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dealing is at the time aware, or has reason to suppose, that the act is in the nature of a fraud on the other partners, and unauthorized, it will not in such a case be binding on them (i). And where an individual partner enters into a transaction in the name of the firm, after notice expressly given by or on behalf of the firm to the person with whom he deals that the act is unauthorized, the co-partners will not be bound by it; for by this express notice their implied sanction is displaced (j). The implied authority of partners to bind their firm is one which does not extend to matters extraneous to the joint concern, nor to matters which, though connected with it, are, by the ordinary usage of business, transacted with the express and formal intervention of all the partners. For example, it is settled law, that one member of a firm has no implied authority to refer to arbitration a dispute in which the partnership is involved with a stranger (k), nor to execute a deed in the name of the partnership (1), nor to bind the firm by a guarantee (m). In these cases, the other members of the firm must either be actual parties to the transaction, or must give their special consent that the one partner should act for them in the matter ; and that special consent must be authenticated by deed, where a deed is to be executed in the name of the partnership. As regards accepting bills of exchange or making promissory notes, a partner has implied authority to bind the firm only in the case of a trading partnership. In other cases, in order to make the firm liable upon the bill or note, it must be shown that such a course of dealing is necessary or usual in the particular business (n).

(i) Sections 7 & 8 of the Act.

(0) Lord Galway V. Matthew (1808), 10 East, 264.

(k) Stead v. Salt (1825), 3 Bing. 101.

(1) Harrison v. Jackson (1797), 7 T. R. 207.

(m) Brettel v. Williams (1849), 4 Ex. 623.

(n) Bank of Australasia v. Breillat (1847), 6 Moo. P. C., at p. 194 ; Yates v. Dalton (1858), 28 L. J. Ex. 69.

A partnership may, as regards strangers or third persons, be an actual partnership, although it purport not to be so as between the partners themselves (). For a man who is not really a partner, may nevertheless allow his credit to be pledged as a partner, as in the case where his name appears in the firm, or where he interferes in the management of the business, or otherwise holds himself outas a partner, so as to produce a reasonable belief in strangers that he is a partner (p); in which cases he is answerable as an ostensible partner to all who deal with the firm without having notice at the time that he is in fact not a partner. It frequently happens also, that a partnership comprises some member not generally known to be interested in the business or adventure, the firm name not usually containing the names of all the members. A partner thus unknown to the public is a dormant partner; and every person dealing with the firm is entitled, when he discovers the existence of such dormant partner, to hold him chargeable with the others (9).

A man does not become a partner merely from owning property in common with others, or even from participating in the profits of the partnership (r), although the contrary was at one time supposed. Participation in profits is, however, an important element in determining whether or not, and is in most cases primâ facie evidence that, the parties interested in the common business are partners therein (s). But it is expressly provided by the Partnership Act, 1890, s. 2, re-enacting (with slight amendments) the like provisions which were contained in the statute 28 & 29 Vict. c. 86, commonly called

(0) Davis v. Davis, [1894] 1 Ch. (9) Heuth v. Sanson (1832), 393; Pooley v. Driver (1876), 4 B. & Ad. 172. 5 Ch. D. 458.

(r) Cox v. Hickman, supra ; (p) Section 14 of the Act; and and Daris v. Davis, supra; sec. see Mollico v. Court of Wardstion 2 of the Act. (1872), L. R. 4 P. C., p. 435; (8) Ibid. Smith v. Bailey, [1891] 2 Q. B. 403.

