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PARTNERSHIPS (Rights and Duties of partners to each other (2. General…

- - - - Section 6(3) also goes on to identify circumstance where the presumption does not operate (because there is no 'mutuality of rights and obligations'):
        -A debt repaid in instalments out of profits
        -a wage paid on the basis of share of profits
        -payment of an annuity to a widow or child of a deceased partner
        -loan with the interest dependent on profits
        -annuity for goodwill part of sale of business dependent on profits
      - Section 6 (3): Profit sharing
        -Sharing of profits is not conclusive proof of partnership but creates a strong presumption that there is a partnership
        -The party arguing against the existence of a partnership has the onus of proving there is not a partnership
      - Section 6 (2): sharing of gross returns
        -Sharing of gross returns does not mean the sharers are in partnership
      - Section 6 (1) : common ownership
        -common or joint ownership of property (like land or buildings) does not necessarily mean that the common owners are in partnership
- - - - s9 PA Each partner is liable jointly with the other partners for all debts and obligations of the firm incurred while they are a partner
      - s9 PA: A partner (acting as an agent) will bind co-partners where:
        -he/she does any act or enters into a transaction
        -that is within the scope of the kind of business carried on by the partnership; and
        -is carried out in the usual way that partnerships of that kind conduct business
      - UNLESS:
        -The partner had no authority to so act;and
        -the third party knew this, or
        -the third party did not know or believe that the partner was a partner
        Note: even if the action of the partner was within the scope of what the partnership normally does, it must be done in the usual way to bind the other partners (Goldberg v Jenkins)
        -Did the other parson know or *believe there was no authority or did not believe him to be a partner? (Construction Engineering v Hexyl)
    - - s14, s16 Liability of partners to third party for wrongful acts of a partner
        -Each partner is liable for the wrongful act or omission of any partner acting 'in the ordinary course of the business of the partnership' or 'with the authority of the co-partners'
        
        'Wrongful act or omission' includes:
        -Tort (negligent driving where engaged in the usual course of business)
        -Breach of ACL (misleading or deceptive conduct)
        -Breach of fiduciary duty (conflict of interest)
        -Crime (fraudulent misappororiate funds)
        *Note: It does not include brick of contract
        
        'Acting in the ordinary course of the business of the firm"
        -Walker v European Electronics: acting in ordinary course of the business and therefore the other partners were jointly and severally liable.
        -National Bank v Batty: not acting in the course of the firms business or within authority when he fraudulently deposited checks
        -Polkinghorne v Holland and Whittington
    - - Joint and several liability: P could sue one (or more) partners and receive the full amount and leave it to the partner who has been sued to get the others to contribute according to their share of the liability