PARTNERSHIP is the relation which subsists between persons carry ing on a business in common with a view to profit. Such is the short definition contained in the Partnership Act,1890, an Act which amended and very largely codified the law relating to partnership, and is the chief statutory authority on the subject. But this definition does not profess to be complete. For one thing, it must be noted that no partnership, strictly so called, is constituted by the relation between members of a company or association registered as a joint-stock company under the Companies Acts; nor by the formation or incorporation of a company under a special Act of Parliament, or letter patent, or Royal Charter ; nor by a mining company subject to the jurisdiction of the STANNARIES (q.v.). As a general rule, an agreement to share profits and losses in a business will constitute a partnership ; and in most actual cases there is no dispute between the parties concerned as to the existence or non-existence of a partnership But in some cases there does arise a difficult question, sNhether the 'partners arc really partners in the legal sense of the term, and so entitled to the rights and subject to the oblitrations incidental to a partnership. Thus in Grecn v. Beesley, it agreetlthat Green should carry the mails, by horse and cart, between Northampton and Brackley at a remuneration. payable by Beesley, at the rate of 429 per mile per annum, and also that Green would pay a certain proportion of the incidental expenses; the money received for the carriage of parcels was to be divided beta een the parties equally, in which proportion they were also to bear any losses in respect of damages to parcels and so forth. Upon Green suing 13cesley in this action for certain arrears of the .1.)9 per mile and his share of the receipts for carriage, the defendant set up the defence that the relationship between them was that of partners, and that, accordingly, neither party could claim anything from the other except upon a balance of a profit and loss account. And this defence succeeded, for it was held that the agreement constituted a partner ship, and not a mere matter of wages and independent payments. Another case, hich also incidentally illustrates the practice of marine insurance underwriting Pee LLOYD'S], is that of Brett v. Beeheith. There the parties having agreed to act in concert as underwriters and share equally the profit ancl loss of all insurances, it was held that a partnership had been constituted by that agreement, even though each of' the parties had underwritten policies in his own name for distinct sums.
The foregoing general rule is not, however, always a sufficient criterion, though as a working principle it is no doubt adequate. The Act itself lays down three important rules, to which regard should be had in determining whether a partnership does or does not exist. (1) Joint tenancv, tenancy in common, joint property, common property, or part ownership, does not of itself create a partnership as to anything so held or owned, m hether the tenants or owners do or do not share any profits niade bv the use thereof. For instance, if two persons buy a horse, each paying one-half of the price, under an agreement that either of them having possession of the horse shall provide for his keeping without cost to the other, and that each shall offer the horse for sale and endeavour to procure a purchaser at a profit over the cost, but that neither shall sell the horse without the concurrence of the other, they are owners of the horse as tenants in cominon, and not as partners (American). (2) The sharing of gross returns does not of itself create a partnership, whether the persons sharing such returns have or have not a joint or common right or interest in any property from which, or from the use of which, the returns are derived. (3) But the receipt by a person of the share of the profits of a business is prink facie evidence that he is a partner in the business, but the receipt of such a share, or of a payment con tingent on or yaryina. with the profits of a business, does not of itself make him a partner in the business. In the words of the Master of the Rolls, in Poole?' v. Driver," If we find an association of two or more persons formed for the purpose of carrying on, in the first instance, or of continuing to carry on business, and we find that those persons share between them generally the profits of that business, as I understand the law of the case as laid down by the highest authority, those persons are to be treated as partners in that business unless there are surrounding circumstances to show that they are not really partners." In the case of Cox v. Hickman, the persons sought to be made liable as partners were held not so liable by the Court. They certainly shared in the profits of the business, but the "surrounding cir cumstances" were such that they were in fact trustees for the creditors of the business, and only as such were they authorised to carry it on and receive their share of the profits. But the cases that come before the courts in this
connection are not always those in which creditors seek to attach a liability .upon parties who, though they have participated in the profits of a business, are yet unwilling to be regarded and liable as partners therein. Sometimes, as in Ex parte Tennant : In re Howard, it is the participant in the profits who, because he is such, claims to be a partner. There the claimant, whose son was an underwriter at Lloyds, and this business being the one in which the partnership was claimed, had become a surety for his son, and in return was entitled, under an agreement, to a half share in the profits. But Lord Justice James, in view of all the "surrounding circumstances," found that the whole intent and meaning of the parties, as expressed by their agree ment, was that the father should not be a partner, and should not have the rights of a partner. The agreement conferred upon him " no specific right to interfere with the monies in the hands of the brokers, or to intercept anything between a broker and the son, but that he was relying on the personal responsibility of the son to pay that which he intended to have as his reward for what he had done—one-half of the net profits. That being so, and there being no fraud upon the creditors, the father having never held out to the creditors that he was responsible, and having provided a fund for the creditors by means of his suretyship, it seems to be impossible to say that the creditors were in any way prejudiced or damnified by the mode in which this bargain was made between the father and the son. The fact is that the father is now seeking, contrary to his first impression as to what the relations between them were, to make out that he was a partner." Of this third statutory rule there are five particular applications. These are : (a) The receipt by a person of a debt or other liquidated amount by instal ments or otherwise out of the accruing profits of a business, does not of itself make him a partner in the business or liable as such; (h) A contract for the remuneration of a servant or agent of a person engaged in a business, by a share of the profits of the business, does not of itself make the servant or agent a partner in the business or liable as such ; (c) A person being the widow or child of a deceased partner, and receiving by way of annuity a portion of the profits made in the business in which the deceased person was a partner, is not by reason only of such receipt a partner in the business or liable as such ; (d) The advance of money by way of loan to a person engaged or about to engage in any business, on a contract with that person that the lender shall receive a rate of interest varying with the profits, or shall receive a share of the profits arising from carrying on the business, does not of itself make the lender a partner with the person or persons carrying on the business or liable as such, provided that the contract is in writing, and signed by or on behalf of all the parties thereto ; (e) A person receiving by way of annuity or otherwise a portion of the profits of a business in con sideration of the sale by him of the goodwill of the business, is not by reason only of such receipt a partner in the business or liable as such. Another point of interest in connection with partnerships may be usefully noted. It is that the relationship of partnerships is not limited to affairs in the nature of continued and extensive business operations. It may exist only as to a particular transaction or adventure. Where this is so the rights and liabilities of the partners are naturally confined to those incident to transaction or adventure the subject of the partnership. In /?cid v. Ilollins haul, ft merchant directed a broker to purchase cotton, it being agreed that the broker should not charge a commission but receive a share in the profit ; it was held that the broker was interested as a partner in the cotton. But an agreement by A. arid 13. that C., because of his assistance, shall have a share in the profits and losses of a transaction, say a deal in cotke, between A. and B., does not give C. anything more than a share in the results of the transac tion ; it does not give him the interest of a partner in the coffee (Alfaro v. De La Torre). In the last-mentioned case the Master of the Rolls laid it down as long settled law, that if two persons enter into a joint adventure on these terms, that one is to pay for the goods, and that ulien the goods are sold the profits are to be divided or the losses bone equally, the owner of the goods is the person who bought them on his own account, and who has not specifically parted with any share in them to the other.