adultery all over Exeter’ was not regarded by the court as
sufficient grounds for dissolution under s 35(c). There
was no evidence that the adulterous conduct had
affected the business of the bank.
Section 35(c) forbids a petition by the partner in default.4 Wilful or persistent breach of the agreement or
conduct affecting the relationship.This is covered by s
35(d). It includes, for example, refusal to meet on busi-
ness or keep accounts, continued quarrelling and very
serious internal disagreements. However, as the court
said in Loscombe v Russell(1830), the conduct must be
‘serious’. Thus, occasional rudeness or bad temper would
not suffice.
‘Wilful’ means a serious breach inflicting damage on
the firm. Less serious breaches are enough if ‘persistent’.
In Cheesman v Price(1865) a partner failed 17 times to
enter small amounts of money he had received in the
firm’s books. The court ordered dissolution. The essen-
tial trust between the partners had gone.
Again, s 35(d) forbids a petition by the partner in default.
No partner can force a dissolution by his own default.As regards the application of s 35(d), the two cases that
follow are of importance.
The precise effect of s 35(d) was raised again in the
following case.Part 2Business organisations
130
Hurstv Bryk(2000)In this case the House of Lords ruled that a fundamental
breach of the partnership agreement by one or more of
the partners that leads to a dissolution of the firm does
not discharge the innocent partner(s) from liability to
contribute to the debts and obligations of the firm in that
dissolution.
As regards the facts, it appeared that relations
between the partners in a firm of solicitors had broken
down. All the partners except the claimant, Mr Hurst
(a salaried partner), made an agreement to dissolve the
firm. The claimant would not sign it. He said that the
other partners were guilty of a repudiatory breach of
the partnership agreement. Since he had accepted the
breach he was discharged, he said, from all his obliga-
tions to his former partners and therefore could not be
required to make a contribution in the dissolution. There
were significant obligations for continuing rent under a
lease owned on trust for the firm by the equity (i.e. pro-
fit-sharing) partners. The lease was not easily saleable
so the matter was one of some substance. The House
of Lords ruled that there had been a repudiatory breach
of the partnership agreement. However, that did notdischarge the claimant from his liability to contribute in
the winding-up. A repudiatory breach does not bring to
an end rights and liabilities existing at the date of accept-
ance of the breach. These included the joint and several
liability of partners for the debts and liabilities of the firm
under s 9 of the Partnership Act 1890 and a right to
a contribution between the partners under s 44 of the
1890 Act.Mullinsv Laughton(2003)The claimant said that because of the conduct (undis-
closed in the report) of the defendants, who were his
partners, in a meeting with him and subsequently, they
were in repudiatory breach of the partnership contract.
He said he had accepted that repudiation so that the
partnership had terminated and he should be paid his
share in the firm under dissolution arrangements. The
other partners did not accept that the firm was dis-
solved. In this case the High Court agreed with them.
Wilful and persistent breach could dissolve a partnership
under s 35(d) but only at the discretion of the court to
order that it had been dissolved. The judge in the High
Court did agree that the conduct was such as to entitle
the claimant to a dissolution under s 35(d) (breach) or s
35(f ) (just and equitable). Rather than winding up the
partnership, the judge, relying on statements made by
the House of Lords in Syersv Syers(1876), ordered the
other partners to buy the claimant out.
Comment. It is therefore the law that a repudiatory breach
of the partnership contract will not, as is the case with
other commercial contracts, discharge the agreement.
The court must be involved before dissolution takes
place and the dissolution rights of the partners can arise.5 The business can only be carried on at a loss. This is
provided for by s 35(e). It is hardly surprising as a
ground for dissolution in view of the fact that partners
are in business together with a view to profit, as s 1
states. Therefore, they must have a means to release
themselves from loss.
Section 35(e) is not available if the losses are tempor-
ary. In Handyside v Campbell(1901) a sound business
was losing money because a senior managing partner
was ill. He asked the court for a dissolution. The court