This section is from the book "Hill's Manual Of Social And Business Forms: A Guide To Correct Writing", by Thos. E. Hill. Also available from Amazon: Hill's Manual Of Social And Business Forms: The How-To-Do-Everything Book Of Victorian America.
AN agreement between two or more persons to invest their labor, time and means together, sharing in the loss or profit that may arise from such investment, is termed a partnership.
This partnership may consist in the contribution of skill, extra labor, or acknowledged reputation upon the part of one partner, while the other, or others, contribute money, each sharing equally, or in fixed proportion, in the profits. Or an equal amount of time, labor and money may be invested by the partners and the profits equally divided; the test of partnership being the joint participation in profit and joint liability to loss.
A partnership formed without limitation is termed a general partnership. An agreement entered into for the performance of only a particular work, is termed a special partnership; while the partner putting in a limited amount of capital, upon which he receives a corresponding amount of profit, and is held correspondingly responsible for the contracts of the firm, is termed a special partner. The conditions of such a partnership, are regulated by law in different States.
Negotiable paper of the firm, even though given on private account by one of the partners, will hold all the partners of the firm when it passes into the hands of holders who were ignorant of the facts attending its creation.
Partnership effects may be bought and sold by a partner; he may make contracts; may receive money; endorse, draw and accept bills and notes; and while this may be for his own private account, if it apparently be for the use of the firm, his partners will be bound by his action, provided the parties dealing with him were ignorant of the transaction being on his private account; and thus representation or misrepresentation of a partner having relation to business of the firm, will bind the members in the partnership.
An individual lending his name to a firm, as partner or allowing the same to be used after he has withdrawn from the same, is still responsible to third persons as a partner.
A partnership is presumed to commence at the time articles of copartnership are drawn, if no stipulation is made to the contrary, and the same can be discontinued at any time, unless a specified period of partnership is designated in the agreement; and even then he may withdraw by giving previous notice of such withdrawal from the same, being liable,however, in damages, if such are caused by his withdrawal.
Should it be desired that the executors and representatives of the partner continue the business in the event of his death, it should be so specified in the articles, otherwise the partnership ceases at death. Should adminstrators and executors continue the business under such circumstances, they are personally responsible for the debts contracted by the firm.
If it is desired that a majority of the partners in a firm have the privilege of closing the affairs of the company, or in any way regulating the same, such fact should be designated in the agreement; otherwise such right will not be presumed.
Partners may mutually agree to dissolve a partnership, or a dissolution may be effected by a decree of a court of equity. Dissolute conduct, dishonesty, habits calculated to imperil the business of a firm, incapacity, or the necessity of partnership no longer continuing, shall be deemed sufficient causes to invoke the law in securing a dissolution of partnership, in case the same cannot be effected by mutual agreement. After dissolution of certain kinds of partnership, notice of the same should be given in the most public newspapers, and a notice likewise should be sent to every person having special dealings with the firm. These precautions not being taken, each partner continues liable for the acts of the others to those persons pecuniarily interested who have no knowledge of the dissolution and have had previous dealings with the firm.
This Agreement made this tenth day of June, A. D. one thousand eight hundred and seventy one, between Charles R. Field, of Salem, Washington county, New York, of the one part, and David G. Hobart, of the same place, of the other part, witnesseth:
The said parties agree to associate themselves as copartners, for a period of five years from this date, in the business of buying and selling hardware and such other goods and commodities as belong in that line of trade; the name and style of the firm to be "Field & Hobart."
For the purpose of conducting the business of the above-named partnership, Charles R. Field has, at the date of this writing, invested Five Thousand Dollars as capital stock, and the said David G. Hobart has paid in the like sum of Five Thousand Dollars, both of which amounts are to be expended and used in common, for the mutual advantage of the parties hereto, in the management of their business.
It is hereby also agreed by both parties hereto, that they will not, while associated as copartners, follow any avocation or trade to their own private advantage; but will, throughout the entire period of copartnership, put forth their utmost and best efforts for their mutual advantage and the increase of the capital stock.
That the details of the business may be thoroughly understood by each, it is agreed that during the aforesaid period accurate and full book-accounts shall be kept, wherein each partner shall record, or cause to be entered and recorded, full mention of all moneys received and expended, as well as every article purchased and sold belonging to, or in any wise appertaining to such partnership; the gains, profits, expenditures and losses being equally divided between them.
It is further agreed, that once every year or oftener, should either party desire, a full, just and accurate exhibit shall be made to each other, or to their executors, administrators, or representatives, of the losses, receipts, profits and increase made by reason of, or arising from such copartnership. And after such exhibit is made, the surplus profit, if such there be resulting from the business, shall be divided between the subscribing partners, share and share alike.
Either party hereto shall be allowed to draw a sum, the first year, not exceeding Six Hundred Dollars per annum, from the capital stock of the firm, in monthly installments of Fifty Dollars each; which amount may be increased by subsequent agreement.
And further, should either partner desire, or should death of either of the parties, or other reasons, make it necessary, they, the said copartners, will each to the other, or, in case of either, the surviving party to the executors or administrators of the party deceased, make a full, accurate and final account of the condition of the partnership as aforesaid, and will, fairly and accurately, adjust the same. And also, upon taking an inventory of said capital stock, with increase and profit thereon, which shall appear or is found to be remaining, all such remainder shall be equally apportioned and divided between them, the said copartners, their executors or administrators, share and share alike.
It is also agreed that in case of a misunderstanding arising with the partners hereto, which cannot be settled between themselves, such difference of opinion shall be settled by arbitration, upon the following conditions, to wit: Each party to choose one arbitrator, which two thus elected shall choose a third; the three thus chosen to determine the merits of the case, and arrange the basis of a settlement.
In witness whereof the undersigned hereto set their hands the day and year first above written.
CHARLES R. FIELD, Signed in presence of DAVID G. HOBART.
Abel Smith, Myron Brown.
A silent partner withdrawing from the firm, a majority of the creditors not knowing of his interest in the business, a public announcement of his retirement is not deemed necessary. But if his name has been prominently associated in the partnership, a notice of the dissolution is published in some newspaper within the county where the business was transacted, in the following form:
The partnership heretofore existing under the name of Beecher, Moulton & Tilton, wherein John L. Beecher and Richard T. Moul-ton, both of the city of Huntsville, in the county of Butler and State of Kentucky, were general partners, and Frederick W. Tilton, of the city of St. Louis, in the county of St. Louis and State of Missouri, was a special partner, is this, the twenty-seventh day of January, A. D. 1883, dissolved by mutual consent.
JOHN L. BEECHER,
RICHARD T. MOULTON,
FREDERICK W. TILTON.
The business will be continued at Huntsville, Ky., by John L. Beecher, who alone is authorized to settle the affairs of the said firm.
Huntsville, Ky., January 27, 1883.