Partnership Law PDF

5/4/2024 NHAS PARTNERSHIP 1 PARTNERSHIP - Introduction The relevant law - Partnership Act 1961 which is in pari materia with the English Partnership Act 1890. S47(1) PA 1961 – “application of the rule of equity and common law…” Partnership is essentially...

5/4/2024 NHAS PARTNERSHIP 1 PARTNERSHIP - Introduction The relevant law - Partnership Act 1961 which is in pari materia with the English Partnership Act 1890. S47(1) PA 1961 – “application of the rule of equity and common law…” Partnership is essentially a contract law. Thus Contract Act 1950 and contract law are applicable to partnership. Tan Eng Choong v Foo Kai Yuen 1 MLJ 531 NHAS PARTNERSHIP 2 1  5/4/2024 PARTNERSHIP – Not a legal personality A partnership is not a legal entity in law. Alagappa Chettiar v Coliseum Café MLJ 111 See Raja Azlan Shah LP as he then was at 104-105 in Keow Seng & Company v Trustees of Leong San Thong Kho Kongsi (Penang) Registered 2 MLJ 103 NHAS PARTNERSHIP 3 DEFINITION Sec. 3 (1) Partnership Act 1961 “The relation which subsists between persons carrying on business in common with a view of profit” NHAS PARTNERSHIP 4 2  5/4/2024 “Relation” - Contractual relation either expressed @ implied with whatever name. “persons” Max no of members : see S13 Companies Act 2016 The effect of non-compliance on the above Tan Teck Hee v. Cheng Tian Peng (1915) 2 FMSLR 161 Tan Ching Cheong v. Estate & Trust Agencies Ltd. (1932) FMSLR 129. NHAS PARTNERSHIP 5 “carrying on business” - S2 : includes every trade, occupation, or profession. - Costom & Excise Comm. v. Lord Fisher (1981) 2 All ER 262 - Soh Hood Beng v. Khoo Chye Neo (1897) 4 SSLR 115 - Ratna Amal v. Tan Chow Soo MLJ 399 It denotes that the business is ongoing and not s’thing to be done in future. Keith Spicer Ltd. v. Mansell 1 All ER 172 Mann v. D’Aroy (1968) 2 All ER 172 NHAS PARTNERSHIP 6 3  5/4/2024 “Profits”  ” implies a comparison between the state of a busRe Spanish Prospecting Co. Ltd 1 Ch. 92 “Profitiness at two specified dates usually specified by an interval of a year……. If the total assets of the business at the two dates be compared, the increase [which’ they show at the later dateas compared with the earlier date ….. represents the strictness the profits of the business during the period in question… (at pp 98 – 99) Soh Hood Beng v. Khoo Chye Neo NHAS PARTNERSHIP 7 NON-PARTNERSHIP ASSOCIATION S.3(2) – (a) Company registered under the Companies Act 1965 @ co-operative association under any written law in respect of co-operative association. (b) Formed or incorporated by or in accordance with:- (c) any other law in force in Malaysia or any part thereof (d) any letter of mandate, royal charters or UK’s Act of Parliament NHAS PARTNERSHIP 8 4  5/4/2024 OTHER CONSIDERATION FACTORS S.4(a) Joint ownership on property does not by itself creates a partnership. French v Strying (1857) NS 357 Racing horse. Davis v. Davis (1894) 1 Ch. 399 Inheritance estate NHAS PARTNERSHIP 9 Fromount v Coupland Training horse business for profits is a partnership even though the horses was not jointly owned by all parties involved. NHAS PARTNERSHIP 10 5  5/4/2024 S.4(b) Sharing of gross returns by itself will not constitute a partnership. * Gross return = total income Cox v. Coulson (1916) 114 LT 599 Lyons v Knowles (1863) 3 B & S 556 NHAS PARTNERSHIP 11 S.4(c) receipt of a share of the profits of business is prima facie evidence that he is a partner in the firm. Murray v David SSLR 229 receiving profits does not automatically made a person a partner. He must expressed his consent and there is agreement between parties involved. NHAS PARTNERSHIP 12 6  5/4/2024 S.4 (c) receipt of profits does not make a person a patner in the followings: i. receipt of debt or other liquidated amount either by installment or otherwise, out of acruing profit of business.  Badeley v Consolidated Bank (1888) 38 Ch.D 238 per Lindley J at 258 ii. a contract for remuneration of servant or agent  Walker v Hirsch (1884) 27 Ch.D 460 NHAS PARTNERSHIP 13 iii. payment of anuity to the widow or child of deceased partner  IRC v Lebus’ Trustees (1946) 1 All ER 476 iv. Advances of money by way of a loan  Re Young, ex parte Jones (1896) 75 LT 278 v. Consideration for sale of goodwill of a business.  Pratt v Strick 17 Tax Case 459 NHAS PARTNERSHIP 14 7  5/4/2024 PARTNERSHIP AGREEMENT oral / in writing Advantages of having written agreement No agreement, Chapter IV & V applicable. Proper interpretation of terms in the Act can be done by looking at the intention of all parties based on the agreement. NHAS PARTNERSHIP 15 PARTNERSHIP AGREEMENT S. 5 Registration of Business Act 1956 : Particulars need to be in the agreement. Name of parties involved, Account & capital business & address Rights of deceased partners / Firm’s name & partners retired / new Duration & method of Management dissolution Other matters eg. competition Partnership’s assets etc. NHAS PARTNERSHIP 16 8  5/4/2024 REGISTRATION OF PARTNERSHIP –Registration of Business Act 1956 –Sivagami Achi v PRM Ramanathan Chettiar & Lain-lain (1959) 25 MLJ 221 –Gulazam v Noorzaman Sobath (1957) 23 MLJ 45 NHAS PARTNERSHIP 17 9