Unlawful Consideration and Object

Case Number

41 L.J. Ex. 157

Equivalent Citation

(1872) L.R. 7 Ex. 218

Bench

Kelly, C.B. and Martin, B.

Decided on

1872

Relevant Act/ Section

Law of Partnership Act, 1865 – section 19 (Duty of a partner as an agent of the firm)

Brief Facts and Procedural History

The background of this case is that five people came together to form a partnership company for seven years. These people had decided that they will share the profit and the losses of the company with each other. They further agreed that in case of the death of any of the partners before the end of the seven years, the others would continue the business and their executors will get the profit on their behalf. Later, on the death of one of the partners, the others continued the business and the deceased’s executors were paid 1/5th of the profits of the company, despite the fact that they never took part in the management of the business. A conflict arose between the plaintiff and the other partners and the plaintiff sued the executors of the deceased along with the other partners, regarding the performance of a contract entered by the other partners post the death of the deceased partner.

Issues Before the Court

The main issue before the Court was whether the deceased’s executors will be considered to the partners of the company?

The Ratio of the Case

In this case, the court said that though the defendants took the profit of the company, they did not involve in the process of the business and so they could be considered to be partners of the business. But when the court looked into the judicial precedents of this case, they said a testator cannot be a partner in a form, in which the deceased was a partner, unless there is an agreement or contract between the surviving partners and the testator, either expressly or impliedly.

The decision of the Court

Finally, the court held that the defendants are not the partners in the business because there is no agreement or contract between the defendants and surviving partners, conforming them as partners of the business. 

This case analysis is written by Santhiya V, pursuing BBA LLB (Hons.) at Alliance University.

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