below) because s 14 liability depends on the fact that
the outsider reliedon the fact that the salaried partner
was a fully liable partner. Reliance was not shown in
Lewis(see above) and outsiders are unlikely to enter into
business arrangements by relying on the full liability of
salaried partners unless, perhaps, they have a special
expertise or are known to be wealthy.
As was indicated in M Young Legal Associates Ltd
(see above), a salaried partner will not be able to claim
that the fact that he or she does not share profits means
that there cannot be a partnership. Section 1 requires
only that the partners have a view of profit, not that they
must share it. This is not helpful to salaried partners or
consultants who work for the firm but are not profit-
sharing. If there is reliance by an outsider they could be
liable under s 14 and the definition in s 1 will not pre-
vent this liability.
Describing themselves as ‘salaried partner’ or ‘con-
sultant’ on the firm’s letterhead may help to avoid liabil-
ity as a full partner, depending always on the facts of
the case.
The partner by holding out (or by
estoppel)
The usual way in which this happens in practice is where
a person allows his or her name to appear on the firm’s
letterheading, or on the list of partners for inspection
under the Companies Act 2006 whether that person is
or is not a full partner. (See Stekel v Ellice(1973) and
Nationwide Building Societyv Lewis(1998).) It can also
happen on the retirement of a partner if the partner
retiring does not get his name off the letterheading or
list.
Under s 14 everyone who by words, spoken or written,
or by conduct, represents himself, or knowingly allows
himself to be represented, as a partner in a particular
firm, is liable as a partner to anyone who has, because of
that, given credit to the firm or advanced money to it.
Thus, although such a person is not truly a partner, he
may be sued by a client or creditor who has relied on the
fact he was a partner.
However, to become a partner by holding out (or
estoppel, as it is also called) the person held out must
know that he is being held out as a partner and, if he
knows, it must also be shown that he consents. The fol-
lowing case is an example.
The person who is held out is liable to a client or cred-
itor who has relied on him being a partner. That is all
s 14 says. However, in Hudgell, Yeates & CovWatson
(1978), the court said that the true or actual partners
could also be liable to such a client or creditor if they
themselves were responsible for the holding out or
knowingly allowed holding out to take place.Part 2Business organisations
116
Tower Cabinet Co Ltdv Ingram(1949)In January 1946 Ingram and a person named Christmas
began to carry on business in partnership as household
furnishers under the name of ‘Merry’s’ at Silver Street,
Edmonton, London. The partnership lasted until April
1947 when it was brought to an end by mutual agree-
ment. After the dissolution of the firm, Christmas con-
tinued to run ‘Merry’s’ and had new notepaper printed
on which Ingram’s name did not appear. In January 1948
Christmas was approached by a representative of Tower
Cabinet and eventually ordered some furniture from them.
The order was confirmed on letterheading which had been
in use before the original partnership was dissolved and
Ingram’s name was on it, as well as that of Christmas.
Ingram had no knowledge of this and it was contrary to
an agreement which had been made between him and
Christmas that the old letterheading was not to be used.
Tower Cabinet obtained a judgment for the price of
the goods against ‘Merry’s’ and then tried to enforce
that judgment against Ingram as a member of the firm.
The court decided that since Ingram had not knowingly
allowed himself to be represented as a partner in ‘Merry’s’
within s 14 of the Partnership Act 1890, he was not liable
as a partner by holding out (or estoppel).
Comment. As the case shows, a partner who has retired
will not be liable if after retirement his name appears
on the firm’s letterheading if the other partners agree
before he retires that the stock of old letterheading will
be destroyed, or that his name will be crossed out. If
old notepaper is used in spite of the agreement, the ex-
partner is not liable: there is no duty in law to stop people
telling lies! However, something should be done to show
lack of consent if it is known that old letterheading is
being used. This could be, for example, a recorded delivery
letter to the continuing partners expressing dissent.
A partner who intends to work with the firm, perhaps
part time, after retirement, can avoid the above problems
by describing himself on the firm’s letterheading as a
‘consultant’.