LAWS4001 Lecture 2: Week 1 – Introduction to partnerships
Week 1 – Part 2: PARTNERSHIPS
My notes & Bernard
The law of partnership is State and Territory law unlike the law relating to companies, which
is Commonwealth legislation. There is also a large body of case law (drawn from both
common law and equity), which compliments and adds to each State Act.
A further point to note (which is fundamental to understanding the law relating to partnership)
is that there is considerable scope to amend and vary provisions of the Partnership Act 1892
by agreement among partners. The Acts act as a default if the partners have not agreed upon
their own rules.
The Partnership Act 1892
Partnership is the relation which exists between persons (can be a between entities
like companies) carrying on a business in common with a view of profit
Max 20 members (> 20 members time to incorporate)
Certain trade professions are allowed more than 20 members for example
oActuaries, medical practitioners, patent attorneys, stock brokers or trademark
attorneys = 50 members
oArchitects, pharmaceutical chemists or veterinary surgeons = 100
oLegal practitioners = 400
oAccountants = 1,000
A partnership is also called a ‘firm’ and will generally have a business name
If the firm decides that it will trade under a name other than that of the partners, the
firm must now register the name with ASIC using the new Business Names Register
Elements of a partnership
-Each as a principal and each as an agent for each other: bound by the other
partners actions regardless of their consent(Cox v Hickman (1860)
-Mutual fiduciary duty
-Shareholders = not liable
-Managing directors = complete authority
-Non-equity partners & equity partners: indemnify the company if struggling
but both ‘liable’ to the world
a. carrying on a business
An occupation or activity can only be described as a “business” if it is
continuously carried on, that is to say a business is not an isolated act but rather a
number of activities which together make it a going concern
Smith v Anderson (1880): The expression ‘carrying on’ implies a repetition of
acts and excludes the case of an association formed for doing one particular act which
is never to be repeated. That series of acts is to be a series of acts which constitute a
business... The association, then, must be formed in order to carry on a series of acts
having the acquisition of gain for their object
There are however instances where a single transaction may be taken to be a
business. In Re Griffin: Ex Parte Board of Trade (1890) 60 LJQB 235 the Court held
that if an isolated transaction is proved to have been undertaken with the intention
that it should be the first of several transactions (that is, with the intent of carrying
on a business), then it is a first transaction in an existing business
Document Summary
The law of partnership is state and territory law unlike the law relating to companies, which is commonwealth legislation. There is also a large body of case law (drawn from both common law and equity), which compliments and adds to each state act. A further point to note (which is fundamental to understanding the law relating to partnership) is that there is considerable scope to amend and vary provisions of the partnership act 1892 by agreement among partners. The acts act as a default if the partners have not agreed upon their own rules. Partnership is the relation which exists between persons (can be a between entities like companies) carrying on a business in common with a view of profit. Max 20 members (> 20 members time to incorporate) A partnership is also called a firm" and will generally have a business name.
