BTC1110 Study Guide - Final Guide: Fiduciary, Profit Sharing, Common Ownership
15 Jun 2018
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Partnership
The first question if whether the partnership exists?
Under s5 – the relation which subsist between persons carrying on a business in common with a view point of profit
1) It is osideed ayig o a usiess he the at is epetitie o regular in relation to any trade,
occupation or profession
• Khan vs Miah (430) – such work is taken a view to profit and may be undertaken as well by partners
as well as sole traders
• Goudberg v Herniman (431) – they were acting in common with a view of profit, but nothing done by
the, ostituted a ayig o of a usiess. They ee ot pepaatoy as i Kha
• Keith v Mansell (431) – were not carrying on business in common at that stage but were preparing to
do so. The contemplation of a business is not sufficient
2) In common – eed to e a utuality of ights ad oligatio. Whilst all ees ot eed to e atie i
management, as long as it can be carried on their behalf
3) Members of non-for profit club are not partners
Under s6, to determine whether there is a partnership there need to be regard to the Statutory Rules
1) Common ownership
2) Sharing of gross return
3) Profit sharing – creates strong presumption, with the onus of proving there is not a partnership on the other
party
What are the rights and duties under the Partnership Act?
Share equally in capital and profits and losses: s 28(1)
Firm indemnifies every partner for firm-related expenses: s 28(2)
Every partner may take part in management: s 28(5)
No partner entitled to remuneration: s 28(6)
No person can be introduced without consent of all: s 28(7)
Decisions to be decided by majority: s 28(8)
Books to be kept at the place of business and all have access: s 28(9)
Restriction on right to expel a partner: s 29
Partnership is found on mutual trust and confidence, which give rises to a fiduciary duty of full disclosure towards
each other. Partners bound to exercise good faith which continues right through to dissolution.
Chan v Zacharia (440) – D is not permitted to put his interests ahead of those of the partnership and he had to
account to the partnership for any profit he obtained from the lease
Scotts v Lewarne (441) – court found that he was not permitted to use the $300,000
Has A breached their statutory duties?
1) Partners must render true accounts and full information of all things affecting the partnership: s 32
2) Duty to account for benefits derived from dealings with partnership without consent or for use by any of
them of the partnership property, name or business connection: s33(1)
3) Duty not to compete with partnership: s 34
• If a partner, without the consent of the other partners carries on any business of the same
nature as and competing with that of the firm, he must account for an pay over to the firm all
profits made by him in that business
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Document Summary
They (cid:449)e(cid:396)e (cid:374)ot (cid:858)p(cid:396)epa(cid:396)ato(cid:396)y(cid:859) as i(cid:374) kha(cid:374: keith v mansell (431) were not carrying on business in common at that stage but were preparing to do so. The contemplation of a business is not sufficient: in common (cid:374)eed to (cid:271)e a (cid:858)(cid:373)utuality of (cid:396)ights a(cid:374)d o(cid:271)ligatio(cid:374)(cid:859). Whilst all (cid:373)e(cid:373)(cid:271)e(cid:396)s (cid:374)ot (cid:374)eed to (cid:271)e a(cid:272)ti(cid:448)e i(cid:374) management, as long as it can be carried on their behalf: members of non-for profit club are not partners. Share equally in capital and profits and losses: s 28(1) Firm indemnifies every partner for firm-related expenses: s 28(2) Every partner may take part in management: s 28(5) No person can be introduced without consent of all: s 28(7) Decisions to be decided by majority: s 28(8) Books to be kept at the place of business and all have access: s 28(9) Restriction on right to expel a partner: s 29.
