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This example relates to the commentary at I8.337 and deals with the creation of a partnership which provides for a partner's share to accrue on his death to a surviving partner without payment, and then considers what might happen when the death occurs.

Uncle had carried on business for ten years when he decided to form a partnership with Nephew. Uncle, at the age of 40, put all his business assets (tangible assets worth £150,000 and goodwill valued at £40,000) into the partnership and Nephew, aged 30, provided £50,000 cash. The capital was credited to the partners in equal shares.

Under the terms of the agreement, profits are shared equally and the partnership continues until the death or retirement (at age 65 or earlier in case of bad health) of either partner.

On the death of Uncle before retirement, his share accrues to Nephew without payment. On the retirement of Uncle, Nephew has to purchase Uncle's interest at a sum equivalent to market value.

On the death or retirement of Nephew, Uncle has to purchase Nephew's