PARTNERSHIP

PROBLEM 2 Week II

COMMERCIAL TRANSACTIONS - PARTNERSHIP

PROBLEM NO.4 - INDIVIDUAL ASSESSMENT - 1ST TERM

BRIEF FACTS

Five persons intend to form a business organisation dealing in photo processing.

They wish to contribute to the start-up capital of the business in different ways,
some with cash, others with skills and yet still others with skills and expertise.
They are seeking legal advice concerning their intentions.

Legal Issues.

1. Whether it is advisable in the circumstances for the parties to form a

partnership.
2. Whether the facts provided are sufficient for purposes of drafting the deed.
3. Whether property contributed with reservations becomes partnership
property.
4. Whether the firm when formed will be liable for Bomboka’s debt.
5. Whether Wambwa is entitled to the 15% of the business profits as he
demands.
6. Whether it is necessary to register a partnership deed and if so what are
the procedural requirements?
7. Whether there are any duties and fees payable on the formation of the
partnership and if so, what are these?
8. What professional fees are the parties required to pay for the legal advise
and other services rendered?

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Law Applicable

OPINION

There are a number of business organisations which include a private limited

liability company, Public Limited liability company, partnership, cooperative
society, unregistered associations such as clubs and trusts. All these named
business organisations have advantages and disadvantages.

However, deducing from the facts, the appropriate business organisation would
be a partnership. Therefore, the legal advice given is in line with this form of
business.

Definition – Section 3(1) of the Partnership Act defines a partnership as a

relation which; subsists between persons carrying on a business in common with
a view of profits. This statutory definition is fortified by Lord Justice Herman in
Keith Spicer Ltd. v Mansell [1970] 1 WLR 333 who defined – partnership in the
same words. In W v Comm. Of Taxes 1969(1) ALR Comm. 91 held that there
are 4 elements of a partnership (a) Each partner must pool something to the
business i.e. money, asset, labour (b) Business must be carried on for the joint
benefit of all partners (c) Object must be to make a profit (d) the business must
be legal.

The principal difference b’tn a company and a partnership, is that the former is a
cooperate entity while the latter isn’t. It is therefore important to note therefore
that a partnership does not enjoy rights and remedies distinct from those of its
individual members. Partnership cannot own property on its own, the firm’s
property belongs to the partners jointly. Persons who deal with the partnership
contract with the parties jointly. Action for a firm debt may be taken against

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anyone of the partners. The death of a partner usually puts an end to the
existence of the firm.

However, the partnership has a number of advantages. In the 1st place the
operation of partnership is flexible as compared to the strict control of
organisations like companies. Unlike companies whose objects clauses are
restricted and difficult to alter, partnership deeds are freely alterable in anyway
agreed among all the partners. Partnership are not only easy to form and
manage due to the few numbers, but also easy to dissolve. No legal formalities
are thus required in its formation.

Sect. 3 of Business Names Registration Act requires registration of business

name if the true surnames of the parties are not used. This is easier on
partnership b’se they use the true surnames of the parties.

Further still, under taxation, partners (ITA Sect 75) are taxed individually
including their share from. The partnership returns. Companies on the other
hand are taxed at a corporate tax rate and the individual shareholders are also
taxed.

2. As regards information needed to draft a deed its important to consider the

check list below and ask about any matters in the check list not provided by the
facts.

The particulars of all the proposed partners are;

The proposed name of the partnership; description of the business; all the
licences and insurance policies. Certificate of ownership and the like to be
assigned to the new partnership from the proposed photo processing laboratory
business; will all the partners assume all the liabilities of old business? Location
of the business, the duration of the partnership capital contributions valuing;
Returns to the partners. Accounting, management, time dedicated to the

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business, disputes, prohibited acts, what would be the effect of death, disability
on the existence of the partnership; how expulsion to be done, admission of new
partners and dissolution and winding up.

