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Any fool can make a rule and every fool will mind it' Henry David Thoreau 1817 1862

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Title: Any fool can make a rule and every fool will mind it' Henry David Thoreau 1817 1862


1
Any fool can make a rule and every fool
will mind it. Henry David Thoreau1817 1862
2
Required text Cases, Materials and Notes
on Partnerships and Canadian Business
Corporations, 4th ed. By Harris, Daniels,
Iacobucci, Lee, MacIntosh, Puri Ziegel. Thomson
Carswell, 2004.
3
Assessment is 100 examination. It will be
a closed book exam.
4
 1. sole proprietorships2.
partnerships a)      general
partnershipsb)     limited partnerships
(LPs)c)      limited liability partnerships
(LLPs) 3. business corporations.
5
When is a partner a partner?
6
PARTNERSHIP ACTRSBC 1996 CHAPTER
348   Partnership definedS. 2 Partnership
is the relation which subsists between persons
carrying on business in common with a view of
profit.
7
Persons who are not a partnershipS. 3
The relation between members of a company or
association that is(a) incorporated under an Act
for the time being in force and relating to the
incorporation of joint stock companies, or
licensed or registered under an Act relating to
the licensing or registration of extraprovincial
companies, or(b) formed or incorporated by or
under any other statute or letters patent or
Royal Charteris not a partnership within the
meaning of this Act.
8
Rules for determining partnershipS. 4
In determining whether a partnership does or does
not exist, regard must be had to the following
rules(a) joint tenancy, tenancy in common,
joint property, common property or part ownership
does not of itself create a partnership as to any
property that is so held or owned, whether the
tenants or owners do or do not share any profits
made by the use of the property(b) the sharing
of gross returns does not of itself create a
partnership, whether the persons sharing the
returns have or have not a joint or common right
or interest in property from which or from the
use of which the returns are derived
9
(c) the receipt by a person of a
share of the profits of a business is proof in
the absence of evidence to the contrary that he
or she is a partner in the business, but the
receipt of a share, or of a payment contingent on
or varying with the profits of a business, does
not of itself make him or her a partner in the
business, and in particular(i) the receipt by a
person of a debt or other liquidated amount by
installments or otherwise out of the accruing
profits of a business does not of itself make him
or her a partner in the business or liable as a
partner,(ii) a contract for the remuneration of
an employee or agent of a person engaged in a
business by a share of the profits of the
business does not of itself make the employee or
agent a partner in the business or liable as a
partner,(iii) the spouse or child of a deceased
partner who receives by way of annuity a portion
of the profits made in the business in which the
deceased person was a partner is not merely
because of the receipt a partner in the business
or liable as a partner,
10
(iv) the advance of money by way of
loan to a person engaged or about to engage in a
business, on a contract between that person and
the lender under which the lender is to receive a
rate of interest varying with the profits or is
to receive a share of the profits arising from
carrying on the business, does not of itself make
the lender a partner with the person carrying on
the business or liable as a partner, as long as
the contract is in writing and signed by or on
behalf of all the parties to it, and(v) a person
receiving by way of annuity or otherwise a
portion of the profits of a business in
consideration of the sale by him or her of the
goodwill of the business is not, merely because
of the receipt, a partner in the business or
liable as a partner.
11
Kamex the intention of the co-owners is
crucial
12
How is a third party/the person in the
street/the man on the Clapham Omnibus/the
Skytrain rider supposed to be able to distinguish
between a co-owner and a partner in the course of
business? What does s. 4 (c) mean?
13
        Sharing profits       
Sharing responsibility for losses, including
guaranteeing partnership debts        Jointly
owning property        Controlling partnership
business        Participating in
management        Stating intention to form
partnership in contract        Making
government filing showing partnership (e.g.
registration under business names legislation,
tax returns)        Access to information
regarding the business        Signing authority
for contracts, bank accounts        Holding
oneself out as a partner        Contributing
money, services or property as capital       
Full-time involvement in the business       
Use of a firm name, perhaps in advertising      
  Firm having its own personnel and address
14
principle of equality between the partners
15
Partners right and obligation to share
equally in the profits and losses of the
partnership businessS. 27 Subject to any
agreement express or implied between the
partners, the interests of partners in the
partnership property and their rights and duties
in relation to the partnership must be determined
by the following rules(a) all the partners are
entitled to share equally in the capital and
profits of the business and must contribute
equally towards the losses, whether of capital or
otherwise, sustained by the firm
16
The right to participate in the
management of the business S. 27 e) every
partner may take part in the management of the
partnership businessThe right to have access to
the partnership books(i) the partnership books
are to be kept at the place of business of the
partnership, or the principal place, if there is
more than one, and every partner may, when he or
she thinks fit, have access to and inspect and
copy any of them
17
duty to render to each other true accounts
and full information
18
Partners must render accountsS. 31
Partners are bound to render true accounts and
full information of all things affecting the
partnership to any partner or his or her legal
representatives. 
