The firm property may be held in the name of the firm or of a partner.

Good-will is capitalized reputation.

Notice to a partner is notice to the firm.

136. QUESTIONS

What are some of the things that should be included in a written contract of partnership? What is the rule in regard to evidence relating to written contracts? (See Contracts).

What may be invested as capital? What is the rule as to the distribution of losses and gains? What is good-will? Give examples of business houses in your knowledge whose good-will would be valuable.

137. Powers. The formation of partnership relationship creates the relationship of principal and agent. Each one is a principal and at the same time an accredited agent for all. The general rules relating to powers and liabilities as laid down in the chapter on Agency apply here. As between themselves, the parties may agree to any legal distribution of powers and duties, a division of duties being permissible; and a restriction of the right to act for the firm is binding between the members of the firm but inoperative when the rights of an innocent third party intervene.

When no powers are agreed upon, by implication the usual ones are understood. Third persons must exercise reasonable care and diligence to determine the existence and nature of a partnership. They are bound to take notice of all known facts. or those that might be ascertained.

The partnership may be confined to a single venture or to a special time. "Where a partnership is limited to a particular trade or business, one partner cannot bind his co-partner by any contract not relating to such a trade or business, and third persons will be presumed to have knowledge of the limited nature of the partnership from circumstances connected with the business of the firm."

138. Liability of Partners. Each partner is at once an agent and a principal. He is liable personally as well as collectively on all contracts made either by himself or by his associates. His private property may be taken from him by due process of law to satisfy the creditors of the firm if there are not enough partnership assets. He stands as a guarantor of debts owed by the firm. If in a final settlement there is not enough partnership property to satisfy creditors' claims in full, and recourse is had to individual property, the partner advancing more than his share has a right to demand contribution from his partners.

139. Trading and Non-Trading Companies. There is a distinction of importance relating to the powers of partners engaged in a general buying and selling business and those not so engaged. "The test of the character of the partnership is buying and selling. If it buys and sells, it is commercial or trading. If it does not buy or sell, it is one of employment or occupation.” The law recognizes greater and more varied powers of partners 'in the former than in the latter.

In the case of the A B C Co., a mercantile house, great latitude of commercial activity must be granted in favor of the partners, while if this were an association of physicians little latitude would be recognized. In the former contracting is the business, while in the latter it is but an incident. In the one, profits are produced by buying and selling; in the other, through the ability to perform an act.

140. Scope of Business. Within the scope of the business is included the carrying out of all acts expressly provided

for and all those acts that are incident and necessary to the full development of the partnership business. While the scope of the business may be clearly defined by the articles, strangers are guided largely by those acts of the partners that have been carried out with the public. By this means the scope may be enlarged so as to include a line of operation not contemplated at the time of the formation of the partnership. The partners' powers are enlarged by express or implied consent of the partners, and the contracts so formed are binding.

141. Kind of Partners. Partners are classified as real, or ostensible; nominal; dormant, or silent; and limited.

1. Real, or Ostensible Partner is one who is held out to the public as a general partner. He is active in the management of the business, and shares in its losses and gains.

2. Nominal Partner is a partner in name only, that is, he merely loans the use of his name and the benefit of his credit to the firm. He is not a participant in profit and losses.

3. Dormant, or Silent Partner is a partner not known to the public. He has an interest in the business, but third parties have no knowledge of this. If he becomes known as a partner he at once becomes liable for debts of the firm.

4. Limited Partner. Statutory enactments have in many states provided a way whereby a person may be interested in a business as a partner and yet escape a part of the liability of the general partner. If he complies with the statute, his liability is limited to the amount of his investment. If he does not heed the injunction of the statute, he becomes a general partner liable for all debts. Not all the partners may be limited. Some of the provisions usually named in the statute are: One or more general partners with one or more special partners. Special partners' names must not be used in the firm name, investment must be paid in, and the word "limited" must be used with the firm name. The agreement must be in writing and, in general, recorded and published.

142. Limited Partnership. Under the statutory enactments, several states allow the formation of a limited partnership in which the liability of each partner is limited to the amount of his investment. It is needless to say that the statutory requirements must be carefully followed.

Each partner is the accredited agent for the firm.

Each partner is jointly and jointly and severally liable for the debts of the firm.

The scope of the business is largely determined by the impression conveyed to the third party.

An. ostensible partner is a real partner.

A nominal partner is one in name only.

A dormant partner is one not known to the public.

A limited partner is one whose liability is limited.
A limited partnership is one of statutory provisions.

144. QUESTIONS

What is the relationship of partners? What is the extent of the fowers of a partner? What is the liability of partners?

What is the distinction between trading and non-trading companies? What is the meaning of "scope of business"? Define the different kinds of partners. What is a limited partnership? What is the distinction between a limited partnership and a limited partner?