Issue (p. 8)
As a matter of law, can a partner (A Co) enter into a valid and enforceable contract with a partnership (ABLP) of which A Co is a member? …
Common law rule (p. 8)
In The Law of Contract in Canada (6th ed.), G.H.L. Fridman summarizes the common-law position (at 139):
At common law it was not possible for a person to contract with himself. This meant that … A and B could not contract with B and C. Any attempt to make such a contract resulted in a legal nullity …
Rule under Law of Property Act (Alberta) (p. 8)
…Section 10(1) of the Law of Property Act (Alberta) provides that a contract is valid and enforceable in accordance with its terms notwithstanding that in or by the contract, inter alia, one of the parties (in our example, A Co) enters into an agreement with that party and some other person (A Co and its partner in their capacity as partners of ABLP). By virtue of section 10(3) of the Law of Property Act, section 10 applies to a "contract" that provides for the "conveyance of an interest in real or personal property".
Result: valid partner loan (p. 8)
In Alberta, therefore, A Co can enter into a valid and enforceable contract with ABLP if the contract provides for the conveyance of an interest in real or personal property (for example, if A Co transfers property or loans money to ABLP….
Crawford, "Funding of Retired Partners' Cash Requirements", 1992 Conference Report, C. 34
Crawford, "Tax and Capital Considerations in Refunding Retired Partners' Income and other Cash Requirements", 1991 Conference Report, c. 34.
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