Partnership Law PDF

23/4/2024 RELATIONSHIP AMONG PARTNERS NHAS Partnership 1 RELATIONS OF PARTNER TO ONE ANOTHER  Subject to partnership agreement. If none, S.21 – 33 AP 1961 will be applicable.  2 important principles:- a. R...

23/4/2024 RELATIONSHIP AMONG PARTNERS NHAS Partnership 1 RELATIONS OF PARTNER TO ONE ANOTHER  Subject to partnership agreement. If none, S.21 – 33 AP 1961 will be applicable.  2 important principles:- a. Requirement of being honest. b. Rules in managing the firm S21 – Rights and duties of a partner may be fixed in the partnership agreement. Those rights and duties may be varied by the consent of all partners and such consent may be either express or inferred from a course of dealing. NHAS Partnership 2 1  23/4/2024 THE REQUIREMENT OF BEING HONEST i. The needs for honesty Maxim : in societatis contractibus fides exuberet (an exuberant faith in the partnership contracts) The strictest good faith must be observed in partnership transactions S27 : no majority can expel a partner unless the power to do so is conferred by express agreement between them.  Law v Law (1905) 1 Ch. 140  Green v Howell (1910) 102 LT 347 NHAS Partnership 3 Contd. ii. Honesty according to the Act. a. S30 – Partners are bound to render true account and full information of all things affecting the partners to any partner of the firm. b. S31 (1) – Every partner must account any benefit derived by him from any transaction connecting the partnership or any use of partnership property, name or business connection which was without the concsnt of other partners. c. S31 (2) – also applicable to any transaction after the firm has been dissolved on the ground of death of any partner. Also applicable when the affairs of firm have not been completely wound up. Pathirana v Pathirana (1967) 1 AC 323 NHAS Partnership 4 2  23/4/2024 Contd. d. S32 – a partner has to account any profit made by him to the firm when:  if he carries on a business of the SAME nature as and COMPETING with that of the firm.  the SAME and COMPETING business was carried out without consent of other partners.  Aas v Benham (1891) 2 Ch. 244  Trimble v Goldberg (1906) AC 494 NHAS Partnership 5 Contd. iii. Rules in managing the firm (If not stated in agreement S26 is applicable) S.26(a) equal rights of all partners over capital, profits and liabilities. Stewart v Forbes (1849) Mac. & G. 136 Re Albion Life Assurance Society (1880) 16 Ch.D 83 S.26(b) rights to be reimbursed of payments made and personal liabilities incurred by him for the firm.  Kok Hong Leong v Seow Kah Cheng (1950) 16 MLJ 87  Ong Keat Huat v H/Kong Uni.Corp (1961) 27 MLJ 36 NHAS Partnership 6 3  23/4/2024 Contd. S.26(c) entitlement to 8% interests per anum. S.26(d) a partner is not entitle to interest on capital before ascertainment of profits. S26 (e) every partner may take part in the management of partnership’s business. S.26 (f) no partner shall entitle for remuneration. Chew Kong Chin v. Estate & Trust Agencies 1 MLJ 201 Tham Kim Fai v. Ng Kon Seong 4 CLJ 634 NHAS Partnership 7 Contd. S.26 (g) introduced new partner must CONSENT all partners. S.26 (h) any differences arises has to be resolved by MAJORITY. Change in the nature of partnership business, by UNANIMOUS CONSENT. Const v Harris (1824) T & R. 496 Tam Kok Cheong v Low Pui Heng (1966) 1 MLJ 52  S.26 (i) all partners may have access to and inspect and copy any records. NHAS Partnership 8 4