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Characteristics of Partnership

What? sec. 3(1) Partnership Act 1961

it is a relationship that subsist
between persons carrying on
business in common with a view of
an agreement between persons
that is contractual in nature.
Wong Peng Yuen v. Senanyake
Here a partner of a rm executed a
partnership deed which transferred
shares from the capital of the rm
to his children which was an
attempt to admit them as partners.
The other partner, D had
The children were not partners
since there was no contract
between them and the D
The transfer amounted to an
assignment of the shares of the
partnership not conferring on
them partnership rights.
Existence of Partnership Intention
Chooi Siew Cheong v. Lucky
Heights Development
Here the proprietor of the land
entered into a joint venture
agreement where he contributed
land with the developers who
develop houses / shoplots. Were
they partners?
There was no partnership as the
intention of both parties was wholly
separate business
& was no business in common.
In deciding whether the partnership
exits the courts must look at sec.4
and the intention of the parties.
Verbal/written agreement, but need
to look surrounding circumstances
Aw Yong Wai Choo v. Arief
Trading Sdn. Bhd
To ascertain intention the courts will
take into account any verbal /
written agreement, the surrounding
circumstances of the case at all
times just because the parties
expressly profess to have intention
to be partners, the court may
decide to the contrary.
No negation of partnership though
no mention of partnership. Courts
look into the business in common
with the view
Ratna Amal v. Tan Chow Soo
Parties entered into an agreement
to sell condensed milk called
syndicated agreement.
Division of prots - Arrangement
to sell, rear and buy cattle whereby
he would provide capital and the
other would rear and sell the cattle
and prots divided.
Gulazam v. Noorzaman & Sobath
Joint venture is not partnership
Sinnathamby Klondakoundan v.
the courts will look at the intention
of the parties and sec. For them to
be partners the joint venture
between them must constitute a
partnership for a single
adventure or undertaking under
sec. 34(1)(a).
Liability of partnership to
Outsiders (3rd party)
Section 10 Notice
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 rm, no
act done in contravention of the
agreement is binding on the rm
with respect to persons having
notice of the agreement.
Section 9
Where one partner pledges the
credit of the rm for a purpose
apparently not connected with
the rms ordinary course of
business, the rm is not bound,
unless he is in fact specially
authorized by the other partners;
but this section does not a!ect any
personal liability incurred by an
individual partner.
Higgins v Beauchamp
one partner borrowed money from
P stating it was for parnership but
not. Cinema business not trading
No Express/implied authority
Section 8
Whilst Sec 7 applies to partner, Sec
8 applies to partners AND non-
partners is authorized.
Eg : A cannot go to the court. 3rd
party knows. Not binding on the
Partners bound by acts on behalf of
An act or instrument relating to the
business of the rm and done or
executed in the rm-name, or in
any other manner showing an
intention to bind the rm, by any
person thereto authorized,
whether a partner or not, is binding
on the rm and all the partners:
Provided that this section shall not
a!ect any general rule of law
relating to the execution of deeds
or negotiable instruments.
Execute : signature
Re Briggs
Firm, father & son, son executed a
deed of assignment, stating it was
trading under rms name.
Sec 8 applies
Asamaju Enterprise v MBB
Cheque given to D, but not
indorsed by all partner
Still bound if PA states person sign
has the authority, here presence of
2 partners is su"cient
Section 8 does not apply to
undisclosed agency, because
cannot know hes an agent or
No actual authority is required,
comes from representation
Section 11 Contractual liability
Every partner in a rm is liable
jointly with the other partners for all
debts and obligations of the rm
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
unsatised but subject to the prior
payment of his separate debts.
Father of all Section Section 7 Power of Partner to bind rm
Every partner is an agent of the rm
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 rm of which he is a member
bind the rm and his partners,
unless the partner so acting has
in fact no authority to act for the
rm in the particular matter, AND
the person with whom he is dealing
either knows that he has no
authority or does not know or
believe him to be a partner.
i) Usual way of business
Mercantile Credit v Garrod
Garage business, PA excluded
buying/selling cars. One of the
partners w/o authority sold a car
Culture overrides PA. Sec 7 applies.
Chan King Yue v Lee & Wong
P borrowed money
Held : borrowing money was not in
the usual way business in electrical
engineer rm. But however it was
applied to pay pay debt of the rm
Vasu Devan v VA Nair
A partner sell the partnership
business by executing s/a
agreement, and sale never went
into partnership account.
Not usual way in business. Sec 7
Polikinghorne v Holland
Giving nancial advice is not the
usual way for legal rm
However the rm is bound to direct
where to get such advice.
Union Bank of Australia v Fisher
Act must be necessary nor merely
Golgberg v Jenkins
Lending rate too high, interest too
high, not usual way of business
Bank of Australia v Breillat
ii) Partner does not have authority
A is partner (conveyancing), B&C
(litigation). A suka hati goes to
court, negligent. Client sues A, A
wants to use Sec 7. Client knows.
Section 12
Where, by any wrongful act or
omission of any partner acting in
the ordinary course of the
business of the rm or with the
authority of his co-partners, loss
or injury is caused to any person
not being a partner in the rm, or
any penalty is incurred, the rm is
liable therefor to the same extent as
the partner so acting or omitting to
Cricklewood v Quickgley
Estate Realitites v Wignall
None of the limbs apply, still liable.
National Commercial Bank v Batty
Conversion of cheques (theft),
Hamlyn v Houston Sec 12 applies
Clerk can get info legally, but
because clerk bribed to do so,
Korz v St Pierre
Section 18 Notice to one, notice to all
3rd Party v individual partner
3rd Party v Firm
Section 14
Every partner is liable jointly with
his co-partners and also severally
for everything for which the rm
while he is a partner therein
becomes liable under section 12 or
Joint liability Sue once
Joint & several liability Sue more than once
AGREEMENT (express or implied)
and based on duciary duties
sec 26(a)
When the prots are not equally
shared the losses are borne in the
same proportion; regardless of
capital contribution.
Again this is subject to partnership
Kilpatrick v. Mackay
Both of the partners bought a hotel
with K contributing the larger
proportion. The hotel was used as
joint business venture. When the
hotel was sold the prots were
shared equally and not in
proportion to their initial
Partnership Agreement
Business in common
View of Prot
Guidelines in Sec4
(a), joint tenancy
b) gross return
c) ii) Gaji Walker v Hirsch Clerk, 1/8 from prot & losses
iii) Assignment of shares
iv) Loans Dooley v Drivers
sec 26(b) Indemnify
i) ada authority
ii) necessary Prager v Blatspiel
Sec 26(c)
cannot communicate, doesnt have
Capital advance Kilgarif v Moris
Sec 26(d) Interest tak boleh potong gaji terus Rishton v Grissell
Sec 26e)
Every partner can manage, but still
depends on PA
Kelly v Tucker, or Gulazam
Sec 26(f)
buat gaji lebih, tak dapat,
exception, the other partner
Re Noonan
Sec 26(g) Burne v Reid Introduce son, can. PA says so
Sec 26(h)
Ordinary issue Simple majority
Nature changed 100%
Highley v Walker Son trained in rms workshop
Cannot bad faith Const v Harris
Dissenting partners were not
informed of the purpose of changes
Sec 26(i) Access to books