Page images
PDF
EPUB

Mutual release.

count thereof. And, lastly, the said T. F. on the one part, and the said J. G. and J. J. on the other part, do hereby acquit, release, and discharge the others and other of them of and from all and all manner of action, and cause and causes of action, suits, accounts, sums of money, claims, and demands whatsoever, either at law or in equity, which any or either of them, the said, &c., their executors and administrators, now have or hath, or may have, against the others or other of them, their or his heirs, executors, or administrators, for or by reason or on account of the said copartnership, or of any of the covenants and agreements contained in the indenture of copartnership. In witness, &c.

OBSERVATIONS ON ARTICLES OF PARTNERSHIP.

As persons do not, ordinarily speaking, enter into partnership with those in whom they do not repose confidence, it has often occurred that the terms of partnerships, even of a most important character, have not been reduced into writing, the memory and honour of the parties being their only protection; but when it is considered how treacherous the memory often is, and how frequently the rights of third persons depend upon contracts of this character, the propriety of having them reduced into writing must be obvious. Mr Jarman, an able writer, to whom I have before referred, gives the following advice for the guidance of those to whom the preparation of partnership contracts may be entrusted :—“ In preparing partnership deeds,"e says that author, “ care should be taken to mark with precision and clearness the nature of the business ; the period at which the partnership is to commence; the term of its duration; the proportions in which the parties are to share the

d As to the duty of a partner upon retiring, see post. p. 572.

Jarman's edition of Bythewood, vol. vii. 30.

ners.

profits and losses, and advance the capital; the mode in which the accounts are to be kept, and the business in general carried on; the degree of attention to be paid by the respective partners; the grounds, if any, on which one party shall be empowered to expel or exclude the other from the concern; whether, on the decease of either of the partners, his personal representatives are to have the option of succeeding to his share; in what manner, on the dissolution of the partnership, by effluxion of time, death, expulsion, or otherwise, the partnership accounts are to be adjusted, and the affairs wound up; and, lastly, whether any and what stipulation is to be made for referring disputes to arbitration."

The articles of copartnership, though binding be- Dormant and tween the parties themselves, cannot affect the rights nominal partof others, except so far as they may have notice of the terms of the partnership agreement; and to the debtors of a partnership persons may be jointly liable as partners, though no real partnership subsists between them : Thus, if any person were to hold himself out, or permit his name to be used, as one of a partnership firm, he would be liable to be sued jointly with the real members of that firm, although he might have no interest in the partnership effects or profits, for no one shall be permitted to lend his name to others to enable them to obtain a false credit, by leading persons dealing with them to imagine that they had the security of a greater number of persons than was really the case, without incurring that responsi. bility which he had led others to believe he had taken upon himself; but, on the other hand, though a real partner should have concealed his name, and not therefore been the means of obtaining any additional credit for the partnership, yet as he withdraws for his own use part of the funds to which the creditors trusted for the satisfaction of their demands, and thereby renders the ostensible partners less able to satisfy such demands, he incurs the same liabilities

as the more active and ostensible members of the firm.

A person who, at the time of dealing with the partnership, knew the want of interest in an ostensible partner, and not therefore having been misled by false appearances, could not charge such ostensible partner as though he were really interested in the partnership.5

The duties and obligations arising out of a partnership are regulated by the terms of the agreement between the parties; but if such an agreement should not extend to all those duties and obligations, a contract arising from the relationship of partners will be implied, and enforced by the law. If any of the clauses in the copartnership articles are not acted upon by the parties, the articles will be construed as if they did not contain them.

Where the articles are silent on those points, it will be considered (and parol evidence will not be admitted to contradict it) that the partnership commenced at the date of the articles,k and that the parties are equally interested in the profits, and liable to bear the losses in the same proportions. The partners may, as between themselves, make such stipulations and arrangements as to the proportions in which their liabilities and losses shall be borne ; but to persons dealing with the partnership, each partner is liable to the whole amount of the joint liabilities, except as to persons who were acquainted with the provisions of the partnership articles giving an exemption from liability to any of the partners,' or to

Grace v. Smith, 2 Bl. Rep. 998.