3. Section 24 of P.A. defines partnership property to include all property

purchased or otherwise acquired for purposes of the partnership.
In Pocook v Carter [1912] 1 Ch.Rep ___ it was held that the partnership had
interest in the property a partner had pledged as the principal location until he
ceased to be a partner.
(Sect. 23 of P.A. states that rights of partners maybe varied by the consent of all
the partners).
Singh v Nahar where the partnership deed provided the partners were entitled to
interalia assets of the business in equal shares and the premises were deemed
to be an asset of the business – Relate to facts.
Davis v Davis [1894] 1 Ch. 399. That the use of property by a partnership does
not necessarily mean its partnership property – relate to the facts i.e. Nakiwala &
Wambwa.

4. Sect 7. Every partner is an agent of the partnership and binds it. Sect. 11
that every partner in a firm is liable jointly with other partners for all the debts and
obligations of the firm incurred which the is a partner – the Sections all refer to a
period when partnership is in business and not before its formation. There are
activities of a partner which though within the ambit of Sect.7 will not bind the
firm. Thus in North Ltd v Bbale [1976] NCLR 448. That the partnership is not
liable for personal debts of a partner unless incurred expressly/impliedly on
behalf of partnership. Africa Continental Bank v Babayemi [1970] 1 ALR
Comm. 326 at 352 Dosumu J. said that where a partner borrows money for the
declared purpose of insing…. Partnership capital or raising the whole of or part of
the capital agreed to be subscribed in order to start the firm, the firm will not be
bound unless actual authority or ratification can be proved. Thus, relate to
Bomboka’s loan.

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5. Sect. 28(1) P.A. That partners are entitled to share equally in capital and
profits of the business. Warner v Smith (1863) 1 DEG JESM 337. The court
held that in the absence of any agreement as to sharing of profits, they must be
shared equally.
However, Sect.28 expressly states that everything depends on the agreement of
the partners. Thus, it will depends on the agreement of the partners. Thus, it will
depend on the other partners if they agree he can, if not he cant – Relate to facts
i.e Wambwa – 15%.

6. Sect. 14 of Registration of Documents provides that registration of a

document shall not lcure any defect in any document registered. In Kafeero v
Turyagenda (1980) HCB 122 where the issue arose as to whether a document
that had been registered 6 years after the registration of the firm rendered it
invalid. It was held that its registration or non-registration of a document has
bearing on its validity.

In Sterios Thomopoules and Anor v John Madilas [1946] 10 W.C.C. 269

That a partnership can arise from a mere agreement to agree which is
implemented by all the partners by conduct.

Sect. 17 of Registration of Documents Act states that every certified copy of any
registered deed purporting to be signed by the Registrar shall be receivable in
evidence in any civil case. Thus the importance of registering the deed.

Sect.15 of Registration of Document further states that the registered document

becomes a public document and can be searched. This would help act as a
caveat to any one who wishes to contest the existence of partnership. Further,
sect.72(b) of Evidence Act states that any document registered is a public
document and can be adduced in evidence, it will be evidence of its own.

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Procedure

 A stamp should be gotten from the Revenue office under the Stamps Act
under the Stamps (Amendment Act) Act 12 of 2002 would require the
payment of 5,000/= for the stamp – Rule 48.

 Adherence to the Schedule of Registration of Documents Act as

amended, the payment of registration would be 500/=.

7. On Stamp duty, under sect 2(1) of the Stamps Act provides that
instruments chargeable with a duty as the amount is respectively stated in the
Schedule of the Stamps (Amendment) Act, payment of such a deed will be
5,000/=

Under Sect 19 of the same Act states that every instrument chargeable with duty
which is executed by any person in Uganda shall be stamped within 30 days of
execution.

Sect. 38 of the Act provides that no Instrument chargeable with duty shall be
admitted in evidence unless such Instrument is duly stamped.
Also under the Stamps Act, partnership duty is 5,000/= as per No. 48 of the
Stamps (Amendment) Act of 2002 (First Part).

The licencing fees under the Trade Licencing Act.No.14 of 1969 requires a
payment 500/= per folio under section 7 x 6 = 3,000/=.

Under the BNRA as amended by BN (Amendment) Rules S.I No.8 of 1989, Part
I of the Schedule provides that the application to register a name is 2,600/= and
certified copy of that is 100/= and entering of a name on the register under the
same schedule is 400/=.

