Cox v. Hickman (1860)

Contract II (Special Contracts) · Partnership

Facts.

Creditors of a struggling business took over its management under a trust deed and were to be paid out of profits. A supplier who dealt with the business sought to hold the creditors liable as partners because they shared in the profits.

Issue.

Does sharing in the profits of a business, by itself, make a person a partner?

Held.

No. The House of Lords held that participation in profits is strong evidence of partnership but not conclusive; the real test is whether the business is carried on by or on behalf of the person sought to be charged — i.e. mutual agency.

Why it matters.

It is the foundational authority for s.6 (existence of partnership) — profit-sharing is prima facie evidence only; mutual agency is decisive.

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