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there be a breach of contract on the part of the seller, the buyer may sue either the factor or the principal; and if buyer's part, either But if the buyer be

see pp4, 53. there be a breach of contract on the the factor or the principal may sue. a creditor of the factor, and he buys goods from the factor not knowing that the factor is acting as the agent for another, the buyer has a right to set off the debt due to him from the factor against the price of the goods, even though the goods do in fact belong to a third party. For example, a certain firm of factors dealt in cloth, selling from their warehouse sometimes on commission for other persons, and sometimes on their own account. They had in their warehouse a large quantity of cloth belonging to George. Also, they were indebted to Clagett to the extent of £1,200. In these circumstances, Clagett bought from the factors a quantity of cloth, some of which was George's cloth. Clagett, however, had no reason to suppose that the whole lot did not belong to the factors. George, having ascertained that a large quantity of his cloth had been sold to Clagett, and not having been paid, brought an action against Clagett for the price. Clagett's defence was that the factors were indebted to him in a larger sum than the price of the goods, that he did not know the factors were selling the cloth as agents, and that therefore he was entitled to set off the sum due to him from the factors against the price of the goods. This contention was successful.1

5.53.

A "broker" is an agent who buys or sells goods or shares for a principal on commission. If he be a broker of goods he is a mercantile agent, and accordingly a general agent. A broker is distinguished from a factor chiefly by the fact that a broker does not have possession of the goods he sells, nor does he sell on his own account, 1 George v. Clagett, L. T. R. 359.

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while a factor has the actual possession of the goods of his principal, and does sell on his own account. Hence, a person dealing with one who professes to be a broker must assume that he is dealing with an agent, p53. while no such assumption need be made in the case of a factor.

see p. 113.

An "auctioneer " is a person authorized to sell property on commission at a public auction. He has legal posHe has legal pos- sp 45. session of the goods he sells, a lien upon goods in his possession for his charges, and the right to sue for the price of the goods he sells. He is also in general liable to be sued by a buyer to recover the goods sold.

An agent for the sale of goods sometimes acts under an agreement with the principal by which in return for a higher commission than usual he undertakes that in the case of all goods which he sells the principal shall be paid the price. Such an agreement is called a del credere agreement. His agreement with his principal clearly may result in his becoming liable for the debt of another, in case the buyer makes default in payment; but in spite of the Statute of Frauds the agreement is good without p. 9. writing, for the immediate effect of the agreement is not

to give a guarantee.

Bailees. Any person to whom goods are entrusted by the owner for any purpose is called a "bailee." Thus, a factor is a bailee; so is a carrier, a warehouseman, a borrower, or a hirer.

see p.g.

PARTNERS

Partnership is the relation which subsists between two or more persons who carry on a business in common with a view of profit. But the members of a company are 1 The law on the subject of partnership is mostly contained in the Partnership Act, 1890.

§ An auctioneer cannot sell by private treaty, or warrant goods, reseind sale. He must sell goods for eash, and may retain his commission before handing ouch the proceeds.

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not partners. The persons who carry on a business for profit in partnership are called collectively a firm, and the name under which the business is conducted is called the firm-name. This firm-name may be quite distinct from the names of any of the persons who compose the firm. Thus, Brown and Smith may constitute a firm trading as "Jones and Company." A firm cannot legally consist of more than twenty persons, or if the business be banking, of more than ten persons. If more than twenty persons desire to carry on a business legally in common, they must register themselves as a company, as will be explained later.

A firm may own property, and may be a party to a contract, and may sue or be sued in the firm-name.

Who is a Partner.-A person who has no share in the profits of a business cannot be a partner, but any person who does share in the profits is presumed to be a partner in the business. Thus, Erasmus Carver and William Carver, ship agents, made an agreement with Giesler, also a ship agent, by which the Carvers were to carry on business at one port and Giesler at another. Each house was to do the utmost to persuade ship-owners whose ships used the other port to employ the other house. They were to share in agreed proportions the commissions earned and the profits made, but each house was to be answerable only for its own losses and its own acts, and not for those of the other house. Giesler incurred a debt in the business which he was unable to pay. In spite of the agreement that each house was to be liable only for its own losses, it was held that the Carvers and Giesler were really partners, and that the Carvers were answerable for the debt of Giesler.1

The fact that a person shares in the profits of a firm 1 Waugh v. Carver, 14 R. R. 845.

is, however, not conclusive evidence that he is a partner; thus, a creditor may receive his debt by instalments out of the profits of a firm; or a servant or agent may be remunerated by a proportion of the profits; or the widow or child of a deceased partner may receive a portion of the profits by way of annuity, without necessarily being a partner in the business. Also, where a person lends money to another engaged in business, on a contract by which the lender is to receive a rate of interest varying with the profits, or a share of the profits, such loan does not of itself make the lender a partner in the business, provided the contract is in writing signed by all parties thereto. And a person who sells the good-will of a business may, as part of the price, continue to receive a portion of the profits without being necessarily a partner. But in either of these two last-mentioned cases, if the person actually carrying on the business become bankrupt, the person entitled to receive part of the profits can receive nothing out of the bankrupt's estate until all the ordinary creditors of the bankrupt have been paid in full.

It must in every case be a question of fact whether or not a person is, or is not, a partner in a business. If he shares in the profits of the business he is presumed to be a partner; but he may show that although he shares in the profits he is not in fact a partner. When a person does not intend to be a partner, and when the business is not carried on for him, he is not a partner. But if a person holds himself out as a partner in a business, he is liable as if he were a partner to any one who gives credit to the firm in the belief that he is a partner.

The question whether a person is a partner in a business is of great importance; for each partner is liable for all the debts of the firm incurred while he is a partner.

see p.66.

1RRp 57.

p.66.

see p. 57.65.

A dormant partner is one who, although sharing in the profits, takes no part in the management of the business of the firm; whose name does not appear, and who is perhaps not actually known to be a partner. Such a partner is, however, equally liable with other partners. A partner is not liable for debts incurred by the firm before he became a partner. Neither is a person who ceases to be a partner liable for debts contracted after he has left the firm. But when a person who has ceased to be a partner, or who never was a partner, allows others to believe that he is a partner, he is liable as if he were a partner to any one who gives the firm credit in that belief. A person who thus allows his name to be used as if he were a partner, when in fact he is not a partner, is called a nominal partner.

Liability of Partners. The liability of a partner is joint with all the other partners, not several. That is to say, a person who has given credit to a firm cannot pick out one member of that firm and sue him alone for his debt, he should sue the whole firm. But a single member of a firm, against which judgment has been obtained, may be compelled out of his private property to satisfy the judgment; for if the property of the firm is not sufficient to satisfy the firm's debts, each partner is liable for these debts to his last penny. When a partner dies his estate is severally liable for the debts of the firm, and his executors may be sued without joining the other partners. But a partner's private creditors are always 2 entitled to be paid out of his private property before creditors of the firm; and creditors of the firm are entitled to be paid out of the firm's property before any partner's private creditors are paid out of that partner's share in the firm's property.

1 In Scotland each partner is severally liable as well as jointly. 2 In England and Ireland, not in Scotland.