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Case law: Partners must consent before property can be brought into the partnership

All partners in a partnership must consent to property becoming partnership property before it is treated as such, and that there is written, formal evidence of this - or risk a claim that it is not partnership property, following a recent ruling.

January 2019

This update was published in Legal Alert - January 2019

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

A son claimed that his late father’s farm and bungalow were owned by a partnership between himself, his father and his brother. However, relations between him and his brother had broken down and the partnership was being dissolved. If his claim was upheld, it meant the properties would pass according to the rules that apply on dissolution of a partnership.

The brother, together with his wife and mother, argued that the properties had not become partnership property and therefore passed under their father’s will to the mother. This was important as the mother had lived in the farm while married to the father, and continued to do so. The brother and his wife lived in the bungalow.

The High Court noted that the absence of formal paperwork recording the alleged agreements between the parties made the case far more difficult than it would otherwise have been. However, the judge decided that a reference to ‘property’ in the partnership accounts was a reference to the farm and bungalow, but also found that the reference had been included in the accounts at a time when the brother was only 16. It was therefore unlikely that he had given the valid consent to the properties becoming partnership property as required by law.

The property was not therefore partnership property, despite being included in the accounts and the properties passed to the mother under the will.

Operative date

  • Now

Recommendation

  • All partners in a partnership must consent to property being partnership property before it is treated as such, and that there is written, formal evidence of this - or risk a claim that it is not partnership property at all

Case ref: Wild v Wild [2018] EWHC 2197

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