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Interest on Overdue Accounts.
This is payable only from the date of a written demand for payment giving notice that interest will be claimed from the date of demand until payment. The words, " Interest will be charged on overdue accounts," often found on printed headings, is not of value until notice has been given as from a definite date. But if the heading stated, e.g., Interest will be charged on all accounts unpaid after six months from date of delivery of the goods "it would be of effect: But even the former wording may have some value as indicating that accounts will not be allowed to run on indefinitely, and may help to justify a notice when it is given.
Sales by Auction.
In the case of a sale by auction
(1) Where goods are put up for sale in lots, each lot is, prima facie, deemed the subject of a separate contract of sale. (2) The sale is complete when the hammer falls, or on any other customary manner of announcing completion. Until such announcement, the bidder may retract his bid.
(3) When the sale is not notified to be subject to a right to bid on behalf of the seller, it is not lawful for him to bid or employ others to do so, or for the auctioneer knowingly to take any such bid; but, where a right to bid is reserved, the seller, or any person on his behalf, may bid at the auction. Any sale contravening this rule may be treated as fraudulent by the buyer.
(4) A sale may be notified to be subject to a reserved or upset price.
For further consideration of auction sales the Law of Agency should be referred to. (1)
Sales by Post.
A large volume of business is nowadays transacted by what is termed "Mail Order," that is, where the vendors advertise that on receipt of the cash price they will send the goods which form the subject of the sale by post. In such transactions it is obviously the intention of both parties that the post shall be the means of communication, and it is probable, therefore, that delivery to the Post Office is equivalent to delivery to the purchaser, in which case, if the goods are not delivered by the Post Office, the purchaser would have no redress against the seller on proof that they had, in fact, been handed to the Post Office for delivery.
(1) See ante, pp. 86-88.
LAW OF PARTNERSHIP
Reference should also be made to the following:
APPENDIX F.-Partnership Act, 1890, page 385.
APPENDIX G.-Limited Partnership Act, 1907, page 395.
Partnership is the relation existing between persons who carry on a business in common with a view to profit; and the principles of the law relating thereto will be found in the Partnership Act, 1890. It should be noted that there are three essentials in the formation of a partnership. There must be a business, it must be carried on in common, and it must be carried on with a view to profit; so that an association of persons to form, for example, a club is not a partnership, nor is an association for trade protection or for any similar purpose where no business is to be carried on or no profits are intended to be made. It is not every combination of persons for the purpose of making profits, however, that is a partnership, and the Partnership Act gives the following exceptions
(1) A joint stock company registered under the Companies Acts. (2) A company incorporated by special Act of Parliament,
or Letters Patent, or Royal Charter.
(3) A company engaged in working mines within the Stannaries. The Stannaries Court was an ancient court exercising jurisdiction over all mines and miners within the counties of Devon and Cornwall. This court was abolished in 1896 and its jurisdiction and powers transferred to the County Court of Cornwall. By a local custom, companies within the jurisdiction are allowed to be formed for working mines on what is known as the Cost Book System. These companies do not fall under the Companies Acts, 1908-17, nor are they regarded as Partnerships under the Partnership Act, 1890; they are governed by special Acts of 1869 and 1887. Such associations are, therefore, not partnerships.
How Partnerships are formed.
A partnership may be formed by agreement of any kind, or may even be implied from the conduct of the parties; but, usually, there is a written agreement-which may or may not be under seal-called the Articles or Deed of Partnership, and this contains all the conditions, financial and otherwise, under which the parties agree to conduct their business. These Articles are conclusive as between the parties as to what their intention was when forming the partnership. The partners are, therefore, bound by the Articles as well as by any implied conditions which may have come into existence during the course of trading. The Partnership Act applies, in many cases, only where the Articles or implied conditions give no ruling. Where the partnership is to last for more than a year, and nothing has been done in pursuance of the agreement, it is essential that the agreement should be in writing, in accordance with the Statute of Frauds, and also where the partnership is to commence at a future date more than a year ahead. But where the agreement has been partly performed it was held in Crowley v. O'Sullivan (1900) that it need not be in writing.
