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Nature Of Partnerships Notes

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Core Module: BLP Paper B

Partnerships The Nature of partnerships Definition of Partnership

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S.1 Partnership Act 1890
-The relation which subsists between
-Persons

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Actual or legal - therefore partnerships can be between 2 companies
-Carrying on a business in common

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S.45 :A Partnership can include"every trade, occupation or profession". Khan v Miah - Indian restaurant getting ready for trading was still considered to be work of a business even though not yet trading

-With a view to profit

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Partners must only intend for business as a WHOLE to make a profit. Not individual partner to make a profit. Young v Zahid: One Partner did not get fixed share of profit, received a set amount instead. Still intended the partnership to make a profit. Therefore a Partnership existed.

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Conduct = Davis v Davis [1894]: conduct meant that there was a partnership - the drawing of identical sums of money implied that the 2 sons had agreed to share profits - they were therefore in partnership.

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Pratt v Strick - no partnership by selling property then seller helping out the buyer in return for payment [i.e. doctor's were sharing profit whilst doctor 1 helped introduce clients to doctor 2]

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No requirement that profit is actually obtained

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Person taking a SHARE of PROFITS - see S.2(3)(a-e) PA: lists 5 situation where it is presumed that a person receiving a share is NOT a partner.

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Always look at the evidence AS A WHOLE! Does the evidence comply wit the definition?
NB. There must be agreement to carry on business in common with view to make a profit. [Written or otherwise]. People can be in partnership without having agreed to a partnership - but they must agree to the definition of a partnership in some form.

Commencement date

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A partnership is established as soon as S.1 definition is satisfied.

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S.1 definition is decided when the partnership commenced, not any agreement to the contrary between the parties [Khan v Miah (2000)]

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S.2: rules for determining existence of partnership. Sets out what does / does not in itself create a partnership e.g. Join owned property does not in itself create a partnership. [David v Davis]

Nature of a partnership 1

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