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Published by Nenit Nenita

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Published by: Nenit Nenita on Jul 02, 2012
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(Arts. 1767-1867)
Brief historical background.
Development of partnership.
— The earliest form ofconducting business was the single entrepreneur ownership planwhereby one individual owned the business, had sole control ofthe same, reaped all the pro
ts, and suffered all the losses. Underthis system, the growth of an individual business was limited,owing especially to the limitation of capital and sometimes alsoto the limitation of skill or knowledge. To permit combinationsof capital, or capital and experience, and to secure economy byeliminating some of the overhead costs of individual enterprises,the partnership plan of business association was developed. Thepartnership may be traced back to ancient history. (T.S. Kerr,Business Law: Principles and Cases, 2nd ed., p. 705.)(2)
Ancient origin of partnership as a business organization.
Development, as distinguished from origin, of the partnershipas a form of business organization, is often credited to theRomans. They found in this form of business organization ameans whereby the capital, goods, talents, and credit of two ormore individuals might best be combined to carry on a tradeor business. Such trade or business might well have been, andfrequently, was too large an undertaking for a single individual.
(a) Historically, the partnership as a business organiza-tion was used long before the Romans. As early as 2300 B.C.,Hammurabi, the famous king of Babylon, in his compilationof the system of laws of that time, provided for the regulationof the relation called partnership. Commercial partnershipsof that time were generally for single transactions or under-takings.(b) Following the Babylonian period, we
nd clear-cutreferences to partnerships in Jewish law. In this connection,however, it must be remembered that the ancient Jews were apastoral people, and, therefore, the partnership as a businessorganization under Jewish law was concerned with theholding of title to land by two or more persons. The Jewishword “shutolin” was used to designate this joint ownershipof land. Subsequently, this same word was used to denote thepartnership relation.(3)
The relative newness of the law of partnership.
— Thepartnership as a form of business organization has had a verylong history of use. This would suggest that there would be acorrespondingly long line of precedents and decisions dealingwith this subject. Such is not the case. The explanation for thissituation is both clear and understandable. For at least a centuryafter the partnership as a business organization had been welland generally established in British commerce, the Englishcourts of justice had scarcely dealt with this subject. The fact isthat disputes between merchants were considered and disposedof by special courts.
Blackstone’s commentaries on the law which
rst appeared in 1765, do not con-tain any discussion on business partnerships. The fact is that partnerships did not havean early start in England. They began in the trading nations of Holland and Italy. TheEnglish law of partnerships is an ill-assimilated mixture of Roman Law, of the Law ofMerchants, and of the Common Law of England. (Charles W. Gerstenberg, “Organiza-tion and Control” [1919], 3 Modern Business, p. 36.) One should not be surprised to learn,therefore, that the development of the law of partnership in England and the UnitedStates, was accompanied with so much confusion and uncertainty that demands for stat-utory uniformity arose. The result in England was Act of 1800, and in the United States,the Uniform Partnership Act and the Uniform Limited Partnership Act. (Wyatt & Wyatt,Business Law Principles and Cases [1963], p. 597.)
These special courts were commonly known as Courts Staple,Admiralty Courts, and Courts of Piepoudre.(a)
The law of merchants.
— This subheading might well be taken to indicate that merchants had a special and peculiarkind of law that was applicable to them and their legal affairs.In fact, such was the case during the Middle Ages. Duringthis time, there were numerous periods of rather intensecommercial activity. In England, this activity was centered onso-called fairs or staples at which were gathered merchantsfrom many countries seeking to sell their goods. Partnerships
ourished during these periods of activity.During this same period, the common law courts ofEngland were thought to be celebrated for their slowness andtheir methodical exactness of form. The merchants movedmore rapidly than the law and they required that justice be more speedy and that it be in general accord with theircustoms. This background and need gave rise to the specialcourts mentioned above.(b)
English law of partnership.
— In time, the use of thesespecial courts was discontinued and their functions were takenover by the law courts. During his term as Chief Justice, LordMans
eld sought to establish a common law for commercialmatters. His efforts were directed toward establishing andde
ning the customs of merchants and supplementing this body of law with the applicable principles of the civil law. Itwas not until the latter years of the 18th century that the lawof partnership as we know it today began to assume bothform and substance.In 1778, Lord Mans
eld decided the case of
Fox vs. Han-bury
(2 Cowp. 445, 98 Eng. Rep. 1179 [1776].) which dealt withthe relative rights of partners as well as the rights of partner-ship and separate creditors so far as partnership propertywas concerned. In 1794, William Watson wrote a text on thesubject of partnership. (William Watson, Partnership, Lon-don [1794].)(c)
Beginning of law of partnership. —
These two sources,speaking most generally, may be said to mark the beginning

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