Keenan and Riches’BUSINESS LAW

Chapter 5Non-corporate organisations – sole traders and partnerships

141

Comment The partners may agree, for example, that £1,000 per month as a maximum be

drawn. It is usually also provided that, if on taking the annual account the sums drawn out by

any of the partners are found to exceed the sum to which that partner is entitled as his share

of the year’s profits, the excess shall be refunded immediately.

12. Each partner shall diligently employ himself in the partnership business
    and carry on and conduct the same for the greatest advantage of the
    partnership.


13. Each partner shall be entitled to fiveweeks’ holiday in aggregate in each
    year of the partnership.

Comment It may sometimes be found that the agreement states that some or all of this holiday

must be taken between certain dates in the year.

14. No partner shall without the previous consent of the others:

(a) hire or dismiss any employee or take on any trainee;

(b) purchase goods in the name or on behalf of the firm to an amount

exceeding one thousand (£1,000) pounds;

(c) compound release or discharge any debt owing to the partnership

without receiving the full amount therefor;

(d) be engaged or interested whether directly or indirectly in any

business or occupation other than the partnership business;

(e) advance the moneys of or deliver on credit any goods belonging

to the partnership;

(f) make any assignment either absolutely or by way of charge of his

share in the partnership;

(g) give any security or undertaking for the payment of any debt or

liability out of the moneys or property of the partnership;

(h) introduce or attempt to introduce another person into the business

of the partnership;

(i) enter into any bond or become surety for any persons or do or

knowingly permit to be done anything whereby the capital or property

of the partnership may be seized, attached or taken in execution.

Comment This clause can be extended as required. However, since partners have

considerable apparent authority under s 5 of the 1890 Act and case law, the above prohibitions

will in many cases not prevent an outsider who has no knowledge of them from claiming

against the firm.

They do provide grounds for dissolution of the firm if a partner is in wilful or persistent breach

of them or the partnership agreement in general.

It is generally unwise to have a very large number of prohibitions because this is likely to

restrict the activities of the firm and its individual partners unduly.

15. Every partner shall during the partnership pay his present and future
    separate debts and at all times indemnify the other partners and each of
    them and the capital and effects of the partnership against his said debts
    and engagements and against all actions, suits, claims and demands on
    account thereof.

Conduct
of the
partnership
business

Holidays

Restrictions

Partners’
debts and
engagements