A partnership cannot be formed for an illegal object. For example, in O'Connor and Ould v. Ralston (1920), a partnership was formed for betting purposes. It was held that such a partnership is not possible by English law, and therefore an action by such a partnership to recover money paid by the partnership in respect of bets will not lie. Nor can a partnership be formed for any purpose, although it can for most purposes. There are certain classes of business or profession which cannot be the subject of a partnership. For instance, it is not possible for two barristers to enter into a partnership with a view to practising at the Bar. In some cases, certain requisites have to be observed, such as that the partners are duly qualified, e.g., medical practitioners, or registration of particulars of each partner, e.g., moneylenders, otherwise the partnership would be illegal.
It is useful to bear in mind that an agreement to carry on business at a future time does not render the parties liable as partners until that time arrives. The true test of a partnership is the carrying on of business, not the agreement to carry on.
Kinds of Partners.
There are various terms applied to partners, depending on the nature of their connection with the partnership
(a) General, that is, a partner in the fullest sense.
management of the business and is known to the world as a partner.
(c) Dormant, that is, a partner who takes no active part in the management and is not known to the world as a partner.
(d) Sleeping, equivalent to Dormant.
(e) Limited, that is, a partner who takes no actual part in the management and whose liability is restricted. to the amount of capital he has invested in the business.
(f) Quasi-partner, that is, a person who is, in fact, not a partner but who is regarded as such in the eyes of the law as a consequence of "holding-out." Where a man holds himself out as a partner he is estopped from denying to the creditors that he is one.
When a partnership is formed, the "firm," as it is termed, is not a legal entity, as in the case of a limited liability company, but consists of, say, A and B and C, who are unable, as a rule, to avoid personal liability for acts done in the firm's name; but partners may now sue and be sued in the name of the firm. If the name consists of the surnames of some or all of the partners, there is no restriction as to the employment of any name, even though it may conflict with another existing firm known by the same name, unless the name is calculated to mislead the public, as was held in Turton v. Turton (1889).
Registration under Business Names Act, 1916.
In certain circumstances, however, the firm must be registered under the Registration of Business Names Act, 1916. These circumstances are, in the case of a firm having a place of business in the United Kingdom
(1) If the firm name does not consist of the true surnames of all partners who are individuals, and the corporate names of all partners who are corporations, without any addition except the true Christian names or initials of the individual partners.
(2) In cases where a partner has changed his name, except in the case of a woman who has married.
The particulars required are:
(a) The business name, the general nature of the business and principal place of business.
(b) In respect of each individual partner, his present Christian name and surname, any former Christian name or surname, his nationality and, if that has been changed,
his nationality of origin, his usual residence, and any other occupation.
(c) In the case of a corporation which is a partner, the corporate name and registered office.
(d) Any change in the constitution of the firm.
Should there be default in registration the firm cannot, unless the Court grants relief, sue on any contract entered into while in default, but the firm may assert its rights by way of a counterclaim or set-off if it is itself sued. Every firm that is registered in accordance with these provisions must give particulars of the names and nationality of the partners in its trade catalogues, trade circulars, show cards, and business letters.
No partnership for profit may now be formed to consist of more than ten persons in a banking business, or more than twenty in any other business. Any association of persons exceeding that number must, to be legally recognized, be one of those previously mentioned.
What Constitutes a Partnership.
Whether a person is or is not a partner depends on the intention of the parties and the facts of the particular case. The sharing of profits is strong evidence of partnership, but it is not conclusive; and the court will look at all the evidence and draw an inference therefrom.
The principal rules laid down by Section 2 of the Partnership Act for the purpose of determining who are partners or what constitutes a partnership, are as follows:
(1) Joint tenancy, tenancy in common, joint property, common property, or part ownership does not of itself create a partnership as to anything so held or owned, whether the tenants or owners do or do not share any profits made by the use thereof. (2) The sharing of gross returns does not of itself create a partnership, whether the persons sharing such returns have or have not a joint or common right or interest in any property from which or from the use of which the returns are derived.
(3) The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but the receipt of such a share, or of a payment contingent on or varying with the profits of a business, does not of itself make him a partner in the business, and in particular
(a) 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 :
(b) 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 him a partner in the business or liable as such;