334 Chapter 12Partnership, limited liability partnership and choice of legal status
firm would not be liable for a partner who lost his or her temper and battered a client
(unless the other partners had authorised the battery!).
If we have another look at the case of partner G, who crashed into the bus, we can now
decide whether or not the other partners would be liable. They would be liable if G was
driving on the firm’s business. So they would be liable if G was going to see one of the firm’s
clients but would not be liable if G was driving otherwise than on the firm’s business.
So they would not be liable if G was going home after work or driving to visit friends.Liability by ‘holding out’
A person ‘holds himself out’ to be a partner if he leads third parties to believe that he is a
partner. If a third party gives credit to the firm as a consequence of a person holding him-
self out as a partner, then the person who held himself out to be a partner will be liable as
if he really was a partner.
Section 14 states that:
Every one who by words spoken or written or by conduct represents himself, or who knowingly
suffers (allows) himself to be represented, as a partner in a particular firm, is liable as a partner to
anyone who has on the faith of any such representation given credit to the firm...
Note that the person can hold himself out as a partner by ‘words spoken or written or by
conduct’.
If the representation is made by a third party, the person represented as a partner will
not be liable unless he ‘knowingly suffers himself to be represented as a partner’.Dubai Aluminium Co Ltd vSalaam and others (2002) (House of Lords)A dishonest solicitor committed a tort by setting up fake contracts which defrauded a third
party out of $50 million. The dishonest solicitor was acting for other fraudsters. He did not
receive any of the $50 million, but was paid his usual fees for his work.
HeldThe innocent co-partners of the dishonest partner were liable to the third party under
s. 10. The fraudulent acts of the dishonest partner were so closely connected with the
type of acts which he was meant to do that they could fairly and properly be regarded as
having been done in the ordinary course of the firm’s business.
CommentIn JJ Coughlan Ltd vRuparelia (2003)it was held that the words ‘in the
ordinary course of the business’ in s. 10 meant the same as the words ‘in the usual way of
the business carried on’ in s. 5. As regards both sections, the question was whether the act
of the partner (in making the contract or committing the tort) appeared to be the type of act
which the firm would usually make in the course of its business, and if the act appeared to
be done in the usual way one would expect such an act to be done.Tower Cabinet Co Ltd vIngram (1949)Christmas and Ingram were partners in a firm of furnishers called Merry’s. After Ingram’s
retirement, Christmas ordered goods using old partnership notepaper. This notepaper
contained the names of both Ingram and Christmas. Ingram did not know that Christmas
had used the notepaper and the supplier of the goods had never dealt with the firm when