Partnership Law and Liability for Negligent Misrepresentation

1.
The issue in the present case is related with the business structure used by Julio, Carolyn, Trisha
and Sarah. For this purpose, it has to be seen if the relationship between the parties can be
described as a partnership.
The law provides that the relationship of partisan is present between the persons who are
carrying on a business in common for the purpose of making profit. Therefore, it entails the
creation of an accord amid two or more people to enter a legal relationship. Such relationship is
basically of contractual type. Tindal CJ had stated in Green v Beesley (1835) that the definition
of partnership has always been understood as a mutual participation, yet a legal entity is not
created by the participants when a partnership is dedicated. Similarly, in Smith v Anderson
(1880), James LJ had mentioned the concept of partnership in the following words. According to
him, ordinary partnership can be described as a partnership which comprises of definite persons
who are bound together by a contract created between them to carry on, jointly, an object, either
during pleasure or for a particular time. It is basically comprised of the persons who had initially
created the agreement with each other. In spite of the definitions mentioned above, limitations
are present or the number of persons who can create a partnership. A partnership has a name,
which is called the name of the firm. It is registered under State Business Names Act. In this
way, partnership law has been derived from case law and also from statute law. The legislation
that is relevant in this regard is the Partnership Act, 1892. Partnership can be explained as a
particular kind of agency. The cause behind this is that where the partners are acting in the
course of partnership business, they are considered to be acting as agents of other partners (Lang
v James Morrison & Co Ltd., 1911).

In the present case, Julio, Carolyn and Trisha had decided to jointly start a business. They had
agreed to put equal money in the business and the profits of the business are going to be shared
equally. Similarly, all of them were going to be involved in the management of the business. On
the other hand, Sarah had given a loan of $40,000. In return, Sarah was going to receive 2% of
the net profit made by the business for the next five years. Sarah is not interested in business, and
she's more of artistic nature. Under these circumstances, Sarah cannot be considered as a partner
in the business.
Therefore it can be concluded that they are running their business in the form of partnership.
Julio, Carolyn and Trisha are the partners. However, Sarah cannot be considered as a partner.
2.
In this case, the effect of mistake made by Julio on the contract with their client, X has to be
seen.
In context of a contract, a mistake can be described as an error that has been made in the
meaning of words, laws or facts do to which, one or both the parties to the contract have entered
the contract without completely understanding the responsibilities or outcomes off the contract.
In this regard, unilateral mistake is the error that has been made only by one party to the contract
and is not shared by the other. Hence, a unilateral mistake occurs when only one party had made
a mistake concerning the subject matter or the terms or quantity in the contract. This may result
in legal conflicts, particularly when the other party has suffered a loss under the contract as a
result of such a mystery.

A unilateral mistake that generally take place is where one party makes a mistake regarding the
price of the product. In this way, a unilateral mistake takes place when only one party to the
contract had made a mistake regarding the subject matter of the terms of the contract. Such
mistake is generally made more commonly as compared to other type of mistakes under the
contract like mutual mistake where both the parties to the agreement have made the mistake. The
basic point in case of unilateral mistake is that only one party had made a mistake while the other
party is not under mistake. Due to the fact that the mistake has been made by only one party, it
may result in an unfair advantage in bargaining power. Hence, the law provides that if the
contract has been created on account of the unilateral mistake, it may result to various remedies
under the contract law like the recession of the contract or the reformation of the contract.
A unilateral mistake may take place regarding any term of the contract or the provisions
mentioned in the contract. Generally a unilateral mistake is related with the definition of a word
or phrase.
Section 5, Partnership Act: it has been mentioned by the partnership law in this section that if the
partner has to be treated as an agent of the firm and of other partners too. As a result, the acts of
the partner, when the partner acts for continuing the usual business of the firm, is binding for the
farm and all the partners unless the partner who has so acted, had no authority to act on behalf of
the firm in that particular matter and the person with whom the partner was dealing was either
aware of the fact that the partner did not have the authority or does not know or believe the
person to be a partner of the firm. It has been already mentioned that partnership is considered as
the branch of the law of agency. But one major difference that is present in case of partnership
law is that a partner is a principal as well as the agent. In this way, partners have two-way
fiduciary duties imposed on them. As a result of the fact that partners owe fiduciary duties