Law of Partnership

Question 1

A partnership is defined as “the relation which subsists between persons carrying on a business with a common view to profit”

Answer 1

Section 3(1) Partnership Act 1961

Question 2

______________ provides “every partner is an agent for the firm and other partners for the business of partnership”

Answer 2

Section 7 Partnership Act 1961

Question 3

Every partner in a firm is liable jointly with the other partners for all debts and obligations of the firm.

Answer 3

Section 11 Partnership Act 1961

Question 4

Any partner who commits criminal offences shall be personally liable. Other partners shall not be liable unless there is a piece of evidence. The supporting case is ____________________________

Answer 4

Chung Shin Kian & Anor v Pendakwaraya

Question 5

All the partners are entitled to share equally in the capital and profits of the business and must contribute equally towards the losses.

Answer 5

Section 26 (a) Partnership Act 1961

Question 6

The firm must indemnify every partner in respect of payments made and personal liabilities incurred by him.

Answer 6

Section 26 (b) Partnership Act 1961

Question 7

Any difference arising as to ordinary matters connected with the partnership business may be decided by a majority of the partners.

Answer 7

Section 26 (h) Partnership Act 1961

Question 8

The partnership books are to be kept at the place of business of the partnership and every partner may, when he thinks fit, have access to and inspect and copy any of them

Answer 8

Section 26 (i) Partnership Act 1961

Question 9

Every partner is obliged to render true accounts and full information on all things affecting the partnership.

Answer 9

Section 30 Partnership Act 1961

Question 10

The supporting case for Section 31 Partnership Act 1961 is ____________.

Answer 10

Pathirana v Ariya Pathirana

Question 11

Dissolution by expiration or notice.

Answer 11

Section 34 Partnership Act 1961

Question 12

Dissolution by bankruptcy or death.

Answer 12

Section 35 Partnership Act 1961

Question 13

Dissolution by the Court.

Answer 13

Section 37 Partnership Act 1961

Question 14

Give and 3 difference between LLP and a company.

Answer 14

No issuance of shares.
Flexibility in making decisions.
No formal requirement for Annual General Meetings.
No requirement to submit financial statements to SSM.
Accounts need not be audited.

Question 15

A partner making advance for the business purpose is entitled to interest at the rate of 8% per annum from the date of the payment or advance.

Answer 15

Section 26 (c) Partnership Act 1961

Question 16

A partner is not entitled to the 8% payment, before the ascertainment of profits, to interest on the capital subscribed by him.

Answer 16

Section 26 (d) Partnership Act 1961

Question 17

Every partner may take part in the management of the partnership business.

Answer 17

Section 26 (e) Partnership Act 1961

Question 18

No partner shall be entitled to remuneration for acting in the partnership business

Answer 18

Section 26 (f) Partnership Act 1961

Question 19

The supporting case for Section 30 Partnership Act 1961 is __________

Answer 19

Law v Law

Question 20

Any secret profit or benefit must be told to all partners is stated in _____________.

Answer 20

Section 31 Partnership Act 1961

Question 21

The obligation of a partner not to compete with the firm in a business of the same nature without the consent of the other partners is stated in ____________.

Answer 21

Section 32 Partnership Act 1961

Question 22

Dissolution by the illegality of partnership.

Answer 22

Section 36 Partnership Act 1961

Question 23

Explain the 3 advantages of LLP.

Answer 23

Separate legal personality, Perpetual succession, Any changes about the partners will not affect the rights and liabilities of the LLP.

Question 24

Explain the 3 disadvantages of LLP.

Answer 24

Requires a minimum of 2 partners at all times, Difficult to transfer ownership, must go thru SSM, No corporate tax exemption

Question 25

U and S are partners. U has taken a loan to renovate the premises of business. S does not want to be jointly liable and pay the debt. Please advise S with TWO supporting statutes and TWO cases

Answer 25

*S 7 Partnership Act 1961
*Chan King Yue v Lee & Wong
*S 11 Partnership Act 1961
*Osman b.Haji Mohamed Usop v Chang Kang Swi

Question 26

The partners plan to engage Kevin to manage the business. Kevin will receive a remuneration of RM5,000 per month. Is Kevin a partner? Explain with supporting statute.

Answer 26

No. Section 26 (f) Partnership act 1961 - No partner shall be entitled to remuneration for acting in the partnership business.

Question 27

Sue does not manage the partnership business, can she still be a partner?

Answer 27

Yes. Section 26 (e) Partnership act 1961 - Every partner may take part in the management of the partnership business.

Question 28

Partners would like to dissolve their partnership. The partnership agreement does not have an expiration time. Explain the right dissolution with ONE supporting statute.

Answer 28

Section 34 Partnership Act 1961 - Dissolution by expiration or notice.

If entered into for an undefined time, giving notice to the other of his intention to dissolve the partnership is sufficient.

Question 29

Business includes every trade, occupation or profession that the parties must agree.

Answer 29

Section 2 Partnership Act 1961

Question 30

Partnership must be a minimum of ___ parties max of ___ parties.

Answer 30

2 , 20