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8. On Remuneration, the 5th Schedule to the Advocates (Remuneration and
Taxation of Costs) Rules, Part I of para (b) provides for the cost of drawing a
deed is 10,000/= per folio but his depends on the matter. In this case I would
charge them 20,000/= per folio due to the complexity of the matter part Part 2(a)
on attendance in person or by telephone per 15 mins. or part there of will be
10,000/=.

Part 6(a) on correspondence, letters will be 20,000/= .

6(b) Receiving and perusing a letter = 5,000/=
Part 7. Legal opinion and advise depends on circumstances but do not charge
less
than 65,000=.
Disbursements are included in the expenses.

REPUBLIC OF UGANDA

IN THE MATTER OF THE PARTNERSHIP ACT CAP 86

THIS DEED OF PARTNERSHIP ISMADE THIS 11 TH DAY OF OCTOBER 2003

BY AND AMONG PERSONS

1. AMON SEMPA P.O. BOX 93 MENGO.

2. BEN OLOYA P.O. BOX 41 KAMPALA.
3. ANDREW BOMBOKA P.O. BOX 33 WANDEGEYA
4. JANE NAKIWALA P.O. BOX 1431, KAMWOKYA.
5. PATRICK WAMBWA P.O. BOX 34, KAMPALA
(Each of whom is hereinafter referred to as “a partner” and collectively
as “the partners”).

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WHEREBY IT IS AGREED AS FOLLOWS:

The partners do form such a partnership the terms of which, save as expressly or
impliedly set down herebelow, shall be governed by the Partnership Act Cap.86
Law of Uganda and the relevant common law.

ARTICLE I: NAME, ADDRESS, AND PLACE OF BUSINESS

1. The partnership shall be carried on under the style and name of

SEMPA & PARTNERS.

2. The principal place of business shall be situate at Plot 14, on Kampala

Road or at any other place as partners from time to time agreed.

3. The postal address of the firm shall be 91, Kampala.

ARTICLE II: NATURE AND DESCRIPTION

1. The business of the partnership shall be photo processing and shall

carry on any other business as the partners shall from time to time
agreed.

ARTICLE III: COMMENCEMENT AND DURATION

1. The partnership shall be deemed to have commenced on 11th day of

October and shall continue until determined as hereinafter provided.

ARTICLE IV: PARTNERSHIP CAPITAL

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 1. The limited capital shall be as herein provided by the respective
partners.
a) Amon Sempa: Photo processing laboratory.
b) Ben Oloya: Computer worth 3 million.
c) Andrew Bamboka: Electricity generator, 500,000/= and vast
experience
in photo processing.
d) Jane Nakiwala: A building for 12 months and renovation
expenses.
e) Patrick Wambwa: Motor car for hire and skills in electrical
engineering.

2. Any other property and good will in whatever form acquired by the
partnership shall be deemed capital of the partnership.

ARTICLE V: PROFITS AND LOSSES

1. The net profits and net losses of the partnership shall be distributed as
herein below stated.
a) Save for Patrick Wambwa who shall be entitled to 15% of the share
of net profits, all other partners shall be entitled to equals share of
net profits and losses.

ARTICLE VI: MANAGEMENT

1. Each partner shall have an equal say in the running of the partnership
business.

2. Without prejudice to the aforegoing, the managing partners shall be

Amon Sempa and Patrick Wambwa.

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 3. Decisions affecting the partnership shall be reached at in a properly
convened, meeting of all the partners to be held at the principal place
of business on such days and intervals as partners shall deem fit.

ARTICLE VII: ACCOUNTS AND BOOKS OF ACCOUNTS

1. The usual and proper books of accounts including those required by

law shall be kept by the firm and each partner shall have fee access to
the said at all time.

2. The accounting year of the partnership shall run from 1st July – 31st
June of the following year.

3. The Bankers of the partnership shall be Stanbic Bank (U) Ltd. Main
Branch, and the signatories to the Bank Account shall be managing
partners.

ARTICLE VIII: DUTIES OF PARTNERS

1. Partners shall be faithful, loyal and demonstrate utmost good faith in all
dealings in partnership and use their best endeavours to promote
partnership business.
2. Each partner shall duly and punctually discharge his/her debts and
liabilities.
3. No partner shall give credit or lend any of the partnership monies.

