswell (1910)
Case: Sharpe held a small shareholding in a boat on which he suffered a serious accident (which occurred within the course of his employment) and died. His wife sued for compensation for his death in terms of the Workmen’s Compensation Act 1906 but her claim was dependant on whether or not Sharpe was a partner in the business. If S had been a partner in the business his widow would be disqualified from claiming compensation for his death in terms of the Act.
Held: The ownership of property does not in itself constitute a partnership. S was not deemed to be a partner. His widow was, therefore, entitled to receive compensation under the Act in respect of his work-related death.
Does a partnership exist?
Sharing of gross returns
Cox v Coulson (1916)
Case: Mr Mill and Mr Coulson enter into an agreement regarding the provision of a theatre and scenery. Mr Coulson (for providing the theatre and scenery) receives a share in gross returns only. Mr Cox, a member of the audience, is injured by gunfire during a performance and sues Mr Coulson as a partner. The pursuer claimed that the defender was liable on the ground that he was a partner of Mr Mill.
Held: Mr Coulson is not a partner as the sharing of gross returns in itself does not constitute a partnership
Fiduciary duties (relationship of trust) (S.28-30)
The duty to disclose
Law v Law (1905)
Case: One partner accepted an offer from the other to buy his share of the firm. He later discovered that certain partnership assets had not been disclosed to him and sought to have the contract set aside.
Held: A partner could avoid an agreement under which he sold his share of the partnership’s business to another partner when that other partner failed to disclose the information affecting the value of the partnership’s business to the partner selling his share of the partnership’s business.
Fiduciary duties (relationship of trust) (S.28-30)
The duty to account
Pathirana v Pathirana (1967)
Case: A partner informed another partner by a notice to end the partnership within three months. Within three months period, the partner serving the notice obtained a contract in business originally engaged into by the partnership.
Held: The partner serving the notice was under a duty to account to the other partner the profit she obtained under the contract.
Fiduciary duties (relationship of trust) (S.28-30)
The duty to account
Bentley v Craven (1853)
Case: Craven was in partnership with the plaintiff in a sugar refinery business. He bought sugar on his own account and later sold it to the partnership at a profit, without declaring his interest to the other partners.
Held: The partnership was entitled to recover the profit from the defendant.
Fiduciary duties (relationship of trust) (S.28-30)
The duty not to compete
Glassington v Thwaites (1823)
Case: A member of the partnership, which produced a morning paper, was also involved in the publishing an evening paper. It was argued that this later activity was in competition with the partnership’s business.
Held: The argument was sustained and the partner was held to account for the profit he made from publishing the evening paper.
Liability of the partners
Kirkintilloch Equitable Co-operative Society Ltd v Livingstone (1972)
Case: The Society had hired the services of a firm of chartered accountants to audit its accounts for a period of approximately 15 years from 1952 to 1967. The Society later sued the firm for professional negligence on the basis that the partner who had acted as the principal auditor of its accounts had failed to display the requisite level of care expected of a reasonably competent member of the accounting profession. The Society claimed that the partner had made a number of mistakes when auditing the accounts.
Held: The firm was liable to the Society for any acts of professional negligence committed by the partner responsible for auditing the accounts.
Liability of the partners (retired partner)
Tower Cabinet Co Ltd v Ingram (1949)
Case: Ingram and Christmas sold furniture under the business name “Merry’s”. The partners later dissolve their business association. Ingram has communicated this fact to the firm’s bank. They agreed that Christmas would continue to trade under the same business name. The individuals failed to place an advertisement in the London Gazette. Nine months later Christmas entered into a contract to supply furniture to Tower Cabinet. He used Merry’s previous headed notepaper (which still listed Ingram as his partner) to communicate with TC. A dispute arose between Merry’s and TC. TC claimed against both Ingram and Christmas.
Held: Ingram was not liable to TC for anything done by his former partner, Christmas. He had no previous business dealing with Tower Cabinet before the termination of his partnership with Christmas and was therefore, completely unknown to them. He could not be regarded as an apparent partner in the firm. Furthermore, at no point, had Ingram held himself out or represented himself to be a partner in Merry’s during any dealing with TC.
Termination of a partnership
Winsor v Schroeder (1979)
Case: S and W contributed equal amounts of money in order to buy a house, modernise it and then sell it on at a profit (divided equally between the partners).
Held: The partnership would come to an end when the property was sold and the profit, if any, was divided between W and S. (goal accomplished)
Termination of a partnership
Peyton v Mindham (1972)
Case: A dissolution notice was given by A and B to C by notice, in order to exclude C from sharing in valuable, future contracts.
Held: A dissolution notice is ineffective if it was given in bad faith.
Termination of a partnership
Stevenson & Sons Ltd v AG für Cartonnagen Industrie (1918)
Case: An English company, Stevenson, was in partnership with a German company as a sole agent to sell the German company’s goods.
Held: This would involve trading with enemy aliens in wartime and the partnership was, therefore, dissolved on the ground of illegality.
