Over Taylor Biggs

Two partners who developed hotels dissolved their partnership.  The Court confirmed that contractual obligations to third parties continued notwithstanding the firm’s dissolution, but full completion of two unfinished property developments was not necessary to wind up the dissolved partnerships affairs.

The Partnership Act 1890 (the Act) does not entitle the surviving partners to engage in new contracts that will bind a deceased or former partner.  The case confirmed that where there are transactions which are unfinished at the time of the dissolution, the Act only applies if and to the extent that completion of such transactions is necessary to wind up the partnership’s affairs.  The Act where applicable confers a power to complete such transactions, but dos not impose any additional duty.

There is scope within the Act to require the fulfilment of existing obligations.  However  this will arise only where it is necessary to wind up the partnerships affairs.  If the contracts envisage the rights and obligations being capable of transfer to a third party, this can assist in deciding whether performing the outstanding obligations is necessary in order to wind up the partnership or, whether the rights can be transferred to another person without the partnership performing the outstanding obligations.

Case: Boghani v Nathoo [2011] EWHC 2101 (Ch) (High Court)

This briefing note is not intended to be a comprehensive guide and does not cover every aspect of the topic and is not intended to provide legal or other advice.