Cox v Coulson [1916] 2 KB 177 (Graw 24; 2001) Facts: Coulson leased and managed a theatre in which a touring

company under the management of one C Watson Mill was performing a play. The financial arrangements were that Mill received 40 percent of the gross box office receipts with the remaining 60 per cent going to Couslon. During a particular performance Cox, a member of the audience, was injured when a weapon being used as a prop (and which should not have been loaded) accidently discharged. Cox sued and the court had to decide whether Coulson, who had not been directly concerned with the specifics of the performance, could be made liable. Held: Coulson could be liable but only as an inviter potentially in breach of his duty to invitees entering his theatre. He was not directly or vicariously responsible for the negligence of the actor either as his employer or as Mills partner. As Swinfen Eady LJ explained at 181: Although the gross takings were divided between them, there was not any partnership; each had to discharge his own separate liabilities in respect of the venture. The travelling expenses, the remuneration of the actors, the cost of the appliances had to be borne entirely by Mill. The theatre rent and outgoings, the cost of the lighting, and the cost of playbills were wholly to be borne by the defendant. One of them may have made a profit out of the venture, and the other might have made a loss. Neither of them had authority to bind the other in anyway; there was no agency between them. The sharing of gross returns does not of itself create a partnership.

Chan Sau-kut and Another v Gray and Iron Construction & Engineering Co. [1986] 1 HLLR 84 The case concerns whether a partnership exists where there is an express agreement stating that it is not a partnership but a debtor / creditor relationship.

In this case, Mr. Gray wanted to embark on a drainage project. He had not enough capital and so he asked Chan and others to contribute money to the project. The contract between Chan and Gray and others stated the relationship to be a co-operation and provided for joint control of the bank accounts and equal sharing of profits. It also contained a clause stating: this contract shall not constitute a partnership .

The question is: if it was a partnership, Chan would have to responsible for the business's liabilities. If it was only a debtor / creditor relationship, Chan would not be responsible for the business liabilities but rather, he would be entitled to get back his investment in the business from Gray as a debtor.

In his judgment, the judge held that a partnership existed notwithstanding the agreement stating otherwise. His decision was based on the substance of relationship, namely the operations, the sharing of risks and profits, and the management and control of the business.

In my experience, the Revenue regards the factor "whether the taxpayer had a share of profits" as the most important one in determining the existence of a partnership.

Eg Weiner v Harris [1910] 1 KB 285 : jewellery was delivered to a retail dealer on sale for cash only or return. The contract further provided that the jewellery was not to be kept as his own stock, that it was to be entered at cost price in a special book kept by him, and that his remuneration for selling it was to be one-half the profit. CA held the relationship was one of P and A. The essence of a sale or return is that the person to whom the goods have been delivered has the right for a period to retain them and is given the option during that period either himself to purchase the goods or dispose of them to another on his own account.