Appeals were made after an order declaring an account a between former partners in a wholesale fruit and vegetable business. The dispute related to the applicability of limitation to undrawn profit shares, and the doctrine of Laches.
Held: The judge had been entitled to find on the evidence that undrawn profits had been capitalised. There was no inequity in allowing the widow to draw the undrawn capitalised earnings of the business. Limitation did not apply and nor did the doctrine of laches. ‘When a partnership at will is dissolved by the death of a partner, the surviving partner or partners, and the personal representatives of the deceased partner, may all agree, solely for the purpose of the winding up, to continue the business of the former partnership in order best to maximise the value of its business and goodwill on sale or other realisation. If they do all so agree, their rights and obligations, including their shares of any profit from the continued trading, and the authority of each former partner to bind the others continue as before: 1890 Act s.38. The surviving partners and the personal representatives of the deceased partner put themselves at risk if they take that course. The surviving partners, and possibly the personal representatives, will be personally liable for any losses incurred in the continued trading, and any such losses will diminish their and the deceased’s respective partnership shares. ‘ The widow of the deceased partner was an outgoing partner for the purposes of section 42(1) of the 1890 Act, and the judge’s order was adjusted accordingly.
Thomas LJ, Moore-Bick LJ, Etherton LJ
[2008] EWCA Civ 1417
Bailii
Limitation Act 1980, Partnership Act 1890 38 42(1)
England and Wales
Citing:
Cited – Bouche v Sproule 1887
Lord Bramwell discussed the capitalisation of undistributed profis within a partnership: ‘Where there is a partnership, whether an ordinary partnership or an incorporated partnership . . There the undivided profits of any period, a year or shorter . .
Lists of cited by and citing cases may be incomplete.
Company, Limitation, Equity
Updated: 11 November 2021; Ref: scu.278673