1. 21 Partnership © Oxford University Press, 2007. All rights reserved.

2. Partnership What is a partnership? the relation that subsists between persons carrying on a business in common with a view of profit key word: relation = relationship, essentially contractual.

3. Partnership cont … Threshold requirements: a valid agreement business being carried on commonality of purpose a view of profit.

4. Partnership cont … Partnership “rules”: co-ownership of assets: not sufficient in itself to create partnership sharing of gross returns: not sufficient in itself to create partnership sharing of net profits: prima facie evidence of partnership, but not conclusive.

5. Partnership cont … Partners’ relations to outsiders: concept of agency liability in contract is joint (must be sued in one action) liability in tort is joint (see above) and several (individual – legal actions can be severed) note liability of partners for crimes note liability as partner by “holding out”.

6. Partnership cont … Relationship of partners to one another: Fiduciary (good faith) relationship - full disclosure no secret profits must not compete with the partnership.

7. Partnership cont … Note: liability of incoming and outgoing partners freedom of contract is preserved special rules regulating partners in the absence of agreement: eg. all partners share equally in capital and profits & contribute equally to losses; all partners may take part in management.

8. Partnership cont … Note: special rules governing partnership property eg. property bought on account of the partnership and in the course of the partnership business is called partnership property expulsion of partners: requires express provision.

9. Partnership cont … Dissolution: without court order – eg. by notice, by expiration, death or bankruptcy of partner; or illegality by court order – eg. mental illness; permanent incapacity; prejudicial conduct; persistent breaches of agreement; business can only be carried on at loss; or on the just and equitable ground.

10. Partnership cont … Consequences of dissolution: public notification rights and obligations of partners continue in order to complete dissolution Distribution after dissolution: note rules that apply subject to any agreement to the contrary.