partner, or retiring of a deceased partner, to be used in the business, is to be considered a loan within the meaning of the last preceding section. deceased partner's repre sentative. Servant or agent re 242. No contract for the remuneration of a servant or agent of any person, engaged in any trade or undertaking, munerated by a share of the profits of such trade or undertaking shall, of of profits. itself, render such servant or agent responsible as a partner therein, nor give him the rights of a partner. by share Widow or child of 243. No person, being a widow or child of a deceased deceased partner of a trader, and receiving, by way of annuity, a propartner portion of the profits made by such trader in his business, receiving shall, by reason only of such receipt, be deemed to be a of profits. partner of such trader, or be subject to any liabilities incurred by him. annuity out Person receiving 244. No person receiving, by way of annuity or otherwise, portion of a portion of the profits of any business, in consideration of the profits for sale by him of the good-will of such business, shall, by reason good-will. only of such receipt, be deemed to be a partner of the person carrying on such business, or be subject to his liabilities1. sale of Person leading 245. A person who has, by words spoken or written, or by his conduct, led another to believe that he is a partner in a to believe particular firm, is responsible to him as a partner in such firm. another him partner. Person 246. Any one consenting to allow himself to be repre permitting sented as a partner, is liable, as such, to third persons who, on the faith thereof, give credit to the partnership". himself to be represented as partner. Minor partner. 247. A person who is under the age of majority according to the law to which he is subject, may be admitted to the benefits of partnership, but cannot be made personally liable for any obligation of the firm; but the share of such minor in the property of the firm is liable for the obligations of the firm 3. 1 3 Ben. A. C. J. 238: 10 Ben. 312. This and the four preceding sections are taken from Bovill's Act, 28 & 29 Vic. c. 86, which had previously been extended to India by Act XV of 1866. 2 See the Evidence Act, sec. 109, as to the burden of proving that persons who have once acted as partners have ceased to stand in that relationship to one another. Sec. 253, cl. (2) applies to miner as well as to adult partners. There fore, as regards his co-partners, a of minor 248. A person who has been admitted to the benefits of Liability partnership under the age of majority, becomes, on attaining partner on that age, liable for all obligations incurred by the partnership attaining majority. since he was so admitted, unless he gives public notice, within a reasonable time, of his repudiation of the partnership. 249. Every partner is liable for all debts and obligations Partner's liability incurred while he is a partner in the usual course of business for debts by or on behalf of the partnership; but a person who is of partadmitted as a partner into an existing firm does not thereby become liable to the creditors of such firm for anything done before he became a partner1. nership. 250. Every partner is liable to make compensation to third Partner's liability for persons in respect of loss or damage arising from the neglect neglect or or fraud 2 of any partner in the management of the business fraud of of the firm. co-partner. power to 251. Each partner who does any act necessary for, or Partner's usually done in, carrying on the business of such a partner- bind coship as that of which he is a member, binds his co-partners partners. to the same extent as if he were their agent duly appointed for that purpose3. Exception. If it has been agreed between the partners that any restriction shall be placed upon the power of any one of them, no act done in contravention of such agreement shall bind the firm with respect to persons having notice of such agreement. Illustrations. (a) A and B trade in partnership, A residing in England, and minor claiming his share of the profits must contribute towards the losses. When the ancestral trade of a Hindú was carried on after his death for the benefit of his minor children by their guardian, and debts were incurred by the firm in the course of business, the Calcutta High Court, following the analogy of the rule in sec. 247, held that the minors' shares were, but the minors personally were not, liable for these debts, 3 Cal. 738. So 3 Cal. 231, 234, where it was also held that there is no customary lien on an indigo-factory, or on its produce, in respect of any debt of 2 Why only neglect or fraud'? 'wrongful act or omission 'is probably intended. The firm, not 'every partner,' should be liable in such cases. 3 2 Moo. I. A. 487, where a mortgage of a village which was partnership property made by some of the partners for the benefit of the firm was held binding on a member of the firm, though not executed by him. or not knowing him to be a partner. The Act does not say who may give the notice. Annulment of contract defining partners' B in India. A draws a bill of exchange in the name of the firm. B has no notice of the bill, nor is he at all interested in the transaction. The firm is liable on the bill, provided the holder did not know of the circumstances under which the bill was drawn. (b) A, being one of a firm of solicitors and attorneys, draws a bill of exchange in the name of the firm without authority. The other partners are not liable on the bill1. (e) A and B carry on business in partnership as bankers. A sum of money is received by A on behalf of the firm. A does not inform B of such receipt, and afterwards A appropriates the money to his own use. The partnership is liable to make good the money. (d) A and B are partners. A, with the intention of cheating B, goes to a shop and purchases articles on behalf of the firm, such as might be used in the ordinary course of the partnership business, and converts them to his own separate use, there being no collusion between him and the seller. The firm is liable for the price of the goods. 