Partnership (Societas)
(1) Nature and Relationship
Stated generally, partnership can be defined as an agreement made by two or more people to share risks and benefits, either generally or in some specific busiÂness or activity.
Partnership also exists in modern law, but was a much broader idea in Roman law than it is now. Unlike a modern partnership, for example, a Roman partnership was not necessarily a business relationship, and indeed could cover the whole of the partners' property and affairs. This, in fact, was the oldest form of partnership in Roman law. As we saw in Chapter 7, a Roman citiÂzen whose paterfamilias110 was still alive could not own any property.[2301] [2302] As we saw in Chapter 16, where the paterfamilias died intestate, leaving surviving children, the property of the paterfamilias would be divided equally among the children.[2303] Thus, the first time that the surviving children ever owned property, it would come to them all at once and together through succession. In such cases, the default option could easily be seen as being for the surviving children to continue managing the family property together as a unit. Thus, the siblings formed by implication[2304] a partnership to manage the family property rather than dividing it into individual shares. This arrangement was known in early law by the name ercto non cito,[2305] and continued to be possible through the classical period and beyond. This is very difÂferent from a modern partnership, which exists as a business relationship between the partners, separate from their own, personal property and affairs.Certain features of a Roman partnership can be traced back to this origin of partnership as a family arrangement, not least the fact that breach of partnership obligations had the very serious consequence that the erring partner incurred infamiaf[2306] However, a partnership could also be a more limited relationship.
Two or more individuals could make a partnership for some specific purpose, which did not need to be a business transaction. For example, two neighbours might make an agreement to manage together the space between their houses, in which they intended to build a supporting wall, or they might agree together to acquire a neighbouring area of land to prevent obstruction of the light.[2307] In both cases, there would be a partnership, and the neighbours would owe each other the duties of partners until the purpose was fulfilled. In the modern business world, such a relationship is known as a joint venture, for example where two businesses combine their efforts to launch a new product or enter a new market.Where the partnership was a business relationship, it could be for the purÂposes of a particular business or for all of the partners' business affairs. The latter was presumed in the absence of contrary agreement.[2308] [2309] [2310] [2311] [2312] A person could be a member of more than one partnership, and the fact of such membership did not in any way cause the partnerships to combine: ‘my partner's partner is not my partner'.178 As a consequence of this, the assumption of a new member of a partnership needed the agreement of all existing partners. The default position was that the partners shared profits and losses equally. However, situations might arise where there was a desire to recognise the greater contribution of one or more of the partners by adopting unequal sharing. There was disagreement among jurists as to whether this arrangement was competent, but it was eventually settled that it was.179 It was even possible to excuse a partner of losses altogether,180 although this meant net losses: profits first had to be set off against losses.181 Whatever system of sharing of profit and loss was adopted, though, a partner was entitled to reimbursement from the other partners for expenses incurred in the execution of partnership business.182 A partner would be liable to the other partners for causing loss through fault. (2) Termination A partnership came to an end in various ways.184 If the partnership was created for a specific transaction, it came to an end with that transaction.[2313] The choice of partner was a personal one, so the death of any partner ended the partnership, unless there was contrary agreement.[2314] The heir of the deceased partner should, however, complete any business already begun by the deceased.[2315] Where a partÂner, through insolvency, had had confiscated or had been obliged to surrender his or her assets, this also brought the partnership to an end.[2316] If the partners wished 178 D. 17.2.20 (Ulpian). 179 J.3.25.2; D.17.2.29pr. For discussion, see A Watson, ‘The Notion of Equivalence of Contractual ObliÂgation and Classical Roman Partnership' (1981) 97 LQR 275. As Watson points out, it is difficult to understand why the point should ever have been seen as controversial unless we bear in mind the origin of partnership as a family arrangement. Unequal sharing could be seen as inconsistent with the nature of that relationship, in much the same way as there is a tendency in the modern law of divorce to divide matrimonial assets equally, regardless of the spouses' actual contributions. For this last point, see pages 281-2 of the Watson article. 180 D. 17.2.29.1. 181 182 J.3.25.2. D.17.2.52.15. It seems, though, that there was some disagreement over the precise extent of the partner's to continue anyway, that was considered to be a new partnership.[2317] Finally, the partnership could be brought to an end at any time by any partner's renunciation of it. right to reimbursement: D.17.2.60.1-17.2.61. 183 D.17.2.72;J.3.25.9. 184 D.17.2.4.1. (3) Remedies The partners' obligations among themselves were enforced by the actio pro socio. Breach of partnership obligations also terminated the partnership contract and, as mentioned above, incurred infamia as well. As far as third parties were conÂcerned, some practical difficulty was caused by the fact that outsiders could only deal with partners as individuals, not as representative of the whole partnership. It was, though, only in limited circumstances that one partner could be held directly liable for the acts of another partner.[2320] (4) Partnership in Modern Law The modern Scots law on partnership is primarily contained in the Partnership Act 1890, and includes some fundamental differences from Roman partnerships. For example, unlike a Roman partnership, a modern partnership is a specifically commercial relationship.[2321] In a modern partnership, the individual partners are agents for the partnership as a whole and for each other, with the result that the partners are personally liable for each other's acts in pursuance of partnerÂship business.[2322] Moreover, a Scottish (though not an English) partnership has legal personality separate from the partners themselves, with the result that it is possible for the partnership itself to enter into contracts and own property.[2323] Nonetheless, despite these differences, there has been influence from the Roman law on the modern law of partnership, and on occasion the opportunity arises to make use of the Roman sources. An example of this is to be found in Duncan v MFVMarigold PD145.16 That case involved a partnership in the running of a fishing boat. The executors of a deceased partner sought a payment in respect of a deceased partner's share of the firm's capital. It was noted by the court[2324] [2325] that section 38 of the Partnership Act 1890, which is concerned with the continuation of partnership business following the partnership's dissolution, was inspired by Roman law.