Ferguson v Patrick & James, W.S.
| Jurisdiction | Scotland |
| Judgment Date | 14 August 1984 |
| Date | 14 August 1984 |
| Docket Number | No. 13. |
| Court | Court of Session (Outer House) |
OUTER HOUSE.
Lord Wylie.
Contract—Partnership—Misrepresentation—Duty of partners to ensure other partner aware of material facts when all partners entering into contract concerning the partnership.
The former senior partner of a firm of solicitors raised an action of damages against the firm and his former partners. In terms of the Partnership Agreement he had had the option to retire on 5th April 1978 and to be employed for five years as a consultant at an annual salary equal to one-third of his annual share of the profits of the partnership in the previous years. These profits were to include work then in progress. In July 1976 the pursuer intimated his intention to retire at 5th April 1977 and negotiations as to the terms of his consultancy agreement began between his fellow partners and him. He averred that prior to his actual retiral on 15th July 1977 he had been informed at a partners' meeting by the partner who dealt with the accounts that his share of the profits up to 5th April of that year would be a certain amount. He further averred that he was unaware of, and that the other partners were aware of and did not disclose to him, certain large conveyancing transactions. These would have substantially increased his share of these profits. In reliance on this representation he entered into a consultancy agreement at a lower figure than he would otherwise have done. Shortly after his retirement the indemnity cover of the firm was more than doubled.
The defenders pleaded that, on the assumption that the action was based on breach of contract, there were no averments of fraud. In their absence of such averments the only remedy competent to the pursuer was recission of the contract and not damages. They also contended that in any event the pursuer had not relevantly averred that he was unaware of and that the defenders were aware of these transactions. The pursuer conceded that the action as directed against the firm was irrelevant.
Held (1) that on a fair reading of the pursuer's averments and plea the action was based on breach of their contractual duties by his former partner, it being admitted that one of the defenders had acted as agent for the others in the negotiations with him.
(2) That these duties existed prior to the alleged misrepresentation and they required the defenders positively to ensure that the pursuer was aware of all the facts known to them material to the negotiations over his...
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Reclaiming Motion By The University Court Of The University Of St Andrews And Another Against Headon Holdings Limited And Others
...of the contract. For a relatively recent example of this principle in operation, reference can be made to Ferguson v Patrick & James WS 1984 SC 115. Clark, Partnership i.82, states that: “The law expects and requires that the conduct of the partners towards each other shall be characterised......