We can assume that by reference to Bentley Physiotherapy’s partnership agreement that Tim, Kathy and Martin are partners and that Bentley Physiotherapy is operating as a partnership so no further analysis into the essential elements of a partnership is necessary.
It is stated that Adam made it clear that he didn’t want to be a partner. This does not give us any reason to believe that Adam is not a partner of the business.
Whether a partnership exists is a mixed question of fact and law. WA Partnership Act 1895 – S8 sets out some guidelines for determining whether or not a partnership exists. These include co-ownership of property, sharing of gross returns and sharing of gross profits.
Adam invested $15,000 into the business which makes a strong case for him being a partner as he is actively involved in the management and decision making. We do not have information on how returns, profits and losses are shared in Bentley Physiotherapy.
From the information that we have about Adam, I believe we have to carry on with the presumption that he is in fact a partner of the firm.
‘The acts of every partner who does any act necessary for or usually done in carrying on business of the kind carried on by the firm of which he is a member shall bind his partners to the same extent as if he were their agent duly appointed for that purpose; unless the partner so acting has in fact no authority to act for the firm in the particular matter, and the person with whom he is dealing knows that he has no authority; or does not know or believe him to be a partner’ (S-26, Partnership Act WA 1895)
The above section shows three main elements that must be ascertained for all partners to be liable for Adam’s actions.
First we will look into whether the transaction completed by Adam is within the scope of the firm’s normal business. Mercantile Credit Co Ltd v Garrod is a leading case for this topic as it shows that even if an action is not allowed by the partnership agreement or