PARTNERSHIP LAW Flashcards
Who GOVERN the conventional partnership?
PARTNERSHIP ACT 1961 (PA 1961)
What is the definition of partnership?
s.3(1) PA 1961
“The relation which subsist between persons carrying on business in common with a view of profits”
Partnership must be registered under?
(3 answer)
- Registration of Business Act, 1956 - for Peninsular Malaysia
- Sarawak Cap 64 [Business Name]
Sarawak cap 33 [Business, Professional & Trade Licensing] - Trade Licensing Ord. No 16, 1948 - for Sabah
Difference between ordinary partnership and professional partnership?
Ordinary: cannot exceed 20 person
Professional: unlimited partner
A valid partnership
Partnership is valid even the word partnership does not appear in the name of the form or in the agreement.
No need for a formal agreement. Can be made orally or by writing.
All the elements needed for partnership must exist
4 ESSENTIAL ELEMENTS OF PARTNERSHIP
Under s.3(1) Partnership Act, 1961, there are 4 important element that will constitute a partnership:
1) Relationship that subsists between persons
2) The parson must be carrying on a business (currently carried on)
3) The business must be carried on in common (intention)
4) The business must be carried on with a view of profits
NOT PRIMA FACIE PARTNERSHIP
s. 4 Partnership Act 1961 lay down certain circumstances where it is not prima facie partnership:
s. 4(a)
Joint tenancy refers to ownership of property by two or more persons
s. 4(b)
example: the letting of a cinema by the owner upon the condition that they receive a share of the gross takings
s. 4(c)
Whereby the receipts of a share of profits does not qualify a person to be a partner
1. payment by installment
2. payment of servant or agent
3. annuity to the widow or children of a deceased partner
4. loan given with interest rate varying with profits
5. sales of goodwill
CAN A MINOR BECOME A PARTNER?
Yes. But what are the rules and law?
A minor can be in a partnership for any duration of time until he wanted to disaffirm it.
- liability will be limited (can’t be personally liable)
- not bound by the contract
After reaching age of majority, he can discharge himself within reasonable time from all the future debt of the firm by terminating the partnership.
If he did not repudiate, the agreement will make him liable for the partnership debts.
5 TYPES OF PARTNERSHIP
- General partner
- Active partner
- Sleeping/ Dormant partner
- Salaried partner
- Apparent/ Quasi partner
What is an apparent partner?
A person who is
- not a partner of the partnership
- a holding out occur
- by representation made by the principal
- or failure to notice existing client
When is apparent partner can be held accountable?
Under s.16 PARTNERHSIP ACT 1961
- There must be a representation made or he must knowingly allowed someone else to represent
- Made oral, written or by conduct
- The third party must relied on the representation
- Third party must have given credit to the firm on the strength of that representation
If a holding out happened to a partnership with a deceased partner, what happened?
The liability in respect of the estate of the deceased partner is limited.
Shall not make the person’s estate liable for any of the partnership debts contracted AFTER his death.
RELATIONS BETWEEN PARTNERS
The relations of partnership is determined by their Partnership Agreement. However in the absence if PA, the general provision of s.26 PA 1961 shall apply:
1) Partners are entitled to share/contribute equally in the capital, profit and losses
2) Every partners may take part in management
3) The firm must indemnify every payment/ liabilities made for the firm by the partner
4) Partner making an actual payment or beyond the amount of capital is entitled to interest of 8% per annum from the date of payment advance
5) Partner is not entitled for interest to profits that was before he subscribe capital
6) Not entitle to remuneration/salary for acting in the partnership business
7) Can’t introduce a new partner without the consent of all partner
8) No change may be made in nature of the partnership business without the consent of all partner
9) Partner can have access to the partnership book
LIABILITIES OF PARTNERS