“ Bovill's Act”:-(1.) That the receipt by a person of a debt or other liquidated amount by instalments or otherwise out of the accruing profits of a business does not of itself make him a partner in the business or liable as such ; (2.) 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 not of itself make the servant or agent a partner in the business or liable as such ; (3.) That a person being the widow or child of a deceased partner, and receiving by way of annuity a portion of the profits made in the business in which the deceased person was a partner, is not, by reason only of such receipt, a partner in the business or liable as such ; (4.) That the advance of money by way of loan to a person engaged, or about to engage, in any business on a written contract with that person that the lender shall receive a rate of interest varying with the profits, or shall receive a share of the profits arising from carrying on the business (the contract being signed by all parties), does not of itself make the lender a partner with the person or persons carrying on the business or liable as such ; and (5.) That a person receiving by way of annuity or otherwise a portion of the profits of a business, in consideration of the sale by him of the goodwill of the business, is not, by reason only of such receipt, a partner in the business or liable as such (t). The Act, however, provides, with regard to the fourth and fifth of the last-mentioned cases, that in the event of the bankruptcy or insolvency of the trader, the lender of money and the vendor of a goodwill can only recover the debt or share of profits contracted for, after all other creditors of the trader for valuable consideration have been satisfied (u).

There is this important difference between an ostensible

(t) Pooley v. Driver (1876), 5 Ch. D. 458; Ex parte Delhasse, In re Megevand (1877), 7 Ch. D.

511; In re Hildesheim, [1893] 2 Q. B. 357.

(u) Section 3 of the Act; Re Mason, [1899] 1 Q. B. 810.

and a dormant partner, namely, that an ostensible partner, when he retires, continues liable, on the future engagements of the partnership, to all persons who have before dealt with the firm, unless he gives them notice of the fact of his retirement ; and he continues liable even to those who have not before dealt with the firm, until he gives public notice of his retirement in some sufficient way, as by advertisement in the Gazette. But a dormant partner, when he retires, is not liable on these future engagements at all, either to the former customers of the firm or to the new customers (oc).

When a partnership entered into for a fixed term is continued after the due and full expiration of the term, and there is no new deed of partnership or express new partnership agreement, the rights and duties of the partners under the new partnership continue, after the expiration of the old term, the same as they were before, so far as they are consistent with the incidents of a partnership at will (y); unless, of course, when the partnership is (as it may be) merely continued with a view to the due winding up thereof (:).

On a dissolution of the partnership, every partner has a right to have the property of the partnership (including the goodwill of the business) applied in payment of the debts and liabilities of the firm, and to have the surplus assets applied in paying to each partner any advances made by him, and his share of capital, and to have any ultimate residue divided among the partners in the proportion in which profits are divisible (a).

(2) Section 36 of the Act; Carter v. Whalley (1830), 1 B. & Ad. 11.

(y) Section 27 of the Act; Drw v. Herring, [1892] 1 Ch. 284.

(=) Sections 27 and 38 of the Act.

(a) Sections 39 and 44 of the Act.

CHAPTER V.-SECTION VII.

THE CONTRACT OF GUARANTEE (OR OF SURETYSHIP).

Definition.—The contract of guarantee (or of suretyship) arises, where one man contracts, on behalf of another, an obligation for which the latter is and remains primarily liable,-e.9., when a sum of money is advanced to A., and B. joins with him in giving a bond for its repayment ; or where there is an agreement to supply A. with goods to a certain amount on credit, and in consideration thereof B. promises to see the seller paid for all the goods that shall be so supplied ; or where A. is appointed a public officer, and B. joins with him in a bond, engaging that the duties of the office shall be faithfully performed by A. (a). The obligation of suretyship or guarantee must be carefully distinguished from two somewhat similar cases, viz., (1) cases in which a person undertakes the primary liability in respect of an obligation contracted for the benefit of a third person (b); and (2) cases in which one person merely undertakes to indemnify another against some liability or risk (c).

Form.—Contracts of guarantee will not sustain an action, or be legally enforceable, if made by word of mouth only ; for, by the Statute of Frauds, (29 Car. II. c. 3,) s. 4, no action shall be brought whereby to charge the defendant upon any special promise to answer for the debt, default, or miscarriage of another person, unless the

(a) Duncan & Co. v. N. & S. Wales Bank (1880), L. R. 6 App. Ca. 11.

(6) See Mountstephen v. Lake. man (1870), L. R. 5 Q. B. 613.

(c) Sutton v. Grey, [1894) i Q. B. 285 ; Guild v. Conrad, (1894) 2 Q. B. 885; Re Hoyle, [1893] 1 Ch. 84; Harburg Co. v. Martin, [1902] 1 K. B. 778.

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