Partnership Law Notes.docx

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Monash University
Business Research
Roger Gamble

Partnership A partnership is the relation between persons carrying on a business in common with a view of profit. – Partnership Act, s5 A partnership implies two things: 1. A business being carried on in common ‘Smith v Anderson’ 2. Such business being carried on with a view to profit ‘Goudberg v Herniman’ The most important factors to be taken into account when determining whether or not a partnership exists are: a) The intention of the parties b) Participation in the net profits of the business and an agency relationship The following factors shall also be taken into account:  Joint tenancy does not of itself create a partnership  Sharing of gross returns does not of itself create a partnership  Receipt of profits varying with that of business does not itself make one a partner A joint venture is created when two or more people enter into an agreement to exploit a business opportunity with respect to a particular project. It allows avoidance of partnership’s unlimited liability when the features of a partnership are not taken on. There is no agency and it is possible for one party to make a profit whereas the other makes a loss – ‘Cox v Coulson’ Partnerships arise by agreement and partnership law affords partners great scope to establish the terms of their relationship Only in the absence of a prior agreement are the implied terms from the Partnership Act, s28 activated: Refer to pg.384 of textbook. A majority of partners cannot expel a partner unless power to do so has been conferred by express agreement between them. Also, every partner is entitled to natural justice; they must be given notice of any charge and reasonable opportunity to prepare their case. Fiduciary relationship of trust and confidence exists between partners and gives rise to a duty of full disclosure. It does not conclude with dissolution, only after the final settlement of accounts. – ‘Chan v Zacharia’ A partner may retire at any time
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