Re An Arbitration between David and Matthews [1899] 1 Ch 378
Citation:Re An Arbitration between David and Matthews [1899] 1 Ch 378
Rule of thumb:What happens if a partner is being ousted from a firm? The partner is to be paid a fair value for their shares and is not allowed to use the details of the partnership’s clients to try to solicit them. The Court in this case held that where the shares in the partnership are being sold, and the business is to continue, then future profits for a certain period – called “goodwill” - was to be considered to make up part of the value of the shares, rather than just the percentage value of all of the assets on the balance sheets added together.
Judgment:
'valued on the footing of the consideration of what its value would have been to the partnership if there had been no contract between the parties that the surviving partner should purchase the share of the deceased partner, and therefore on the footing that if it was sold the surviving partner would be at liberty to carry on a rival business but could not use the name of the partnership firm and would not have the right to solicit the old customers of the firm', Romer J.
Warning: This is not professional legal advice. This is not professional legal education advice. Please obtain professional guidance before embarking on any legal course of action. This is just an interpretation of a Judgment by persons of legal insight & varying levels of legal specialism, experience & expertise. Please read the Judgment yourself and form your own interpretation of it with professional assistance.