ARTICLE IX: RESOLUTION OF DISPUTES

All disputes and questions arising btn and among partners relating directly to the
partnership shall be referred to an independent arbitrator.

ARTICLE X: DISSOLUTION

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 1. The firm shall be dissolved as when;
a) The court so orders
b) All partners agree
c) For avoidance of any doubt, the death, bankruptcy, retirement or
resignation of a partner shall not dissolve the firm.

ARTICLE XI: DEATH AND DISABILITY

In the event of death, disability, retirement or bankruptcy, in respect of any
partner, the remaining partners shall have the right to continue the partnership
under the present name and shall have the option to purchase at a fair market
value the share of such partner.

ARTICLE XII: AMENDMENT

This deed may be amended if all partners are in agreement thereto.

IN WITNESS THEREOF, the parties whose names appear, hereinafter are

desirous of being formed into a partnership in presenc eof those persons and are
respectively agreeing to a firm against their respective names.

DATED at Kampala, this _____ day of October 2003.

Signed, sealed and delivered by the said

AMON SEMPA _____________________

BEN OLOYA _____________________
ANDREW BAMBOKA _____________________
JANE NAKIWALA _____________________
PATRICK WAMBWA _____________________

All in presence of: SIGNATURE _________________

FULL NAME: KATO PETER

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 P.O. BOX 98, KAMPALA
ADVOCATE

DRAWN & FILED BY:

Firm A & CO. ADVOCATES
PLOT 14 LUNGUJJA,
P.O. BOX 91, KAMPALA

Questions on Partnerships
Brief Facts
Four persons belong to a p/ship. 2 are dormant while the other two are active.
The active borrowed money and diverted it for their owner use. They also

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pledged the firm’s credit for purposes not connected to the firm’s biz. One of the
dormant partner’s retired and another expelled. There was competition with the
firm. The new partner was admitted, the firm has not paid rent and is facing a no.
suits.

Legal issues:
Whether the firm can be held liable for its debts. (Stanbic, Royal cycles and
mighty investment)
What is the liability of the partners regarding the firm’s debts
Whether Asaba’s application of firm’s funds to buy a taxi was lawful.
Whether a partner can legally compete with the firm.
Whether male was obliged to disclose this investments in private ventures
Whether a partner can dismiss another (whether Kapo’s dismissal was lawfull)
How the creditors would recover.

Law Applicable:
Partnership Act Cap. 86 ammended by Act. 7 of 1998
Civil Procedure Act Cap. 65
Civil Procedure Rules S.I. 65-3 as ammended by S.I. 26 of 1998
TYA Cap. 205
Arbitration and Reconcilliation Act No. 7 of 2001
Distress for rent (Bailiffs) Act Cap. 68
Contract Act Cap. 75 (now cap. 73 laws of Ug.
Commercial court mediation/pilot project) 2000)

Resolution:
- Section 11 of P.A that every partner is jointly liable for the firm & debt and
obligations incurred while he is partner
- Sect. 8 partners are bound of the acts of the firm Gen. rule

(Liability of partners)

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- Asaba’s loans got from the firm.
- Sect. 24 That all ppty brough into the firm whether by purchase or otherwise,
on a/c of the firm, is p/ship ppty
- Funds – p/ship ppty – illegal for personal use of p/ship funds.
- Sect. 25 – property bought with money belonging to firm is deemed to be
firm’s ppty. I.e the taxi and shop – Gaba
- Sect. 33(1) the partners must account for every benefit acquired with the
consent of other partners or from use of p/ship ppty name or biz connection.

Thus Asaba’s use of firm’s headed paper was illegal and should make good of
the loss.

Competition with the firm.

- Sect. 34 not to compete with the firm i.e not to set up same biz, otherwise
account for the profits made and payover to the firm. This male must account
for the profits. Would be in breach of fidicuary relationship duty.

Expelling of Kapo.
Sect. 29 that no majority partners can expel unless there is power to do so.
Expressly provided by the p/ship agreement Asaba must prove that express
provision.

Retirement:
Sect. 30(1) that reasonable notice is sufficient determination of the p/ship.

