the form of the substitution of a new contract for the old one.

2. By fulfilment of a proviso for discharge. The original agreement may contain a clause to the effect that under certain circumstances it is to be at an end.

3. By operation of law. The alteration of a written contract will under certain circumstances operate as a discharge; and when a bankrupt obtains his order of discharge, he is discharged from all debts provable under the bankruptcy.

4. Performance, as we have seen, puts an end to the

contract.

5. Breach of contract, as we have also seen, often

operates as a discharge.

§ 111. Authorities on Contracts.—The work of Sir William Anson on the Law of Contract will be found very useful by the student. Sir F. Pollock's treatise on Contracts is more advanced. A Digest of the Law of Contract is published by Mr. Leake; whilst works such as Addison on Contract discuss all forms of contracts.

PART III

THE LEADING COMMERCIAL CONTRACTS

CHAPTER I

PARTNERSHIP

§ 112. Its Nature.—Partnership has already been defined as the relation that subsists between persons carrying on a business with a view to profit. The partners may make any agreement they please as to the amount of capital, labour, or skill that each one is to contribute to the business, but the sharing of the profits is absolutely essential to a partnership. If an agreement, for instance, be made that one of the partners is to have no share in the profits, he is not a partner. The mere receipt of a share of the profits will not of itself be conclusive as to the existence of a partnership. The executors of a partner may, after his death, be entitled to a share of the profits, but the receipt of such share will not necessarily make the executors partners. Sharing profits is, however, evidence of partnership, but it is not conclusive—all the facts of the case must be examined and the real intention of the parties ascertained. A widow or child of a deceased partner may receive by way of annuity a portion of the profits without becoming thereby a partner. Interest to a creditor may vary with the profits, or take the form of a share of the profits without the lender becoming thereby a partner.

But parties are not permitted to exercise the powers of a partner and at the same time under the cover of some arrangement escape the liabilities of a partner. A creditor who lends money in consideration of a share in the profits is obliged, in case the borrower becomes bankrupt, to postpone his claims until all the other creditors are paid. But if his debt is secured by any charge or mortgage, his rights under such charge or mortgage remain unaffected.

§ 113. Power of a Partner to bind the Firm.-Every partner is an agent of the firm and of his other partners for the purposes of the partnership. As between the partners and third parties, each partner is taken to have full authority without any express agreement to enter into contracts binding on himself and his co-partners, so long as such contracts relate to the usual and ordinary business of the partnership. He may therefore sell any goods belonging to the firm, buy any goods required for the business, engage clerks, and receive all debts due. The exact limits of a partner's authority naturally depend on the character of the business of the firm. Where the firm is carrying on some trade, a partner, as a rule, has in addition to the above powers full authority to make and accept bills of exchange in the name of the firm. He may also borrow money on the firm's credit, and for that purpose pledge any goods belonging to the firm.

On the other hand, a partner is not an agent to bind the firm in matters not connected with the firm's business, unless he is specially authorised.

A partner, for instance, is not regarded as having authority to bind the firm by a document under seal. An express authority from the firm for such a purpose is required, and such authority must be under seal. Nor can a partner give a guarantee in the firm's name without special authority, unless it is the usage in the firm, or in other firms engaged in the like business, so to do. can a partner bind his firm by a submission to arbitration.

Nor

The general authority of a partner to bind the firm may be restricted by agreement between the partners, but such agreement will not affect third parties unless they have

notice of it. If a third party, having notice of such agreement, enters into a contract with the partner outside his restricted authority, the firm is not bound by it. In order to prevent any controversy arising as to the scope of the notice, care should be taken to warn third parties that the firm will not be answerable for the acts of the partner outside of his limited authority.

A partner who enters into an unauthorised contract may, however, be personally liable upon it.

§ 114. Liability of Partners.-A partner during his lifetime is liable jointly with the other partners for all the debts and obligations of the firm incurred while he is a partner. A partner's liability begins when he enters the partnership; he is not liable for debts previously incurred. By retiring from the firm, and giving notice to that effect, he ceases to be liable for subsequent debts. But so long as he is a member of the firm, liability attaches to him jointly with his co-partners.

On the death of a partner the partnership is dissolved, and his private property then becomes liable to the payment of partnership debts in so far as they are unpaid, but subject to the prior payment of his own private debts. It follows from this rule that the creditors of a partnership have, on the death of a partner, a claim upon his private or separate property that they do not possess during his lifetime.

The practical effect of the rule is that the firm's assets are liable for the payment of the firm's debts; the separate property of the deceased partner is liable for his separate debts; but if the firm's assets are insufficient to pay creditors, they can recover what is unpaid from the assets of the deceased that remain, after paying his private debts.

In Scotland the law as to liability is different to that in England. There a partner during his lifetime is individually as well as jointly liable for the debts of the firm.

§ 115. Liability of Persons "holding out."—If a man, by words or conduct, represents himself as a partner, or allows others to do so, he is liable as a partner to any one who, on the faith of such representation, gives credit to the firm. The mere use of a man's name without his know.

ledge will not make him liable as a partner, the use of the name must be with his assent. A retiring partner, in order to avoid liability, ought always to give public notice of his retirement.

The principle of "holding out" does not apply to the executors of a deceased partner who permit the old name to be continued in use.

§ 116. Partnership Property.-All property originally brought into the partnership-stock, or subsequently acquired for the purposes of the firm, is regarded as partnership property. Hence if one partner buys land or shares with the money, and on account of, the firm, they will be regarded as the property of the firm, though the partner takes an assignment to himself.

When land becomes partnership property, it is as between the partners regarded as moveable and personal estate, and hence the legal representatives of a deceased partner, and not his heir, are entitled to such property.

§ 117. Rights and Duties of Partners.-The chief rights and duties of partners, in default of any agreement to the contrary, as between themselves are as follows:

1. All the partners are entitled to share equally in the capital and profits of the business, and must contribute equally towards all losses.

In the absence of any agreement to the contrary, a partner is not entitled to any remuneration for his services beyond his share of the profits, if any. Until the profits are actually ascertained, a partner is not entitled to any interest on capital subscribed by him. But where he makes an advance to the firm beyond the amount of capital he agreed to subscribe, he is entitled to interest at the rate of five per cent per annum from the date of such advance.

2. A partner in the course of the partnership business must not make any undisclosed profit for himself. Hence he must account for any benefit derived by him without the consent of the other partners from any transaction concerning the partnership, or from any use by him of the partnership property, name, or business connection.