Aas v Benham
Rule established
A partner must account only for profits derived from a transaction within the scope of the firm's business, or from the use of the firm's property, name or business connection in that business. Information acquired as a partner may be used freely in a wholly different line of business.
Facts
- The firm carried on business as shipbrokers.
- Benham, a partner, used information and connections gained in that business to help reorganise a shipbuilding company.
- He was appointed to a paid position with that company and received remuneration.
- The firm's business did not include shipbuilding or the promotion of companies.
- The other partners sued for an account of what he had received.
Issue
- Whether a partner who exploits information obtained in the course of the partnership business, in a venture outside the scope of that business, must account to the firm for the profits.
Held
- The claim failed. The remuneration was earned in a business outside the scope of the partnership. Lindley LJ held that the duty to account arises where a partner derives a benefit from a transaction within the scope of the firm's business, or by use of the firm's property, name or connection. Information as such is not partnership property, and a partner is entitled to use knowledge he has acquired in a business the firm does not carry on.
Ratio Decidendi
The fiduciary obligation of a partner is bounded by the subject matter of the partnership. It protects the firm's business, its property, its name and its custom. It does not extend to a general monopoly over everything a partner learns while a partner. Absent competition with the firm or use of its assets, the profit is his own.
How to use it in an exam
- The classic limiting authority on S.16 of the Indian Partnership Act 1932 (partner's duty to account for personal profits).
- Contrast sharply with Bentley v Craven 1853, where the profit was made in a dealing with the firm and in the firm's own line of business, so it had to be accounted for.
- Use the "scope of the business" test as the dividing line in any problem where a partner takes an outside opportunity.
- Note the related but distinct rule in S.16(b) on carrying on a competing business, which was not engaged here.
Source
Source: [1891] 2 Ch 244 (CA); leading limit on the partner's duty to account; citation and bench checked against Indian Kanoon and reported sources, audit of 12 August 2026
This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.