Liability of partners:
Gen. rule – sect. 11 and sect. 8
- Sect. 21(1) admitted partner does not bound.
(2) retired not bound by acts after retirement
Sect. 20 – notice to acting partner to be notice to the firm – notice given to co-
partners.

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However Sali would be still liable to 3rd party(ies) who hold no notice (mighty
investment) and sect. 46/(2) a notice (advertisement) to those who had no
dealings with the firm – Royal cycles debt incurred after his retirement and was
pledging firm’s credit for acts not connected with firm’s biz. Sect. 9 will make
Asaba liable personally for the debt. Sali will be exonerated.
- Whether the use of 10 m and 5 m amounted to misappropriation by Asaba
and male of funds by partners.
- Sect. 24(!) it would p/ship ppty (30m/=) and must held and applied exclusively
for p/ship purposes.
- Sect. 25 – property bought by p/ship money is p/ship property unless contrary
intention applies
- Whether competition with the firm was lawful.
- Sect. 34 that partners has a duty not to compete with firm without consent of
the partners – a/c for and payover in profits Aas v. Benham (1891)2 Ch. 244
a partner not allowed to derive exclusive advantage by engaging in a
transaction in rivarly with the firm. Thus male under 33(1) also A/c for private
profits as a result of using p/ship property [i.e s.25 all that is p/ship property)
- Whether the explusion was lawfull
- Sect. 29 no majority partner to expel another
- Whether the new partner was admitted legally
- Sect. 28(7) there must be consent of all partners.
Remedy to Kapo
Sue for Declaratory order 0
Seek an injunction 0.37
Dissolution of the p/ship. Sect. 39(d) or (f).

How the creditors can recover

Stanbic can sue under 0.27 p/ship
- Go under summary procedure 0.33 after giving intention to sue
- Summary plaint with an affidavit

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 (list evidence, witnesses, and authorities).
- Summons to seek leave to file defence
- Sue partners dealing as chrystal enterprise
Under sect. 11 – if loan by way of mortgage Decree s/9

Mighty investment.
- Distress for rent/bailiffs Act

Royal cycles
Proceed against Asaba personally – sect. 9

Forum
- Sect. 2 P/A states courts means High Court
- An Arbitrator can come in if so agreed in the p/ship Deed.

Whether Sali’s retirement could exonerate him from Firm’s debts

Whether Birungi was validly admitted into the firm, if so whether the is liable for
firm’s debts.
Whether Kapa’s expulsion was legal and if so whether he is liable for the firm’s
debts.
Whether a partner can set up a business to competect with the firm

Admission of Birungi
Sect. 28(7) consent of all persons

Advise on creditors - Stanbic

- Notice of intention to sue
- Summary plaint 0.33 interest rate fixed
- An affidavit supporting the plaint

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Mighty investment
Distress for Rent (Bailiffs) Act.

Royal Cycles Ltd.

Sect. 9 go against Asaba personally under summary procedure 0.33

Drawn & filed by;

Firm ….& Co. Advocates
P.O. Box 3
Kagugube Road
KAMPALA

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA

HOLDEN AT HIGH COURT CIRCUIT, NAKAWA
CIVIL SUIT NO.1 OF 2004

STANBIC BANK (U) LTD ============================== PLAINTIFFS

VERSUS
1. RONNIE ASABA
2. DEAN SSALI =============================
DEFENDANTS
3. TEO KAPO
4. BETTY MALE
SUMMARY PLAINT
(0.33)

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The plaintiff is a Ltd liability co. incorporated under the laws of Uganda
(Companies Act) whose address for purpose of this suit is c/o Firm….P.O. Box
723 K’la.

1. That the defendants are partners are Chrystal Enterprises

2. That the counsel for plaintiff undertakes to serve them personally
3. That the plaintiff is owed 30m/= with interest 25% per annum arising out of
a loan facility extended to the defendants on 5th July 2000.
4. That the loan was acquired with the authority of all the partners.
5. That despite numerous reminders by the plaintiffs, they have paid no heed
which has been taken as an act of default.
6. That the defendants have no defence to the suit
7. That this matter from K’la of this honourable court.

WHEREFORE, pray for

a) An order of payment of the amount due (principal & interest)
b) That judgment should entered in their favour
c) That interest at 25% from date of judgment till full payment
d) An order for the costs of the suit

DATED at K’la at this….day of Oct. 2003.