19
The principle of consensualism
20
Variation of rights and duties by
consent21 The mutual rights and duties of
partners, whether ascertained by agreement or
defined by this Part, may be varied by the
consent of all the partners and the consent may
be either express or inferred from a course of
dealing.
21
s. 27 (g) a person may not be introduced
as a partner without the consent of all existing
partners(h) any difference arising as to
ordinary matters connected with the partnership
business may be decided by a majority of the
partners, but no change may be made in the nature
of the partnership business without the consent
of all existing partners
22
Majority cannot expel partner28 A majority
of the partners can not expel any partner unless
a power to do so has been conferred by express
agreement between the partners and the power is
exercised in good faith.
23
S. 38 (1) On application by a partner,
the court may decree a dissolution of the
partnership in any of the following cases(a) if
a partner is declared under the Patients Property
Act to be incapable of managing his or her
affairs or if it is shown that a partner is,
because of mental infirmity, incapable of
discharging his or her duties as a partner(b)
when a partner, other than the partner suing,
becomes in any other way permanently incapable of
performing his or her part of the partnership
contract(c) when a partner, other than the
partner suing, has been guilty of conduct that,
in the opinion of the court, regard being had to
the nature of the business, is calculated to
affect prejudicially the carrying on of the
business
24
(d) when a partner, other than the
partner suing, wilfully or persistently commits a
breach of the partnership agreement or otherwise
so conducts himself or herself in matters
relating to the partnership business that it is
not reasonably practicable for the other partner
or partners to carry on the business in
partnership with him or her(e) when the
business of the partnership can only be carried
on at a loss(f) whenever circumstances have
arisen that, in the opinion of the court, render
it just and equitable that the partnership be
dissolved.(2) If there are 3 or more partners,
the partnership may be dissolved or may be
dissolved as between the partner whose condition
or conduct gave rise to the application and the
remaining partners.
25
S. 35 (1) Subject to any agreement
between the partners, a partnership is
dissolved(a) if entered into for a set term, by
the expiration of that term,(b) if entered into
for a single adventure or undertaking, by the
termination of that adventure or undertaking,
or(c) if entered into for an undefined time, by
any partner giving notice to the other or others
of his or her intention to dissolve the
partnership.(2) In a case referred to in
subsection (1) (c) the partnership is dissolved
as from the date mentioned in the notice as the
date of dissolution or, if no date is so
mentioned, as from the date of the communication
of the notice.
26
S. 36 (1) On the death, bankruptcy or
dissolution of a partner,(a) a partnership of 2
partners is dissolved, and(b) subject to
agreement among the partners, a partnership of
more than 2 partners is dissolved as between the
bankrupt, dead or dissolved partner and the other
partners.
27
S. (2) If the share in the partnership
property of a partner is charged under section 26
for the separate debt of the partner, the other
partners may by notice in writing to the partner
whose share is charged,(a) dissolve the
partnership, or(b) if there are 3 or more
partners, dissolve the partnership as between the
partner whose share is charged and the other
partners.(3) A notice under subsection (2) takes
effect at the time specified in the notice or
immediately if no time is specified.
28
Fiduciary obligations
29
Partners must render accountsS. 31
Partners are bound to render true accounts and
full information of all things affecting the
partnership to any partner or his or her legal
representatives.
30
Partner must account for benefitsS.
32 (1) A partner must account to the firm for any
benefit derived by the partner without the
consent of the other partners from any
transaction concerning the partnership, or from
any use by the partner of the partnership
property, name or business connection.(2) This
section applies also to transactions undertaken,
after a partnership has been dissolved by the
death of a partner and before the affairs of the
partnership have been completely wound up, by any
surviving partner or by the representatives of
the deceased partner.
31
Profits of partner carrying on similar
businessS. 33 If a partner, without the consent
of the other partners, carries on any business of
the same nature as and competing with that of the
firm, the partner must account for and pay over
to the firm all profits made by him or her in
that business.
