GENERAL PARTNERSHIPS 1. History of partnership.—In no way can one bet ter learn to appreciate the modernity of strictly busi ness associations than by studying the history of part nerships. While such cooperative groups as families, clans and guilds have existed for many centuries, they have bad more than a strictly business foundation. But the business partnership, the association of men for a purely business end, is hardly more than a cen tury old. Blackstone, whose commentaries on the law first appeared in 1765, does not discuss them. Even at this day the true nature of the partnership enter prise is not agreed upon by jurists; Is it an entity, or is it a collection of individuals? From the stand point of partnership law, it is important which view is taken. In order to make law conform to justice courts sometimes state that the partnership is an. entity, and that the question in hand is to be settled on that premise; at other times, however, we find courts deny ing the existence of a separate entity.
The fact is that partnerships did not have an early start in England. They began in the trading nations of Holland and Italy. The English law of partner ships is an ill-assimilated mixture of Roman Law, of the Law Merchant and of the Common Law of England.
2. How partnerships are some of the continental Countries of Europe, partnerships must be founded upon a written agreement. In England and America, however, an oral agreement is sufficient. Indeed, in order to protect third persons, courts fre quently construe a'partnership relation from the acts of two parties, even tho they may have expressly agreed with each other that they shall not be part ners. Thus, Jones lends Smith money to enable him to pursue his business. Jones becomes interested, spends time at Smith's office, permits employes to re fer to him as one Of the "bosses," and generally takes no pains to let creditors know his true position. Now if Brown, relying on all these signs of partnership, and without knowing the true agreement between Jones and Smith, gives credit to the concern, relying on the fact that Jones is responsible and is a partner, Jones will not be permitted to deny that he is a partner.
3. Elements of Jones agrees with Smith to be Smith's partner, the partnership relation will arise. Nothing more is necessary, unless certain. acts are to be done by the parties before business is begun. If, however, no express agreement exists, written or oral, a partnership relation will not be pre sumed by the courts unless the following conditions can be found: (1) The parties must engage in busi ness; mere cooperation for philanthropical purpose is insufficient. (2) They must divide the profits and losses as such. (3) Each must have a voice in the business. (4) There must be on the part of each an actual investment of time, money or property. Thus an agreement between two concerns to conduct their respective businesses in a certain way would be a pool, but not a partnership since the arrangement does not contemplate any form of investment in a com mon fund.
1 4. Incidents of partnership.—Careful considera tion of the legal incidents of the partnership relation will serve to make easy an understanding of the ad vantages and disadvantages of this form of organiza tion, as well as the essential differences between it and the corporation.
The first and most important incident is that of the unlimited liability of the members. One partner may be a prince and the other a pauper ; in that case all the fmancial burden will fall on the prince. He cannot save his private estate by claiming that his creditors are taking more from him than from his partner. To be sure, if a partnership and its mem bers fail in business, the individual property of the members can be taken by the individual creditors of the respective partners; but any surplus beyond what is necessary to pay these claims must go into the common fund to meet the demands of the partner ship creditors.