……………………………………..
COUNSEL

Drawn & filed by;

Firm ….& Co. Advocates
P.O. Box 3
Kagugube Road
KAMPALA
Firm ….& Co. Advocates

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 P.O. Box 71
Kagugube Road
Plot 4
Makerere K’la

Our Ref: FA/LDC/2003

Chrystal Enterprises

Dear Sir,

RE: Notice of intended suit

We proceed on instructions of our client Stanbic Bank (U) Ltd, P.O. Box 71 K’la
on which we address you as follows:

As you are fully aware, that on 25th July, 200o, you obtained a loan from our
client amounting to 30,000,000/= with an interest of 25% per annum was
repayable within one year.

That you have failed to clear the above mentioned sum. We take that to be an
act of default.

By THIS NOTICE we are giving you 7 days within to pay! Clear the principal sum
and interest thereof plus 500,000 being the costs.

Should you fail to comply with this NOTICE we shall have no option but to
institute legal proceedings.

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STAND DULY WARNED.

…………………………………………….
For: Firm ….& Co. Advocates.

PARTNERSHIP

- Automobile Association of Nigeria v. Registrar of Business Names

1969(a) ALR Comm. A dedipe J. stated that a partnership is not a legal entity
like a ltd company or a person. Therefore, it cannot sure or be sued except in
the names of the individual partners.

- Sadler v. Whiteman; Farwell L.J. Stated that a firm has no legal existence
and that partners carry on business both as principals and agents for each
other within the scope of the p/ship business. That the firm’s name is a mere
expression which does not connote a legal entity.

- Emorut v. Ojakol It was held that the act of opening a bank account
preparatory to the conclusion of a p/ship did not amount to creation of a
p/ship.

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- Heshaw v. Roberts Held that the existance of a p/ship depends on the
carrying on of business in p/ship and not on the agreement to form a p/ship.
If the parties have begun to carry on business (though prematurely) they will
be regarded as partners.

- Oginni v. Oginni That co-ownership of ppty does not of itself create a

partnership between the co-owners, whether or not they share profits made
by the use of it.

- Kay v. Johnson A partnership means that the joint ppty shall be employed
for same purposes which shall produce returns in the shape of profits or so as
to add to its value, but nothing of that sort was done in this case. It was mere
joint occupation under a joint ownership of the ppty.

- Smith v. Anderson in BreH .J. that carrying on business implies a repetition

acts and excludes in the case of an association formed for doing one.
Particular act which is never to be repeated. That a series of acts is to be a
series of acts which constitutes a business.

- Ojemen v. Okoafuda That a p/ship could be established for a single

undertaking and dissolves upon the termination of that undertaking. If Sect.
36(b)

- Mensah v. Adu & Ors. That although p/ship is a relation b’tn persons with
the object of carrying on business with a view to profit, the profit need not to
be shared. The profit may be applied for charitable or other purpose.

Sect. 4(3) Cox v, Hickman That while the mere sharing of profits is strong
evidence of the existence of a p/ship, this does not necessarily follow that a
p/ship exists. This was a departure from original view that entitlement to a share
of profits automatically rendered the recipient thereof a partner in the business.

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The rationale behind cox’s case is that the existence of a partnership is
established by showing that there exists a business carried on behalf of partners
as principals.

Sect. 4(3) contradicts itself – Davis v. Davis attempts to explain it. That if the
only evidence is of profit sharing, then the court must act on it inorder to declare
a partnership. However, if there are other circumstances to be considered, the
sharing of profits is merely a factor in decision, being one among equals.
- Osman Fadal Ismail v. Jaji Mohamed Ajib Osman – Somali case.
“The receipt by a person of a share of the profits of a business is strong evidence
that he is a partner, but whether or not the relationship exists depends on the real
intention and agreement of the parties and not upon the mere fact of participation
in the profits.
- Pooley v. Driver in ascertainment of intention. Where two people entered
into a p/ship for 14 years. In order to raise capital they transferred shares to a
3rd party whose contributions were to be considered as loans. It was held that
the true relationship b’tn the 2 partners and the 3rd party was that of active
and dormant partners, respectively rather than that of borrowers and lenders.
Specific instances which do not give rise to partnership
- Sect. 4(3)(a) the receipt by a person of a debt or other liquidated amount by
instalments or otherwise out of the accruing profits of a bliz does not of itself
make him a partner in the bliz or liable as such..
- In Cox v. Hickman the creditors agreed with the debtor to allow him to carry
on his trade under their supervision. It was further agreed that the creditors
would be periodically repaid out of the profits in return for the trade being
exclusively returned not partners since on the facts they had not been
carrying on trade as the debtor’s agent. This there was no mutual
arrangement to trade.
- Sect. 4(3)(b) that a contract for the remuneration of a servant or agent of a
person engaged in a business by a share of the profits of the business does

