Bishop’s checkmate is a reminder of court’s power to dissolve partnerships

1st December 2014

The Court of Appeal case of Bishop v Golstein of earlier this year serves as a reminder of the court’s discretion, under the Partnership Act 1890, to dissolve a business partnership.

Section 35 provides that the court may exercise this discretion when in its opinion (following an application by another partner) a partner “is calculated to prejudicially affect the carrying on of the business” or “wilfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself 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”.

Bishop v Golstein concerned a solicitors’ partnership. Mr Golstein sued Mr Bishop for damages on the grounds of his having breached the partnership agreement, the quantification of these damages being based on an early termination of the partnership agreement under section 35 of the Partnership Act.

Mr Bishop appealed on the following bases: (i) that none of his breaches were continuing as at the date of the partnership’s termination; (ii) that Mr Golstein had affirmed the partnership agreement by his conduct; and (iii) that no breach within the last three months of the partnership had been identified as amounting to a “last straw” within a doctrine applied to the repudiation of employment contracts.

Whilst these points may be relevant to contract or employment law, there is nothing in the Partnership Act indicating their relevance to the court’s discretion to dissolve partnerships under section 35. Mr Bishop was unable to rely on them to overturn the first court’s decision.

Please contact Harry Perrin if you would like to discuss any of the issues raised in this article.
The information provided in this article is for general information purposes only and does not constitute legal or other professional advice and cannot be relied upon as such. Any law quoted in this article is correct as at 01 December 2014. Appropriate legal advice should be sought for specific circumstances before any action is taken. Copyright © Murrell Associates Limited, December 2014.

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