252. Where partners have by contract regulated and defined, as between themselves, their rights and obligations, such contract can be annulled or altered only by consent of rights and all of them, which consent must either be expressed or be imobligations. plied from a uniform course of dealing. Rules de termining partners' mutual relations, where no contract to contrary. Illustration. A, B and C, intending to enter into partnership, execute written articles of agreement, by which it is stipulated that the nett profits arising from the partnership business shall be equally divided between them. Afterwards they carry on the partnership business for many years, A receiving one-half of the nett profits, and the other half being divided equally between B and C. All parties know of and acquiesce in this arrangement. This course of dealing supersedes the provision in the articles as to the division of profits. 253. In the absence of any contract to the contrary, the relations of partners to each other are determined by the following rules: 3 (1) All partners are joint owners of all property originally brought into the partnership stock, or bought with money be longing to the partnership, or acquired for purposes of the partnership business. All such property is called partnership property. The share of each partner in the partnership 1 For it is no part of the ordinary business of such a firm to draw etc. bills of exchange. 2 This should be either owners in common' or 'joint owners without benefit of survivorship.' 3 The words and in the course of' seem wanted. property is the value of his original contribution, increased or diminished by his share of profit or loss: (2) All partners are entitled to share equally in the profits of the partnership business, and must contribute equally towards the losses sustained by the partnership: (3) Each partner has a right to take part in the management of the partnership business 1: (4) Each partner is bound to attend diligently to the business of the partnership, and is not entitled to any remuneration for acting in such business 2 : (5) When differences arise as to ordinary matters connected with 3 the partnership business, the decision shall be according to the opinion of the majority of the partners; but no change in the nature of the business of the partnership can be made 5, except with the consent of all the partners": (6) No person can introduce a new partner into a firm without the consent of all the partners 7: (7) If, from any cause whatsoever, any member of a part There may of course be (and there often is) a 'contract to the contrary,' that the management of the partnership affairs shall be confided to one or more of the partners exclusively of the others, Lindley, i. 541. *This rule, like the preceding, may be and often is departed from by express agreement. The second branch of it does not prevent a partner from recovering compensation for the extra trouble thrown on him by a Copartner who has disregarded the first branch by wilful inattention to business, 29 Beav. 620: Pollock, Ptp. 63. 3 i. e. matters in the ordinary course of. on personal confidence between the partners, and therefore not to admit of its rights and duties being transferred as a matter of course to representatives or assignees, Pollock, Ptp. 64. An unauthorised attempt by one partner to admit a new member into the firm otherwise than by assignment of his share, would have at most the effect of creating a subpartnership between himself and the new person; that is, there would be as between themselves a partnership in his share of the profits of the original firm. But as against the original firm itself the newcomer would have no rights whatever, Lindley, i. 54: Pollock, Ptp. 65. The effect is, not to render an assignment of a share in a partnership illegal or void as between the parties to the assignment; but only so far void, as between those parties and the other partner or partners, as to cause an immediate dissolution, 10 Cal. 672. Of course the interest of all or any of the partners may by express agreement be made assignable or transmissible, and such agreement may be embodied once for all in the original constitution of the partnership, Lindley, i. 699. nership ceases to be so, the partnership is dissolved as between all the other members: (8) Unless the partnership has been entered into for a fixed term, any partner may retire from it at any time1: (9) Where a partnership has been entered into for a fixed term, no partner can, during such term, retire, except with the consent of all the partners2, nor can he be expelled by his partners for any cause whatever, except by order of Court: (10) Partnerships, whether entered into for a fixed term or not, are dissolved by the death of any partner *. 254. At the suit of a partner the Court may dissolve the partnership in the following cases :— (1) When a partner becomes of unsound mind: (2) When a partner, other than the partner suing, has been adjudicated an insolvent under any law relating to insolvent debtors": (3) When a partner, other than the partner suing, has done any act by which the whole interest of such partner is legally transferred to a third person: 7 (4) When any partner becomes incapable of performing his part of the partnership contract: (5) When a partner, other than the partner suing, is guilty of gross misconduct in the affairs of the partnership 8 or towards his partners": 3 Whether there is or is not a fixed term, he cannot be expelled by his partners unless a power to do so has been conferred by express agreement. Where there is such power it must be exercised only in good faith, and the partner sought to be expelled must have an opportunity of being heard, Lindley, ii. 844: Pollock, Ptp. 66. An ancestral trade may descend, like other inheritable property, upon the members of an Hindú undivided family. The partnership so created or surviving has many, but not all, of the elements existing in an ordinary partnership. For example, the death of one of the partners does not dissolve the partnership. Nor, as a rule, can one of the partners, when sever ing his connection with the business, ask for an account of past profits and losses, 5 Bom. 40, per M. Melvill J. 5 Then the insolvent partner's interest is transferred to a third person (the assignee) and the case comes under clause (3). in the partnership property or profits. Nothing is said of a partner incumbering his interest. 8 permanently incapable. • i. e. breach of the duties specified in secs. 257, 258, expressly imposed by the partnership contract, or impliedly imposed by usage in partner ships doing a similar business. i. e. misconduct which renders it practically impossible for the copartners to continue to work with |