Beeky and Beth entered into a partnership selling girls‟ clothing under the registered name of „Girlie.‟ Becky, without consulting Beth set up a boy’s clothing shop under the registered name “BOYZ Clothes” while retaining her partnership with „Girlie‟. This has given rise to frequent quarrels between Becky and Beth. Beth has now refused Becky admission to the firm‟s premises and will not discuss the position with Becky.
Beth wishes to dissolve the partnership and would like Becky to account for profits she has derived from „BOYZ Cloths.”.
Advise Beth. (8 marks)
- This problem is based on the principle of utmost good faith in partnerships.
- Each partner is entitled to utmost fairness from the partners.
- The principle of utmost good faith manifests itself in partnerships in various ways for example a partner may not engage in a competing business without the consent of other partners.
- In this case Becky opened a new shop without Beth’s consent which is contrary to the principle of utmost good faith.
- Since Becky has refused to observe utmost fairness, Beth is entitled to sue for an account of all the profits obtained Becky from the other business.
- Thereafter, Beth can apply to the court for the partnership to be wound up on the ground that it is just and equitable.