A fundamental breach of a partnership agreement by one or more partners does not absolve the innocent partners of their duties under the partnership agreement, the House of Lords has ruled.
In 1990 most partners in a firm of solicitors agreed that their partnership had no future. All but one of the partners signed an agreement to dissolve the partnership. The partnership had a 20-year lease on office premises which had been negotiated in 1988. Because of a substantail fall in property values, it was impossible to dispose of the premises other than at a rent substantially below that which they were obliged to pay the landlord.
The one dissenting partner said that the partnership had been ended by his former partners’ breach of contract which thus released him from his share of the continuing obligation to the landlord. This was not accepted. The partner was trying to introduce a new concept of repudiatory breach of contract being grounds for dissolving a partnership. Partnership law was well established, and such a novel ruling could not be accepted.
Hurst v Bryk and others. HL. The Times 30 March 2000
[2000.3/6]