Does repudiation apply to general partnerships? In short: no
When the actions of one partner mean it is not reasonably practicable for a second partner to carry on in business with him, the partnership must come to an end by mutual agreement but the second partner may sue for breach of contract. The High Court’s recent decision in Golstein v Bishop  EWHC 881 (Ch) confirms that, as a matter of law, it is not possible for a breach to be repudiatory in a partnership context, even where the partnership consists of only two partners. It remains to be seen how this principle applies to LLPs and further case law is required in that regard.
Due to the financial crisis, the solicitors’ practice in which Mr Golstein and Mr Bishop were the sole partners fell on hard times. Mr Golstein was contractually guaranteed a salary for himself and his wife (one of the partnership’s secretaries) of £120,000. His billings fell well short of this target and from 1 September 2008 onwards Mr Golstein agreed to reduce his salary by half. However, there was a genuine misunderstanding between the two partners as to whether this was a temporary arrangement to assist cashflow or a permanent reduction. The dispute became acrimonious and the partnership came to an end on 30 June 2010.
The crucial question was how the partnership came to an end. Mr Golstein claimed it terminated either under a clause of the partnership agreement or following his acceptance of Mr Bishop’s cumulative breaches, which had the effect of a repudiatory breach. These breaches included the reduced payment to Mr Golstein, excluding Mr Golstein from the management of the partnership and accounting malpractice for which Mr Bishop was subsequently fined £5,000 by the Solicitors’ Regulatory Authority. Mr Bishop claimed the partnership terminated by mutual agreement…
If you are registered and logged in to the site, click on the link below to read the rest of the Winckworth Sherwood briefing. If not, please register or sign in with your details below.
News from Winckworth Sherwood
News from The Lawyer
Briefings from Winckworth Sherwood
Yasmin Prest won her landmark divorce ruling when the Supreme Court ordered Mr Prest’s companies to transfer to her a number of properties as part of her lump-sum award.
The Court of Appeal has declined to introduce the detailed guidelines on awards for injury to feelings for discrimination into the DPA regime.