32
Fairness and good faithS. 22 (1) A
partner must act with the utmost fairness and
good faith towards the other members of the firm
in the business of the firm. 
33
The personal character of the partnership 
34
Assignment by partner of a share34
(1) An assignment by any partner of the partner's
share in the partnership, either absolute or by
way of mortgage or redeemable charge, does not,
as against the other partners, entitle the
assignee, during the continuance of the
partnership, to interfere in the management or
administration of the partnership business or
affairs, or to require any accounts of the
partnership transactions or to inspect the
partnership books, but entitles the assignee only
to receive the share of profits to which the
assigning partner would otherwise be entitled,
and the assignee must accept the account of
profits agreed to by the partners.
35
Dissolution by bankruptcy, death,
dissolution of partner or charging orderS. 36
(1) On the death, bankruptcy or dissolution of a
partner,(a) a partnership of 2 partners is
dissolved, and(b) subject to agreement among the
partners, a partnership of more than 2 partners
is dissolved as between the bankrupt, dead or
dissolved partner and the other partners. 
36
Liability towards third parties.
37
 1. pre-partnership liabilities2.
liability as a partner3. holding out
liability4. liability of an apparent partner5.
registration
38
Liability of partners19 (1) A
person who is admitted as a partner into an
existing firm does not become liable to the
creditors of the firm for anything done before he
or she became a partner.(2) A partner who
retires from a firm does not cease to be liable
for partnership debts or obligations incurred
before his or her retirement.(3) A retiring
partner may be discharged from any existing
liabilities by an agreement to that effect
between the retiring partner and the members of
the firm as newly constituted and the
creditors.(4) An agreement under subsection (3)
may be either express or inferred as a fact from
the course of dealing between the creditors and
the firm as newly constituted.
39
Liability of partners for firm debtsS.
11 A partner in a firm is liable jointly with the
other partners for all debts and obligations of
the firm incurred while he or she is a partner,
and after his or her death his or her estate is
also severally liable in a due course of
administration for those debts and obligations,
so far as they remain unsatisfied, but subject to
the prior payment of his or her separate debts.
40
Person representing himself or herself
as partner16 (1) A person who, by words spoken
or written, or by conduct, represents himself or
herself, or who knowingly allows himself or
herself to be represented, as a partner in a
particular firm is liable as a partner to any one
who has, on the faith of any such representation,
given credit to the firm.(2) Subsection (1)
applies whether the representation has or has not
been made or communicated to the person so giving
credit by or with the knowledge of the apparent
partner making the representation or allowing it
to be made. 
41
joint-ventures
42
Central Mortgage Housing Corporation v
Graham (1973) . contribution by both parties
of money, property, skill or knowledge to a
common undertaking. joint interest in the
subject matter of the joint venture. mutual
control and management. arrangement limited to
one project. expectation of profit. mutual
sharing of profit. 
43
limited scope in time
44
Dissolution of partnership35 (1)
Subject to any agreement between the partners, a
partnership is dissolved(a) if entered into for
a set term, by the expiration of that term,(b)
if entered into for a single adventure or
undertaking, by the termination of that adventure
or undertaking, or(c) if entered into for an
undefined time, by any partner giving notice to
the other or others of his or her intention to
dissolve the partnership.
45
Limited partnerships
46
Every limited partnership must have  a
minimum of one general partner a minimum of one
limited partner with unlimited liability with
limited liability
47
Limited liability partnerships
48
Limited liability for partners104 (1)
Except as provided in this Part, in another Act
or in a partnership agreement, a partner in a
limited liability partnership(a) is not
personally liable for a partnership obligation
merely because that person is a partner,(b) is
not personally liable for an obligation under an
agreement between the partnership and another
person, and(c) is not personally liable to the
partnership or another partner for an obligation
to which paragraph (a) or (b) applies.
49
(2) Subsection (1) does not relieve a
partner in a limited liability partnership from
personal liability(a) for the partner's own
negligent or wrongful act or omission, or(b) for
the negligent or wrongful act or omission of
another partner or an employee of the partnership
if the partner seeking relief(i) knew of the act
or omission, and(ii) did not take the actions
that a reasonable person would take to prevent
it.(3) Subsection (1) does not protect a
partner's interest in the partnership property
from claims against the partnership respecting a
partnership obligation.
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