1 THE NATURE OF PARTNERSHIP

English partnership law is to be found in the rules of law and equity relating to
partnership which were codied and to some extent amended by the Partnership
Act CAP 29
That Act dened partnership as follows:
Sec 3(1) Partnership is the relation which subsists between persons carrying on a
business in common with a view of prot .
So a partnership does not mean a body or association; it means a relationship
between separate component persons. Persons who have entered into partnerships
with one another are individually called partners and collectively called a rm and
the name under which their business is carried on is called the rm-name.
Rules for determining the existence of a partnership Sec 4;

Joint tenancy, tenancy in common, joint property, common property or part

ownership does not in itself create a partnership irrespective of whether the
tenants or owners share any prots made by them. this is because no
business is carried out
The sharing of gross returns does not create a partnership whether the
persons sharing such returns have joint or common right or interest in any
property from which returns are derived. Gross returns are not prot.
Te receipt by a person of a share of the prots is not prima facie evidence
that he is a partner in the business.
a) The receipt by a person of a debtor other liquidated amount by
installment out of the prots does not make him a partner. he is a
creditor
b) A contract for remuneration of a servant or agent of a person in a
business by a share o f the prot does not in itself make him a partner.
he is an employee
c) Receipt of a portion of the prots by the widow or child of a deceased
partner does not make such widow or child a partner.
d) Where a person receives a varying share of the prots being payment
of money that had been lent in order to engage in the business does
not make the lender a partner in the business he is a creditor.
e) A person receiving by way of annuity or otherwise a portion of the
prots of a business in consideration of the sale by him of the goodwill
of the business is not by reason of such receipt a partner in the
business or liable as such . This is because he is a seller of goodwill.

DEFINITION OF PATNERSHIP
If we analyse the denition of partnerships the following essential characteristics
stand out;

1. The business is carried on in common there should be at least two or more

competent people to form a partnership. The partners should jointly
participate in running of the business. For this purpose each partner is
considered an agent of the rm in Bairds case James LJ stated that as
between partners and the outside worlds each partner is the unlimited agent
of every other in every way connected to the partnership business or which
he represents as partnership business and not being in its nature beyond the
scope of the partnership.
2. Business carried on with a view of profit. It is not necessary that prot be
made but the main objective must be to make prot. The business must be
legal. The object must be to make prots i.e net prots .the sharing of prots
also involves the sharing in the loss.
Formation of A Partnership
The partnership act does not prescribe rules for the formation of a partnership
consequently a partnership may be formed in any way. A partnership is based on
an agreement . It may be an oral or written or may be implied. However all the
essential elements of a contract must be present. There must be free and genuine
consent of the parties who must be competent to contract. A person who is under
the age of majority may be admitted to the benets of the partnership but cannot
be made personally liable for any obligation of the rm.
It is in the interest of the partners that the agreement to form a partnership be
written in which case the written agreement is called a partnership deed.