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LAWS08134 Business Entities Partnership Moot
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- LAWS08134 Business Entities
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- The University Of Edinburgh (ED)
LAWS08134 Business Entities Partnership Moot
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Section 5 of the Act- Every partner is an agent of the firm and his other partners forthe purpose of the business of the partnership; and the acts of every partner who does
any act for carrying on in the usual way business of the kind carried on by the firm of
which he is a member bind the firm and his partners, unless the partner so acting has in
fact no authority to act for the firm in the particular matter, and the person with whom
he is dealing either knows that he has no authority, or does not know or believe him to
be a partner
From the facts thus it is clear enough from the provisions of this section that Brian is in
fact an agent of the partnership.
The contract Brian made with Art World is in fact valid and binding.
S38 of the Act- After the dissolution of a partnership the authority of each partner to bind
the firm, and the other rights and obligations of the partners, continue notwithstanding
the dissolution so far as may be necessary to wind up the affairs of the partnership, and
to complete transactions begun but unfinished at the time of the dissolution, but not
otherwise. Provided that the firm is in no case bound by the acts of a partner who has
become bankrupt; but this proviso does not affect the liability of any person who has
after the bankruptcy represented himself or knowingly suffered himself to be
represented as a partner of the bankrupt.
Re Bourne [1906] 2 Ch.427 at pages 431-432 per Romer LJ:
"When a partner dies and the partnership comes to an end, it is not only the right,
but the duty, of the surviving partner to realize the assets for the purpose of
winding up the partnership affairs, including the payment of the partnership
debts".
A surviving partner carried on the business in the partnership name and continued the
partnership banking account, which was overdrawn at the death of the deceased partner,
and remained overdrawn until the final winding-up of the business. After paying certain
moneys into this account and drawing certain moneys out, he deposited with the bank
the title deeds of certain partnership real estate to secure the overdraft:—
Held, that, in the absence of evidence to the contrary, the bank were entitled to assume
that the dealings with the account were for the purpose of winding up the partnership,
and that their mortgage was a valid security, and took priority over the lien of the
deceased partner's executors on the surplus assets for his share in the partnership.
Clark on Partnership , Vol II, at pp 672–673:
“When a partnership is brought to a termination, it still continues to subsist for the
purposes of winding up; and until this has been accomplished, the partnership relation
cannot be said to have entirely ceased. In the absence of special agreement to the
contrary, the former partners have the right and power of winding up. ⃜ In the case of
dissolution by death, the power vests in the surviving partners, to the exclusion of the
representatives of the deceased partner.
“But the partnership, and with it the agency of the former partners to bind their fellows,
at once ceases as to all future contracts; it subsists only for the purposes of winding up,
which will be strictly construed to mean recovering of debts, fulfilling existing obligations,
and calling on the former partners to contribute …. Such powers of agency as the
partners retain is strictly confined to winding up or completing transactions begun, and
not terminated at the date of dissolution”.
Further to this section of the Act, Section 42(1) of the Partnership Act 1890 provides
that “[W]here any member of a firm has died or otherwise ceased to be a partner, and
the surviving or continuing partners carry on the business of the firm with its capital or
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