Partnership Law
The Law of Partnerships: Scott Osborne
The applicable law:
Partnership Act 1892 (NSW)
The relevant law is contained in the Partnership Act (PA) of each of the jurisdictions. All are based on the PA (1890) UK Act.
The contractual nature of Partnerships Partnerships are essentially contractual.
Defining a Partnership [s.1 PA 1892 NSW]
The PA defines a partnership as “the relation which exists between persons carrying on a business in common with a view of profit”
Partnerships are unincorporated bodies without any separate legal identity of their own. As Justice Barton put it in Cribb v Korn (1911), “to be partners, they must have agreed to carry on some business….in common with a view to making profits and afterwards of dividing them, or of applying them to some agreed object”.
SO…..whether a particular relationship is, in law, deemed a partnership will depend on the parties showing that it exhibits all THREE ELEMENTS that the PA 1892 require. They MUST show that they are;
1 CARRYING ON A BUSINESS;
2 IN COMMON;
3 WITH A VIEW TO PROFIT.
Defining “business” [s.2 PA 1892 NSW]
In Hope v Bathhurst City Council (1980) Justice Mason defined the term business as “activities undertaken as a commercial enterprise in the nature of a going concern for the purpose of profit on a continuous and repetitive basis”.
Difficulties can arise at common law whether a particular activity constitutes “carrying on a business”. It seems to be a question of fact and degree, for example, Evans v FCT (1989) where Evans won $800k from gambling. FCT said he was “carrying on a business” for claiming tax from him. Held: Evans had not been “carrying on a business” of punting as his activities lacked system and organization. Justice Hill made the point that “all indicia to be considered as a whole”.
Defining “carrying on”
Seems to mean that there must be a degree of continuity either in fact or intention. Normally an isolated transaction will not
The applicable law:
Partnership Act 1892 (NSW)
The relevant law is contained in the Partnership Act (PA) of each of the jurisdictions. All are based on the PA (1890) UK Act.
The contractual nature of Partnerships Partnerships are essentially contractual.
Defining a Partnership [s.1 PA 1892 NSW]
The PA defines a partnership as “the relation which exists between persons carrying on a business in common with a view of profit”
Partnerships are unincorporated bodies without any separate legal identity of their own. As Justice Barton put it in Cribb v Korn (1911), “to be partners, they must have agreed to carry on some business….in common with a view to making profits and afterwards of dividing them, or of applying them to some agreed object”.
SO…..whether a particular relationship is, in law, deemed a partnership will depend on the parties showing that it exhibits all THREE ELEMENTS that the PA 1892 require. They MUST show that they are;
1 CARRYING ON A BUSINESS;
2 IN COMMON;
3 WITH A VIEW TO PROFIT.
Defining “business” [s.2 PA 1892 NSW]
In Hope v Bathhurst City Council (1980) Justice Mason defined the term business as “activities undertaken as a commercial enterprise in the nature of a going concern for the purpose of profit on a continuous and repetitive basis”.
Difficulties can arise at common law whether a particular activity constitutes “carrying on a business”. It seems to be a question of fact and degree, for example, Evans v FCT (1989) where Evans won $800k from gambling. FCT said he was “carrying on a business” for claiming tax from him. Held: Evans had not been “carrying on a business” of punting as his activities lacked system and organization. Justice Hill made the point that “all indicia to be considered as a whole”.
Defining “carrying on”
Seems to mean that there must be a degree of continuity either in fact or intention. Normally an isolated transaction will not