Chapter 5Non-corporate organisations – sole traders and partnerships145
1 Tom, Dick and Harry are partners in an unlimited
partnership called We Restore. In the course
of the partnership business, Harry undertook
to restore a valuable painting for a customer.
Harry carried out the work negligently and the
painting is irreparably damaged. The customer
proposes to sue both for tort and for breach
of contract.
Explain the potential liability of We Restore,
and Tom, Dick and Harry on the basis that:
(a)the firm is an unlimited partnership; and
(b)the firm is an LLP.
2 Arnold, Bill and Cuthbert have carried on business
as an unlimited partnership for several years. They
have had many disagreements largely because,
according to Arnold and Bill, Cuthbert has totally
9 The terms of business contracts
They have now written to Cuthbert in the following
terms:
In consequence of your breaches of our partnership
agreement we Arnold and Bill propose to exclude you
Cuthbert from the partnership.
What is the legal effect of this notice?3 Charles retired as a partner from Adam & Co two
years ago. The firm has carried on business under
the two remaining partners Adam and Bernard.
Three months ago Adam and Bernard ordered new
office equipment using old notepaper bearing the
names of all three partners. The firm is unable to pay
the supplier who is threatening to sue Charles for the
amount owing.
Explain the legal position to Charles, bearing in
mind that, as its name indicates, Adam & Co is an
unlimited partnership.Specimen examination questions
8 You have been appointed as partnership secretary in
the firm of Jones, James & Pitt, Chartered
Accountants. The partnership articles appear
on pp 139–43. The following problems emerge
over a number of partners’ meetings:
(a)John Jones soon became unhappy about his
future prospects. He retired from the firm last
month and has taken a partnership with Snooks
& Co, Chartered Accountants, whose office
is two doors away from the offices of Jones,
James & Pitt. Jane James and William Pitt, the
remaining partners, are anxious to stop John
from competing with them.
(b)Before he left, John Jones contracted to buy a
microcomputer system for the practice from
Scroggs Ltd, although at an earlier partners’
meeting it was decided that the purchase should
be deferred for one year. The system cost
£5,000. Jane and William have so far refused
to take delivery of the system or pay for it.
(c)Scroggs Ltd have written to the firm saying
that unless the debt is paid they will petition
the court to wind up the firm.
Having read the partnership articles thoroughly:
(i) Prepare as part of your answer a memorandum
for the next partners’ meeting outlining the legal
position of the firm in the three cases described
above.
(ii) If you think there is a claim under (a)above,
draft as part of your answer a letter to the
firm’s solicitors, Weeks & Co, for the signature of
the partners, stating what has happened
and describing the relevant provisions of the
partnership articles.
(iii)Draft as part of your answer a letter to Scroggs
Ltd to deal with whatever you think the legal
position is under (b)and (c)above.