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 not of itself make the servant or agent a partner in the business or liable as
such.
- Walker v. Hirsch The plaintiff who was a clerk in the firm agreed to advance
GBP 180 and 1/8 of the net profits and losses. It was held that he remained a
servant and as such could not move the court to windup the firm
- Akber Merali Alibhai v. Fidahumssein & Co. ltd. That a partner cannot be
an employee of p/ship since the position involves being both employer and
employee.
- Sect. 4(3)(d) read it
In Aal v. Mohammed It was held that an agreement whereby and
indemnified another against the loss of his advances is not a contract of
p/ship but a loan. It is a contract of a loan because the only risk is that of the
insolvency of the guarantor – there is no element of common risk at all and
that is the essence of a partnership. From the provision, its evidence that the
burden of proof is on the person alleging that a lender in those circumstances
is a partner. – If that’s the lender in those circumstances is a partner, - if
that’s the case then there is no problem with the general rule [sect. 4(3)]
- It’s irrelevant what the agreement describes the r/ship to be. The
determination of a p/ship is an objective test based on the facts of each case.
- Somali’s case of Ismail v. Osman that the advance of money to a p/ship by
a person constitutes him a creditor and not a partner in the firm.
- Sect. 4(3)(e) read it.
- Pratt v. Strick A medical pratictioner assigned his practice by deed to a
purchaser on the terms that he would continue to reside in his liase for 3
months and introduce patients to the practitioner. The deed further provided
that earnings and expenses during 3 months were to be shared equally it was
held that the two medical practitioners were not purchaser from the date of
assignment.

Dormant or sleeping partners

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Ojemen v. Okoafude that there is no evidence from the plaintiff what duty each
partner was to perform. The person’s contribution towards a partnership may be
in ppty, skill, or labour and there is what is called a sleeping or dormant partner,
that’s a person, who contributes ppty, but does not contribute labour.

Partner by Holding out

Re Fraser, exp. Central Bank of London
If a man holds himself out as a partner in a firm and thereby induces another
person to act upon that representation, he is estopped as regards that person
from saying that he is not a partner. The representation may be made either by
acts or words; but estoppel can be relied upon only by the person to whom the
representation has been made in either way and who has acted upon their faith
or it – A person may then be held to be a partner implied.

W v. Commur of Taxes (1969)(1) ALR Comm. 91 Held that the p/ship

agreement is not conclusive evidence of the existing of a p/ship. The App.
applied on biz as a individual, drafted a p/ship deed and reg.d as a p/ship with
names of the proposed partners. The partners didn’t contribute any money and
the biz continued as it was be4, & had the same ban A/C but the profits made
were used as if it was accruing from a p/ship.

Fenston v. Johnson
On whether a person who has lent money to a p/ship is a partner. The lender of
money was to receive profits and losses but we expressly stated it that he was
not be a partner hence wasn’t a partner
- sect. 21(1) A partner is only liable often he his ceased to be a porter or be4
he becomes a partner when there’s a
- Kendall v. Hannington Held a creditor should sue all the partners at once but
if he chooses to sue one or some of them and obtains a judgment and finds
out later, the debt was not fully covered, he can’t proceed against the other
partners he left out.

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Palter v. Zeller

- 4(2) that the sharing of gross-returns doesn’t of it’self create a p/ship cox v.
coulson in coulson was a threatic manager the case applied sect. 4(2) of
the p/ship Act.

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