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Partnership Act, 1890.
[53 & 54 VICT. CH. 39.]
ARRANGEMENT OF SECTIONS.
Nature of Partnership.
1. Definition of partnership.
2. Rules for determining existence of partnership.
3. Postponement of rights of person lending or selling in consideration of share of profits in case of insolvency.
4. Meaning of firm.
Relations of Partners to persons dealing with them.
5. Power of partner to bind the firm.
6. Partners bound by acts on behalf of firm.
7. Partner using credit of firm for private purposes.
8. Effect of notice that firm will not be bound by acts of partner.
9. Liability of partners.
10. Liability of the firm for wrongs.
11. Misapplication of money or property received for or in custody of the firm.
12. Liability for wrongs joint and several.
13. Improper employment of trust-property for partnership purposes.
14. Persons liable by "holding out."
15. Admissions and representations of partners.
16. Notice to acting partner to be notice to the firm.
17. Liabilities of incoming and outgoing partners.
18. Revocation of continuing guaranty by change in firm.
Relations of Partners to one another.
19. Variation by consent of terms of partnership.
20. Partnership property.
21. Property bought with partnership money.
22. Conversion into personal estate of land held as partnership property. 23. Procedure against partnership property for a partner's separate judgment debt.
24. Rules as to interests and duties of partners subject to special agree
25. Expulsion of partner.
26. Retirement from partnership at will.
27. Where partnership for term is continued over, continuance on old terms presumed.
28. Duty of partners to render accounts, &c.
29. Accountability of partners for private profits. 30. Duty of partner not to compete with firm.
31. Rights of assignee of share in partnership.
Dissolution of Partnership, and its consequences.
32. Dissolution by expiration or notice.
33. Dissolution by bankruptcy, death, or charge.
34. Dissolution by illegality of partnership.
35. Dissolution by the Court.
36. Rights of persons dealing with firm against apparent members of firm.
37. Right of partners to notify dissolution.
38. Continuing authority of partners for purposes of winding up.
39. Rights of partners as to application of partnership property.
40. Apportionment of premium where partnership prematurely dissolved.
41. Rights where partnership dissolved for fraud or misrepresentation. 42. Right of outgoing partner in certain cases to share profits made after dissolution.
43. Retiring or deceased partner's share to be a debt.
44. Rule for distribution of assets on final settlement of accounts.
Definition of partnership.
25 & 26 Vict. c. 89.
Rules for determining
existence of partnership.
An Act to declare and amend the Law of Partnership.
[14th August 1890.]
E it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:
Nature of Partnership.
1.—(1.) Partnership is the relation which subsists between persons carrying on a business in common with a view of profit.
(2.) But the relation between members of any company or association which is
(a.) Registered as a company under the Companies Act, 1862, or any other Act of Parliament for the time being in force and relating to the registration of joint stock companies; or
(b.) Formed or incorporated by or in pursuance of any other Act of Parliament or letters patent, or Royal Charter; or
(c.) A company engaged in working mines within and subject to the jurisdiction of the Stannaries :
is not a partnership within the meaning of this Act.
2. In determining whether a partnership does or does not exist, regard shall be had to the following rules:
(1.) Joint tenancy, tenancy in common, joint property, common property, or part ownership does not of itself create a partnership as to anything so held or owned, whether the tenants or owners do or do not share any profits made by the use thereof.
(2.) The sharing of gross returns does not of itself create a partnership, whether the persons sharing such returns have or have not a joint or common right or interest in any property from which or from the use of which the returns are derived.
(3.) The receipt by a person of a share of the profits of a business is
(a.) The receipt by a person of a debt or other liquidated amount
(b) A contract for the remuneration of a servant or agent of a
(c.) A person being the widow or child of a deceased partner,
(d.) The advance of money by way of loan to a person engaged
3. In the event of any person to whom money has been advanced by way of loan upon such a contract as is mentioned in the last foregoing section, or of any buyer of a goodwill in consideration of a share of the profits of the business, being adjudged a bankrupt, entering into an arrangement to pay his creditors less than twenty shillings in the pound, or dying in insolvent circumstances, the lender of the loan shall not be entitled to recover anything in respect of his loan, and the seller of the goodwill shall not be entitled to recover anything in respect of the share of profits contracted for, until the claims of the other creditors of the borrower or buyer for valuable consideration in money or money's worth have been satisfied.
Postponement of rights of person lending or selling in consideration
of share of profits in case
4.-(1.) Persons who have entered into partnership with one another Meaning of are for the purposes of this Act called collectively a firm, and the name under which their business is carried on is called the firm-name.
(2.) In Scotland a firm is a legal person distinct from the partners of whom it is composed, but an individual partner may be charged on a decree or diligence directed against the firm, and on payment of the debts is entitled to relief pro rata from the firm and its other members.
Relations to Partners to persons dealing with them.
5. Every partner is an agent of the firm and his other partners for the purpose of the business of the partnership; and the acts of every partner who does any act for carrying on in the usual way business of the kind carried on by the firm of which he is a member bind the firm and his partners, unless the partner so acting has in fact no authority to act for the firm in the particular matter, and the person with whom
partner to bind
Partners bound by acts on
behalf of firm.
Partner using credit of firm for private purposes.
Effect of notice that firm will not be bound by acts of partner.
Liability of partners.
