The Act makes no mention of goodwill, but the rights of a seller in this respect were fully discussed in the House of Lords in Trego v. Hunt (L.R. 1896, App. Cas. In the absence of special
agreement, the seller may set up business in competition with, and in the immediate neighbourhood of, the purchaser, and advertise his business and deal with his former customers, but may not represent himself as carrying on his former business, nor canvass his former customers. The purchaser may advertise himself as carrying on the former business, canvass its customers, and trade under the old name, unless that name is or contains the name of the vendor, and the purchaser by using it without qualification would expose the vendor to the liability of being sued as a partner in the business. If, on a dissolution or change in the constitution of a firm, the goodwill belongs under the partnership agreement exclusively to one or more of the partners, the partner who is entitled to the goodwill has the rights of a seller. Those to whom the goodwill does not belong have the rights of a purchaser.
If a partner ceases to be a member of a firm, and his former partners continue to carry on business with the partnership assets without any final settlement of accounts, he, or, if he be dead, his estate, is, in the absence of agreement, entitled to such part of the subsequent profits as can be attributed to the use of his share of the partnership assets, or, if he or his representatives prefer it, to interest at 5% on the amount of his share. If his former part ners have by agreement an option to purchase his share, and exer cise the option, he is not entitled to any further or other share in profits than that given him by the agreement.
In the law of partnership as set out above, the Limited Partnership Act i9o7 introduced a consider able innovation. By that Act power was given to form limited partnerships, like the French societe en cominandite; i.e., a part nership consisting not only of general partners, but of others whose liability is limited to the amount contributed to the concern. Such a limited partnership must not consist, in the case of a part nership carrying on the business of banking, of more than ten Persons, and in the case of any other partnership of more than 20 persons. There must be one or more perons called general part ners who are liable for all the debts and obligations of the firm, and limited partners, who on entering into partnership contribute a certain sum or property valued at a stated amount, beyond which they are not liable. Limited partners cannot withdraw. or receive back any of their contributions; any withdrawal brings liability for the debts and obligations of the firm up to the amount withdrawn. A body corporate may be a limited partner. No limited partner can take part in the management of a partner ship business; if he does so he becomes liable in the same way as a general partner, but he can at all times inspect the books of the firm and examine into the state and prospects of the business.
Every limited partnership must be registered with the registrar of joint stock companies, and the statutory particulars must be given. If any change occurs in these particulars, a statement signed by the firm and specifying the nature of the change, must be sent within seven days to the registrar. An advertisement must also be inserted in the Gazette of any arrangement by which a general partner becomes a limited partner or under which the share of a limited partner is assigned. The law of private partner ship applies to limited partners except where it is inconsistent with the express provisions of the Limited Partnership Act.
See Lindley, A Treatise on the Law of Partnership (7th ed. 1905) ; Pollock, A Digest of the Law of Partnership (8th ed. 19o5).
The law of Scotland as to partnership agrees in the main with the law of England and the Act of 1890 applies. The principal difference is that Scots law recognizes the firm as distinct from the individuals composing it. The name of the company may be either personal or descriptive A firm with a personal name may sue or be sued under that name, but a firm with a descriptive name may sue and be sued only with the addition of the names of three at least (if there are so many) of the partners. A consequence of this view of the company as a separate person is that an action cannot be maintained against a partner personally without application to the company in the first instance, the individual partners being in the position of cautioners for the company rather than of principal debtors. But, though the company must first be discussed, diligence must necessarily be di rected against the individual partners. Heritable property cannot be held in the name of a firm ; it can only stand in the name of in dividual partners. Notice of the retirement of even a dormant partner is necessary. The law of Scotland draws a distinction be tween joint adventure and partnership. Joint adventure or joint trade is a partnership confined to a particular adventure or specu lation, in which the partners, whether latent or unknown, use no firm or social name, and incur no responsibility beyond the limits of the adventure. In the rules applicable to cases of insolvency and bankruptcy of a company and partners, Scots law differs in several respects from English. Thus a company can be made bankrupt without the partners being made so as individuals. And, when both company and partners are bankrupt, the company creditors are entitled to rank on the separate estates of the partners for the balance of their debts equally with the separate creditors. But in sequestration, by the Bankruptcy Scotland Act 1913, s. 62, the creditor of a company, in claiming upon the sequestrated estate of a partner, must deduct from the amount of his claim the value of his right to draw payment from the company's funds, and he is ranked as creditor only for the balance. (See Erskine's Inst. bk. iii. tit. iii.; Bell's Comm,. ii. 500-562; Bell's Principles, ss.