LOBO
Week 2
PARTNERSHIP
Common law concept- partnership is formed between 2 or more persons carrying on business in common for the purpose of making a profit.
Ordinary partnerships are by law assumed and presumed to be based on the mutual trust and confidence of each partner in the skill, knowledge and integrity of every other partner.
As between members and the outside world, each partner is the unlimited agent of every other in every manner connected with the partnership business, and not being in its nature beyond the scope of partnership: Re Agriculturalist Cattle Insurance Co (1870) per James LJ.
A partnership is a form of unincorporated business association
Is a branch of agency law in recognition of the fact that the partners when acting in the course of their partnership business, are acting as agents for one another; in other words the partners are as principals responsible for the acts of each other.
Partnership agreement may take a formal form ie a deed of partnership, or a written agreement not under seal, or partnership may be formed orally.
A well constructed and detailed partnership agreement takes place of a company’s memorandum and articles of association.
Obligation to Form a Company
The Corporations Act imposes a limit in s155 on the number of partners a partnership can have.
Partnership must not be of more than 20 persons – except where a relevant declaration is in force relating to a particular profession eg lawyers
Regulated by:
- contract
- fiduciary obligations (equitable)
- agreement (partnership)
- statute
DETERMINING WHETHER A PARTNERSHIP EXISTS
The indicia of Partnership
It is important to determine whether or not a partnership does actually exist in the situation where two or more persons are involved in a particular business or business transaction.
It may be that the relationship is simply a contractual one between two persons acting as principal, or it may...