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British Homes V Paterson 2

In the case of British Homes Assurance Corporation v Paterson, the court ruled that Paterson was not liable for misappropriated funds since the plaintiffs chose to deal solely with Atkinson despite being aware of the new partnership. The court emphasized that under the Partnership Act, a firm is only liable if a partner acts on behalf of the firm in the ordinary course of business, which did not occur in this instance. The decision highlights the importance of clear business dealings and the implications of partnership law in such situations.

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79 views1 page

British Homes V Paterson 2

In the case of British Homes Assurance Corporation v Paterson, the court ruled that Paterson was not liable for misappropriated funds since the plaintiffs chose to deal solely with Atkinson despite being aware of the new partnership. The court emphasized that under the Partnership Act, a firm is only liable if a partner acts on behalf of the firm in the ordinary course of business, which did not occur in this instance. The decision highlights the importance of clear business dealings and the implications of partnership law in such situations.

Uploaded by

naqil1201
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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British homes

assurance
corporation,
limited v paterson
[1902] 2 Ch. 404
British Homes
Assurance Corporation Paterson
(plaintiff) (defendant)

Facts

The plaintiffs acknowledge


Atkinson was appointed as Atkinson formed a the partnership and
the plaintiffs' solicitor for a partnership with Paterson on continued to deal only with
mortgage December 1, 1900. Atkinson.

was dissolved
The partnership
cheque on March 23, 1901, after
to Atkinson deposited the sconded.
The plaintiffs sent a cheque sonal account and Atkinson ab
n” nam e of the into his per
"Atkinson & Atkinso ds.
joined. misappropriated the fun
old firm , before paterson

issue
Whether the defendant (Paterson), as a
partner, is liable for the misappropriated funds
received by the firm, given that the plaintiffs
continued to deal directly with Atkinson and
did not explicitly adopt the new partnership.

Arguments
The plaintiff claimed Atkinson had The defendant argued the plaintiff
apparent authority and acted for the chose to deal with Atkinson only, even
firm, so the firm should be liable under after knowing about the new
the Partnership Act for his actions. partnership.

They also argued that they were told There was no new agreement
about the new partner, so they assumed (novation) and the firm never received
the firm, including Paterson, was part of the money, so it shouldn’t be liable.
the deal.

Judgement & analysis


The court dismissed the claim,
The court found the plaintiff
finding that Paterson and the firm
were not liable. The plaintiff chose had a choice to deal with
to deal only with Atkinson, despite the new firm, but kept
knowing about the new partnership. dealing only with Atkinson.
There were no clear
Under Section 10 of the Partnership dealings with the
Act 1890, a firm is only liable if a
partnership, so partnership
partner acts in the ordinary course
of business and on behalf of the firm law didn’t apply.
— which did not occur here.

commentary
The court’s decision is There was no clear
reasonable, as the intention to involve the
plaintiff chose to deal new partner or firm in
only with Atkinson the agreement

Partnership law only The case reminds us


We agree with the
applies when a that liability doesn’t
decision — it reflects the
partner acts on behalf transfer automatically
importance of clear
of the firm, which in new partnerships
business dealings
didn’t happen

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