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1、Section 5 of the PA defines a partnership as: “the relation which exists between persons carrying on a business in common with a view of profit”.(1) The answer to the question “does a partnership exist?” depends on the actual intention of the parties. 1. The normal practice is for the parties to ent
2、er into a written agreement prepared by professional advisers2. In the absence of a written agreement, the parties respective intentions surrounding their relationship will be crucial3. A partnership is contractual in nature a partnership can arise by a formal or simple contract,4. be oral and/or wr
3、itten, or implied from the conduct of the parties.(2) “Carrying on a Business” Definition: There must be a degree of repetition in the parties conduct. An isolated act or transaction will not be carrying on a business unless there is either a contrary intention or the parties intend that the act, tr
4、ansaction or venture will be repeated. Smith v Anderson (1880)(3) “In Common”1. Each party acts as an agent for the other. Agency means that each partner acts on behalf of the principal (which is the partnership) and has the power to bind the other partners to his or her actions (e.g. entering a con
5、tract). 2. The parties share rights and obligations so that each participant benefits from and is liable for partnership obligations. Kang-Kem v Paine (2004)(4) “With a View of Profit”The Partnership business must have been established with the intention of making a profit. Section 6:Rule 1: Co-owne
6、rship of PropertySection 6(1)(a) PA: The joint ownership of property does not itself create a partnership irrespective of whether the owners do or do not share in any profits made by the use of the property or whether the property is held as joint tenants or tenants in common.Rule 2: Sharing of Gros
7、s Returns Section 6(1)(b)PA:The sharing of gross returns does not of itself create a partnership, whether the persons sharing such returns have an interest in any property which is utilised to obtain the returnsCribb v Korn (1911)Rule 3: Sharing ProfitsSection 6(1)(c):The receipt by a person of a sh
8、are of the profits of a business is prima facie evidence that the person is a partner in the business, but simply receiving such a share does not mean the person is a partner(a)Debts paid out of Profits. section 6(1)(c)(i)A person that is repaid a debt out of the business profits does not itself mak
9、e the person a partner in the businessCox v Hickman (1860)(b) Payments to Employees and Agents. section 6(1)(c)(ii)The payment of a share of profits to an employee or agent of the business under a contract does not make the agent or employee a partner in the business(c) Payments of Interest. section
10、s 6(1)(c)(iv) and 6(2)A lender of money to a partnership who receives interest based on the partnerships profits or a percentage of profits instead of interest, does not become a partner in the business, provided that the contract of loan is in writing and signed by the parties.Section 8 recognises
11、that each partner is an agent of the firm and therefore bound to a partners actions within their actual authority. Further, there are four requirements to establish apparent authority:- 1.The transaction involved must be within the scope of the partnership business (“business of the kind”);2. The tr
12、ansaction must be effected in the usual way;3. The outsider knew or should have known that the partner had no actual authority; 4. The outsider must have known, or at least must have believed, that the person with whom he or she was dealing was a partner. Polkinghorne v Holland (1934)Mercantile Cred
13、it Co Ltd v GarrodSection 10: If one partner pledges the credit of a firm for a purpose apparently not connected with the firms ordinary course of business, the firm is not bound, unless the partner is in fact specially authorised by the other partners.Goldberg v Jenkins. Section 11 provides that th
14、e firm will not be liable for a partners actions which exceed those express restrictions if the other party to the transaction had actual knowledge of the restrictions.Section 12: Every partner in a firm is liable jointly with the other partners for all debts and obligations of the firm incurred whi
15、le a partner.1. “Debts and obligations of the firm”: Does not apply to a personal debt or obligation, even if it is for the benefit of the firm.2. Joint Liability: Joint liability means that the partners (or firm) can only be sued in one legal action. If some of the partners are sued and found liabl
16、e, the other partners cannot be sued later. Kendall v Hamilton (1879)Section 13: The partnership is liable in tort for the wrongful acts or omissions of any partner acting in the ordinary course of the firms business or with the authority of the other partners, where a third party suffers loss or injury.1. A wrongful act or omission;2. Committed by a partner;3. The partner was acting either in the ordinary course of the firms business or with the actual or a
