Partnerships

Question 1

Conlon v Simms [2007]

Answer 1

Fiduciary Relationship -
CofA said that a prospective partner owed a duty to disclose all the facts. In this case the partners are able to recover the damages in respect of this loss.

Question 2

Morrison v Service (1879)

Answer 2

Creation of Partnership -
Shared Resources - The court held they were in partnership.
All facts and circumstances must be considered to determine if a partnership exists.

Question 3

Mortgage Express Ltd v Dunsmore Reid & Smith 1996

Answer 3

Creation of Partnership -

Despite someone saying he is a partner the law shall look at all circumstances to determine if a partnership does exist.

Question 4

Adam v Newbigging (1888)

Answer 4

Creation of Partnership -
Lord Halsbury is saying that you cannot talk your way out of a partnership. If the law deems you to be in a partnership then you are.

Question 5

Stewart v Buchanan (1903)

Answer 5

Creation of Partnership -
“A person who is truly a partner will not escape responsibility however emphatically he may declare in the contract that he is not a partner and is not to be considered a partner. In each case the whole circumstances must be considered”. Lord Moncrieff
Can still be liable for company debt even if it states in the Memorandum of Agreement that you are not to be.

Question 6

Sharpe v Carswell 1910

Answer 6

Part Ownership -
Owned shares in a container ship. The ship carried cargo, sharpe performed duties as master of the ship and received a salary. Sharpe died as a result of injuries in the course of employment.
His widow tried to claim money under the workers compensation act 1906 from the owners.
Court held that he was an employee despite the fact that he did have some shares in the company. Section 2(1) of the partnership act.

Question 7

Mair v Wood 1948

Answer 7

Legal Entity -
Lord President Cooper – “fundamental to the Scots law of partnership that the firm is a legal persona distinct from the individuals who compose it”
Case to cite to state one partner cannot sue another.

Question 8

Bryan v Butters Brothers & Company (1892)

Answer 8

Partners binding the firm -
Court said that the principal had the ability to bind the firm as he was a partner, does not matter what the agreement said but it matters what the 3p knew.

Question 9

Mann v D’Arcy and others [1968]

Answer 9

Oral agreement entered into -
D’Arcy was the active partner. The arrangement was to go into a single partnership with Mann for this venture.
Court said yes, as they regularly did this. The partnership was bound regardless.
If he had been expressly excluded it would be apparent authority and if he did not know it would be implied.
Section 5

Question 10

Fortune v Young 1918

Answer 10

Binding the Firm -
A partner who signs an obligatory document out with that of the course of business. This does not mean that the individual partner can escape it.
Section 5

Question 11

Mercantile Credit Co. v Garrod [1962]

Answer 11

Binding the Firm -
Must look into the business that the company is in as this can be significant. If things are sold out with the business by X, they can be personally liable.
Section 5

Question 12

Kirkintilloch Equitable Co-op Society Ltd v Livingstone and others 1972

Answer 12

Liability of the firm for wrongs -
Court said that everyone is liable for the firms mistakes.
Section 10

Question 13

Dubai Aluminium v Salaam [2002]

Answer 13

Liability of the firm for wrongs -
The actions of a partner were so close to that of the business that they could be held liable.
Section 10

Question 14

Clark v Jamieson 1909

Answer 14

Earnings v. Profit -
Mr. Clark was employed to work a small boat in Shetland. Remuneration was a share in the gross earnings of the boat. Clark drowned and his widow tried to claim compensation under the workman’s compensation act. Court held him to be a workman and not a partner.
Each man was to receive a share in the earnings not the profits.
Section 2(2) of the partnership act

Question 15

Cox v Coulson [1916]

Answer 15

Earning v. Profit -
The sharing receipt was not in partnership. Sharing in profits and receipts is different. This means bearing the loss together. So it is clear that they are not in partnership.

Consider the difference between sharing in the profits (net profits after expenses/costs/outlays) and sharing in the sales (gross returns).
Section 2(3) Partnership Act

Question 16

Cox v Hickman (1860)

Answer 16

Debt payments do not constitute a partnership - 
"I greatly doubt whether the creditor, who merely obtains payment of a debt, and no more, out of the profits of the business, can be said to share the profits" - Wrightman J
Section 3(a) Partnership Act

Question 17

Newstead v Frost

Answer 17

View of Profit -
Created a partnership to exploit profits. HofL said it was created to exploit profits and that the tax avoidance was not enough. There was an overall view of profit.