Alderson v. Pope, 1 Camp. 404, n. h Crawshay v. Collins, 15 Ves. 226. i Jackson v. Sedgwick, 1 Swanst. 470.

Williams v. Jones, 5 Barn, and Cress. 108. 1 Peacock v. Peacock, 16 Ves. 56. m Ex parte Williams, 11 Ves. 5. n Grace v. Smith, 2 BI. Rep. 998. • Galway v. Matthew, 10 East, 266.

whom any partner bad given notice that he was not or would not be liable, who would be bound by the terms of such provisions, or the disclaimer of liability contained in the notice.

Each partner is bound by all the acts and engagements of the others done and entered into in the course of the partnership business ;9 but not for any unconnected with it, or in cases where the party with whom the partner was dealing actually knew, or from the nature of the transaction, might have known, that it was unconnected with the partnership business, or unauthorized by the partnership articles ;r but except in the cases of a release of a debts of a bond to the Lord Chancellor, and some other matters in bankruptcy, as choosing assignees by himself or attorney, or signing the certificate, one partner cannot bind another by deed, unless under an authority for that purpose given by deed, but a deed executed by one partner on behalf of himself and another, in that other's presence, and with his approbation, is binding on both.

A partnership for an indefinite time may be dis. Dissolution of solved at any time, and by any of the parties ;' but partner where a particular term for its duration has been agreed upon, it cannot be dissolved before the expiration of that period, except by the consent of all

P Lord Galway v. Matthew, 1 Camp. 403 ; Vice v. Fleniming, 1 Yo, and J. 227.

9 Swan v. Steele, 7 East, 210; Ridley v. Taylor, 13 East, 175.

* Id. and Snaith v. Burridge, 4 Taunt. 684; Lord Galway v. Matthew, 10 East, 226; Ex parte Goulding, 2 Glyn and Jam. 118; Ex parte Bonbonus, 8 Ves. 540.

s Tooker's Case, 2 Rep. 68.

* Ex parte Mitchell, 14 Ves. 597; Ex parte Hall, 17 Ves. 62; Ex parte Hodgkinson, 19 Ves. 291. The execution of the certificate, though mentioned here, is not exactly in point, not being under seal. u Burn v. Burn, 3 Ves. 578. Peacock v. Peacock, 16 Ves. 49.

the parties, the decree of a court of equity, or the death, bankruptcy," or (in case of a woman) the marriage of one of the parties.

The lunacy of one of the partners does not of it. self work a dissolution; but it is a circumstance which would have great weight with a court of equity in inducing it to decree a dissolution, especially if there should be but little prospect of a return to soundness of mind, and the party becoming lunatic was the principal acting partner, and one to whom the others looked for the chief management of the business. The court will decree a dissolution whenever the partnership cannot be beneficially carried on, as upon any breach of faith, or such misconduct in any of the partners as would destroy that confidence in him which induced the others to enter into the partnership, or when any violent or lasting dissension exists between them; but every quar. rel, angry dispute, or slight misconduct, is not considered a sufficient ground for decreeing a dissolution.

Upon a dissolution of partnership, during the life of the parties, every step should be taken to make it known. A publication in the Gazette is generally considered a sufficient notice to the world at large, but the customers of the partnership are

Dissolution

Ex parte Ruffin, 6 Ves. 126; Crawford v. Hamilton, 3 Mad. 257; Ex parte Williams, 11 Ves. 5; Crawshay v. Collins, 15 Ves. 228; but in case of the bankruptcy of a partner, his assignees will be tenants in common with the other partners, subject to all their rights; Fox v. Hawbury, Cowp. 449; West v. Skip, I Ves. jun. 239.

* 1 Swanst. 517, n.

y Wrexham v. Huddleston, 1 Swanst. 516, n.; Waters v.
Taylor, 2 Ves. and Bea. 303; Sayer v. Bennett, 1 Cox,
107.
? Baring v. Dix, 1 Cox, 213.

Waters v. Taylor, 2 V. and B. 304.
o Goodman v. Whitcomb, 1 Jac. and W. 592.
Graham v. Hope, Peake, 154.

« PreviousContinue »