Is it possible for a person to be a partner in a firm, and thus liable jointly with the other partners to creditors of the firm, even if his agreement with them is not that he should be entitled to participate in its profits but that he should be paid by the firm a specified sum, irrespective of profits, for work to be done by him on its behalf?
Held: There is no minimum threshold that has to be reached in relation to a person’s rights to (a) profits or (b) involvement in management before he can be regarded as a partner. The question is simply whether, by their actions, the parties intended to create a partnership. A partner need not be remunerated by reference to profit and it is no bar to being a partner that he does not make any capital contribution, although that may be a factor pointing against finding that a partnership has been created.
Hughes LJ said: ‘the partners are free under the [1890] Act to arrange for the remuneration of themselves in any manner they choose, including by agreement that one or more shall receive specific sums, or that one or more receive nothing, in either case irrespective of profits’.
Wilson LJ cited a passage from a book in which there was reference to a partner who ‘receives all or most of his remuneration in the form of a salary rather than a simple share of profits’.
Judges:
Tuckey, Wilson, Hughes LJJ
Citations:
[2006] EWCA Civ 613, [2006] 1 WLR 2562
Links:
Statutes:
Jurisdiction:
England and Wales
Cited by:
Cited – Tiffin v Lester Aldridge Llp EAT 16-Nov-2010
EAT CONTRACT OF EMPLOYMENT – Whether established
The Claimant, who is a solicitor, became a salaried partner in a partnership, which became a Limited Liability Partnership, which was the Respondent. The . .
Cited – Clyde and Co Llp and Another v Bates van Winkelhof CA 26-Sep-2012
The claimant was a solicitor partner with the appellant limited liability partnership at their offices in Tanzania. She disclosed what she believed to be money laundering by a local partner. She was dismissed. She had just disclosed her pregnancy . .
Cited – Hosking v Marathon Asset Management Llp ChD 5-Oct-2016
Loss of agent’s share for breach within LLP
The court was asked whether the principle that a fiduciary (in particular, an agent) who acts in breach of his fiduciary duties can lose his right to remuneration, is capable of applying to profit share of a partner in a partnership or a member of a . .
Cited – Hosking v Marathon Asset Management Llp ChD 5-Oct-2016
Loss of agent’s share for breach within LLP
The court was asked whether the principle that a fiduciary (in particular, an agent) who acts in breach of his fiduciary duties can lose his right to remuneration, is capable of applying to profit share of a partner in a partnership or a member of a . .
Lists of cited by and citing cases may be incomplete.
Company
Updated: 06 July 2022; Ref: scu.241722