Question 18

Tower Cabinet Co v Ingram 1949

Answer 18

Partners Leaving -
Ingram left and had notified the correct people. C used the wrong paper to a new client. This was deemed to be wrongful interpretation rather than the new partnership being brought back into existence.
Could have applied Section 36 Partnership Act.

Question 19

Martyn v Gray 1863

Answer 19

Holding out to be a Partner -
Man supplied goods and was not a partner. Held himself out to be one based on the the firms credit to obtain goods. The jury said he had held himself out to be a partner.

Question 20

Scarf v Jardine 1882

Answer 20

Old v. New (Partners) -
Firm dissolved and 1 partner carried on. Was supplied goods from an old supplier and was then sued. They became insolvent and the HofL held that it was liable under the doctrine of personal bar. As the old partner held himself out as such; so was barred from doing otherwise.

Question 21

Stekel v Ellice 1973

Answer 21

Salaried Partner -
“In terms of the outside world it often will matter little whether a man is a full partner or a salaried partner. Salaried partners are held out as being a partner; and the partners will be liable for his actions accordingly”. Megarry J

Question 22

Heddle’s Executrix v Marwick and Hourston’s Trustee 1888

Answer 22

Commencement and Cessation of Liability -
Action raised for a loan prior to the partnership - it was held they would have to pay this.
“It must always be a question of circumstances whether a new firm becomes responsible for the obligation of the old”. Lord Shand

Question 23

Welsh v Knarston 1972

Answer 23

Commencement and Cessation of Liability -
The Firm failed to raise a PPI claim on time and so it was barred. Two partners left the firm; subsequently an action for negligence was raised. The two partners argued that they were not liable. There was a continuing obligation and so they were liable.

Question 24

Sim v Howat 2011

Answer 24

Continuing Obligation of retired partners -

Sim was found to be liable as liable passed from the old firm to the new firm.

Question 25

Munro v Stein 1961

Answer 25

Showed you could not use property of the firm for unrelated business. Every partner is a collective owner.

Question 26

Clements v Norris 1878

Answer 26

Expulsion of Partners -

Renewed a lease in his own name and said the partnership should continue.

Question 27

Carmichael v Evans 1904

Answer 27

Expulsion of Partners -

Junior Partner was given notice to leave.

Question 28

Sheppard & Cooper Ltd v TSH Bank plc 1997

Answer 28

Partners leaving -

The firm stays the same regardless of partners leaving or joining.

Question 29

Law v Law 1905

Answer 29

Accountability of partners for private profits -
If one party knows more about a transaction they must inform the other of the material knowledge. If not then the transaction is voidable.

Question 30

Ferguson v Mackay 1985

Answer 30

Accountability of partners for private profits -

The fiduciary relationship continues regardless of a partner retiring.

Question 31

Pender v Henderson 1864

Answer 31

Accountability of partners for private profits -

Court stated that partners must account for any profit they make as a result of a firm transaction.

Question 32

Aas v Benham 1891

Answer 32

If as a partner you obtain information and use that information for any purpose other than that of the firm; then they must account to the firm for any profits made as a result.

Question 33

Ross Harper & Murphy v Banks 2000

Answer 33

Duty to act in good faith -

Varying standards of care. Should be decided on a case by case basis.

Question 34

Ferguson v Wilson 1904

Answer 34

Do not have to have the intent to mislead in order to allow your co-partners to leave. An error is enough intent. Does not need to be shown.

Question 35

Jassal’s Executrix v Jassal’s Trustee 1988

Answer 35

Must look at the essential features of a partnership and if they are ongoing so is the partnership.

Question 36

Hill v Wylie 1895

Answer 36

Subject to Section 33 of the act. Lord Justice Clark said no this cannot override it.

Question 37

Sutherland v Barnes 1997

Answer 37

Dissolution by the court -
GP’s lack of engagement constituted dissolution of the partnership. The relationship of trust was gone and so dissolution could occur under Section 35(f).

Question 38

Dickie v Mitchell 1874

Answer 38

Distribution of Assets -

Judicial factor was appointed after one partner became incapable of managing his farm.

Question 39

Wilson v Dunbar 1988

Answer 39

Distribution of Assets -
Surviving partner was allowed to purchase the deceased’s shares. Court order to take the shares at market value not book value; as there was no specific agreement for book value to be taken.