What are the most important case-law developments you encountered when updating Partnership Law (7th edition)?

Since the last edition of the book in 2020 there have been three Court of Appeal decisions raising quite fundamental aspects of the operation of the Partnership Act 1890.

Does the authority of a partner survive the ostensible completion of winding up, allowing a partner to pursue a recently discovered claim on behalf of the firm? Section 38 of the Partnership Act 1890 says that a partner’s authority continues after dissolution ‘so far as may be necessary to wind up the affairs of the partnership’. In Flohr v Frontiers Capital [2024] EWCA Civ 1385 the court decided that where there was an asset of the partnership which had not been sold, assigned or otherwise dealt with on dissolution, the partnership affairs had not been fully wound up. This meant the partner still had authority under Partnership Act 1890, s 38 and could take steps as were reasonably required to realise the value of its remaining assets, including by pursuing a cause of action.

In Procter v Procter [2024] EWCA Civ 324 the Court of Appeal had to grapple with another situation where the impact of lapse of time and a newly discovered partnership asset made the partners’ rights unclear. There one partner had retired from the partnership by agreement.  As a result of an earlier round of litigation, also culminating in a Court of Appeal decision, she discovered that the partnership had the benefit of a tenancy over certain farmland. Was she entitled to any share of that tenancy’s value? The Court of Appeal held that the retirement had triggered a dissolution of the partnership as between the retiring partner and the remaining partners, which (subject to any contrary agreement between them) entitled her to the same share as she would have been entitled on a general dissolution under section 39 of the Partnership Act 1890. Accordingly, because she had neither expressly nor implicitly given up her rights, the retiring partner was entitled to be paid a proportionate share of the value of the tenancy even though she was not aware of the asset in question at the time of her retirement.

Finally in Morton v Morton [2023] EWCA Civ 700 the court had to consider whether an outgoing partner’s right to interest on his partnership share under section 42(1) of the Partnership Act 1890 was excluded where the continuing partners exercised an option to purchase that share under section 42(2) of the Partnership Act 1890. The Court of Appeal held that although section 42(2) of the Partnership Act 1890 only refers to the outgoing partner’s share of profits the Act’s logic dictates that the outgoing partner is also precluded, in that scenario, from making any claim to interest either. This is true whether the option is one which is expressly conferred or, as was the case here, where it arises because of an estoppel.  

These decisions are testament to how many interesting problems and how much lively debate this piece of legislation, now 135 years old, still generates

Are there any legislative changes readers should be aware of that have impacted partnership law and are discussed in the 7th edition of Partnership Law?

Partnership law is directly and indirectly affected by all legislative interventions in the conduct of commercial activity, from routine amendments to the applicable parts of the companies and insolvency legislation to policy-driven legislation in respect of particular markets and activities. The 7th edition of Partnership Law has been updated to take account of all of such legislative changes.

Readers may, however, find the following legislative changes (and proposed legislative changes) of particular interest:

•    The coming into force of the European Union (Withdrawal) Act 2018 and associated primary and secondary legislation has resulted in numerous specific and general changes to partnership law. For example, the European Economic Interest Grouping (Amendment) (EU Exit) Regulations 2018 converted EEIGs registered in the UK to a new domestic corporate form, ie a UK Economic Interest Grouping. There are, of course, also changes to the court’s jurisdiction, enforcement of judgment and the application of competition law.

•    The Economic Crime and Corporate Transparency Act 2023 will introduce reforms to prevent the abuse of limited partnerships, including tightening the registration and transparency requirements, and enabling the deregistration of limited partnerships which are no longer carrying on business or where it would be in the public interest to do so. The majority of the provisions in the 2023 Act relating to limited partnerships are due to be brought into full force no sooner than Spring 2026.

•    The arbitration of partnership disputes will be subject to the amendments introduced by the Arbitration Act 2025, including:

o    Clarification of the law applicable to arbitration agreements;

o    A power for arbitrators to dispose summarily of issues which have no real prospect of success; and

o    Clarification of and revision of the framework for challenges to jurisdiction of an arbitral tribunal and appeals under the Arbitration Act 1996.

•    So far as property capable of being partnership assets are concerned, the Property (Digital Assets Etc.) Bill 2024-25 (which has at the time of writing passed through the House of Lords and is at the Committee stage in the House of Commons) would, if enacted, confirm that certain digital assets – such as crypto tokens – can attract property rights even if they do not fit into the category of things in possession or things in action (following the approach taken in D’Aloia v Persons Unknown [2024] EWHC 2342 (Ch)).

Are there are any trends which have the potential to affect or disrupt partnership law over the next few years?

For some years partnerships in all their forms (general partnerships, limited partnerships and limited liability partnerships) have been used in complex commercial structures without their participants always knowing or understanding the nature of the rights and obligations involved or the differences between being a partner and, for example, a shareholder in a limited company. When things go wrong it may come as a surprise to them to discover that they owe (and are owed) fiduciary obligations. This can lead to a divergence between commercial expectations and a more traditional legal approach, as recently discussed by Lady Rose in Rukhadze v Recovery Partners GP Ltd [2025] UKSC 10, which the Supreme Court has made clear that only Parliament can address.   

Meanwhile an existing legislative trend which brings LLPs and LPs more in line with companies is the introduction of greater transparency when it comes to beneficial ownership and involvement in these entities: see the changes being introduced to LPs in particular by the Economic Crime and Corporate Transparency Act 2023. We wait to see the extent to which this affects the use of these structures as investment vehicles.