Liability of the
he is dealing either knows that he has no authority, or does not know or believe him to be a partner.
6. An act or instrument relating to the business of the firm and done or executed in the firm-name, or in any other manner showing an intention to bind the firm, by any person thereto authorised, whether a partner or not, is binding on the firm and all the partners.
Provided that this section shall not affect any general rule of law relating to the execution of deeds or negotiable instruments.
7. Where one partner pledges the credit of the firm for a purpose apparently not connected with the firm's ordinary course of business, the firm is not bound, unless he is in fact specially authorised by the other partners; but this section does not affect any personal liability incurred by an individual partner.
8. If it has been agreed between the partners that any restriction shall be placed on the power of any one or more of them to bind the firm, no act done in contravention of the agreement is binding on the firm with respect to persons having notice of the agreement.
9. Every partner in a firm is liable jointly with the other partners, and in Scotland severally also, for all debts and obligations of the firm incurred while he is a partner; and after his death his estate is also severally liable in a due course of administration for such debts and obligations, so far as they remain unsatisfied, but subject in England or Ireland to the prior payment of his separate debts.
10. Where, by any wrongful act or omission of any partner acting firm for wrongs. in the ordinary course of the business of the firm, or with the authority of his co-partners, loss or injury is caused to any person not being a partner in the firm, or any penalty is incurred, the firm is liable therefor to the same extent as the partner so acting or omitting to act.
11. In the following cases; namely
(a.) Where one partner acting within the scope of his apparent authority receives the money or property of a third person and misapplies it; and
(b.) Where a firm in the course of its business receives money or property of a third person, and the money or property so received is misapplied by one or more of the partners while it is in the custody of the firm;
the firm is liable to make good the loss.
12. Every partner is liable jointly with his co-partners and also severally for everything for which the firm while he is a partner therein becomes liable under either of the two last preceding sections.
13. If a partner, being a trustee, improperly employs trust-property in the business or on the account of the partnership, no other partner is liable for the trust-property to the persons beneficially interested therein.
Provided as follows
(1.) This section shall not affect any liability incurred by any partner by reason of his having notice of a breach of trust; and
(2.) Nothing in this section shall prevent trust money from being followed and recovered from the firm if still in its possession or under its control.
14. (1.) Every one who by words spoken or written or by conduct represents himself, or who knowingly suffers himself to be represented, as a partner in a particular firm, is liable as a partner to any one who has on the faith of any such representation given credit to the firm, whether the representation has or has not been made or communicated to the person so giving credit by or with the knowledge of the apparent partner making the representation or suffering it to be made.
(2.) Provided that where after a partner's death the partnership business is continued in the old firm-name, the continued use of that name or of the deceased partner's name as part thereof shall not of itself make his executors' or administrators' estate or effects liable for any partnership debts contracted after his death.
15. An admission or representation made by any partner concerning the partnership affairs, and in the ordinary course of its business, is representations evidence against the firm. of partners.
16. Notice to any partner who habitually acts in the partnership business of any matter relating to partnership affairs operates as notice to the firm, except in the case of a fraud on the firm committed by or with the consent of that partner.
17. (1.) A person who is admitted as a partner into an existing firm does not thereby become liable to the creditors of the firm for anything done before he became a partner.
(2.) A partner who retires from a firm does not thereby cease to be liable for partnership debts or obligations incurred before his retirement.
(3.) A retiring partner may be discharged from any existing liabilities, by an agreement to that effect between himself and the members of the firm as newly constituted and the creditors, and this agreement may be either express or inferred as a fact from the course of dealing between the creditors and the firm as newly constituted.
18. A continuing guaranty or cautionary obligation given either to a firm or to a third person in respect of the transactions of a firm is, in the absence of agreement to the contrary, revoked as to future transactions by any change in the constitution of the firm to which, or of the firm in respect of the transactions of which, the guaranty or obligation was given.
Notice to acting partner the firm.
to be notice to
Liabilities of outgoing incoming and
Revocation of continuing change in firm. guaranty by
Relations of Partners to one another.
19. The mutual rights and duties of partners, whether ascertained by agreement or defined by this Act, may be varied by the consent of all the partners, and such consent may be either express or inferred from a course of dealing.
Variation by consent of
terms of partnership.
20.-(1.) All property and rights and interests in property originally Partnership brought into the partnership stock or acquired, whether by purchase or otherwise, on ac ount of the firm or for the purposes and in the course of the partnership business, are called in this Act partnership property, and must be held and applied by the partners exclusively for the purposes of the partnership and in accordance with the partnership agreement.
(2.) Provided that the legal estate or interest in any land, or in Scot. land the title to and interest in any heritable estate, which belongs to the partnership shall devolve according to the nature and tenure thereof, and the general rules of law thereto applicable, but in trust, so far as necessary, for the persons beneficially interested in the land under this section.
(3.) Where co-owners of an estate or interest in any land, or in Scotland of any heritable estate, not being itself partnership property, are partners as to profits made by the use of that land or estate, and purchase other land or estate out of the profits to be used in like manner, the land or estate so purchased belongs to them, in the absence of an agreement to the contrary, not as partners, but as co-owners for the same respective estates and interests as are held by them in the land or estate first mentioned at the date of the purchase.
21. Unless the contrary intention appears, property bought with money belonging to the firm is deemed to have been bought on account
of the firm.
Property bought with partnership money.