Abstract
A partnership is formed by contract and is subject to the law of contract.
Contract law permits a party to a contract who has suffered wrongful action
under the contract to terminate the contract and to claim ‘loss of bargain’
damages for the loss of the benefit of the performance of the contract. The
question examined in this article is whether the contractual principle of termination for repudiation applies to the contract of partnership, and is motivated by obiter dicta from the then House of Lords (now the Supreme Court of the United Kingdom) which assert that repudiation is not of itself grounds to terminate a contract of partnership. It recognises the special status of partnership contracts as involving continuing commercial and personal relationships, and supports the blending of common law and equitable principles by the British Columbia Court of Appeal which has held that termination for repudiation may apply to a partnership contract ‘if at all,
only in limited circumstances’ and subject to evidence that the innocent partner has acted with the utmost good faith. If there has been termination of the partnership contract, the innocent partner(s) may still apply to the court for an order of dissolution under the provisions set out in the Partnership Act and may face partnership liabilities incurred after termination and before dissolution.
Contract law permits a party to a contract who has suffered wrongful action
under the contract to terminate the contract and to claim ‘loss of bargain’
damages for the loss of the benefit of the performance of the contract. The
question examined in this article is whether the contractual principle of termination for repudiation applies to the contract of partnership, and is motivated by obiter dicta from the then House of Lords (now the Supreme Court of the United Kingdom) which assert that repudiation is not of itself grounds to terminate a contract of partnership. It recognises the special status of partnership contracts as involving continuing commercial and personal relationships, and supports the blending of common law and equitable principles by the British Columbia Court of Appeal which has held that termination for repudiation may apply to a partnership contract ‘if at all,
only in limited circumstances’ and subject to evidence that the innocent partner has acted with the utmost good faith. If there has been termination of the partnership contract, the innocent partner(s) may still apply to the court for an order of dissolution under the provisions set out in the Partnership Act and may face partnership liabilities incurred after termination and before dissolution.
| Original language | English |
|---|---|
| Pages (from-to) | 170-188 |
| Number of pages | 19 |
| Journal | Australian Bar Review |
| Volume | 42 |
| Issue number | 2 |
| Publication status | Published - 2016 |