partner who is failing to work properly in the business
is, however, in breach of a term which requires him to
do so and this is a ground for the dissolution of the firm.
The term may be found stated expressly in the partner-
ship agreement but will in any case be implied.
3 Under s 24(7) and (8) no new partners can be brought
in and no change may be made in the business of the
firm unless all the partners consent.It should be noted,
however, that a retiring partner’s consent is not required.
This is a fair provision. New partners ought not to be
thrust upon the old partners by a majority vote. Mutual
confidence is essential.
As regards what are called ‘ordinary matters’, these
are to be settled by a majority of the partners regardless
of capital contributed, provided the decisions are made
in good faith and after proper consultation with all of
the partners. The Act makes no attempt to define ‘ordin-
ary matters’. There is no case law to help us. Much will
depend upon the circumstances of the case.
4 Under s 24(9) every partner is entitled to access to,
and may also inspect and copy, the firm’s books.These
books must be kept at the place where the business is
run or, if there is more than one place, at the main place
of business.
The court will make an order (an injunction) pre-
venting a partner from exercising the above rights if he
is, e.g. taking the names of customers from the books to
try to get them to use his own separate business instead
of that of the firm.
Inspection may be through an agent (Bevanv Webb
(1901)), so that a partner who was not able himself to
assess financial information could employ an account-
ant to inspect the books.
5 Although the 1890 Act says nothing about it, it is
implied by law that every partner shall attend at, and
work in, the business.If he does not, the other partners
have a ground to dissolve the firm. However, there is
normally no claim for damages for breach of contract,
this being a common law remedy, and partnership, being
based on equity, has no remedy of damages for breach of
duty between partners.
Expulsion of a partner
Section 25 says that no majority of partners can expel
any other partner unless a power to do so appears in the
partnership agreement.
If an expulsion is challenged in the courts, the judge
will be most concerned to see that a majority expulsion
clause has not been abused.
It must be shown:
1 That the complaint which is said to allow expulsion
is covered by the expulsion clause.For example, in
Snow v Milford(1868) the court decided that the ‘adul-
tery of a banker all over Exeter’ was not a ground for his
expulsion because it was not within the wording of the
expulsion clause. This dealt only with financial frauds
which would discredit a banking business.
2 That the partner expelled was told what he had done
wrong and given a chance to explain.An illustration is
to be found in Barnes v Youngs(1898) where a partner
who was living with a woman to whom he was not mar-
ried continued to do so after becoming a partner. There
was nothing to show that this was damaging to the firm’s
business. Even so, he was expelled by his fellow partners
who refused to tell him why they were doing so. The court
held that his expulsion was unlawful and ineffective.
3 That those who exercised the power of expulsion
did so in all good faith.For example, in Blisset v Daniel
(1853) a partner was expelled. He had done nothing wrong
to hurt the firm, but the partnership agreement said that
a majority of the partners could buy out another. The
motive of the other partners was just to get a bigger
share of the property and profits. The court said that the
expulsion was not effective. It was done in bad faith.
However, if 1 to 3 above are satisfied, the court will
regard the expulsion as valid. For example, in Greenaway
v Greenaway(1940), the partnership agreement pro-
vided for expulsion in the event of conduct contrary to
the good faith required of partners or prejudicial to their
general interest. After several years of quarrelling, one
partner assaulted another. The offender was given notice
of expulsion. The court later said that, although quar-
relling by itself was not enough, the assault was inexcus-
able. Another reason for the expulsion was the fact that
the offending partner had made disapproving remarks
about a fellow partner to the firm’s employees. This
was not in line with the good faith rule. The expulsion
was valid.
Of course, the expelled partner is entitled to his share
of the firm’s assets, as he would be if he retired. However,
provision is often made to pay him out over a period of
time and not immediately so that he cannot demand his
total share of the assets as soon as he is expelled.Part 2Business organisations