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Partnership Act 1890 Notes

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Partnership Act 1980/ CONDUCT ISSUES?
Secti on Definition

Existence

1 2

Meaning
?2

or more persons carrying on a business in common with a view of profit/
risk?
? Ownership of common property is not a P'ship (e.g. Joint tenancy, tenancy in common, joint property, common property, or part ownership )
? Sharing of Gross Returns is not a P'ship ( occasional or regular payments? Are profits being distributed? If it is profit then there is a P'ship See just below) share in profits prima facie suggests a P'ship S.2(3) (But check s.2(3)(a)(b)(c) (d)(e))

? The

? Every

P's Power to bind

5 P is an agent of the firm and his acts will bind all Ps

(acts within the

normal course of business)

? Unless

the P had no authority (& the 3rd person either knows that he has no

authority, or does not know or believe him to be a partner.)

6 Firm money

7 Liability

9 ? An

authorised agent of the firm, P or not, binds the firm and all partners a P uses firm money for private purposes, the firm is not bound unless P was specifically authorised
? Unlimited, joint and several liability (even after death but subject to prior payment
? If

of his separate debts)
? Incoming

Liability of Incoming &
Outgoing Partners

Variation Partnership property

Interests of Partners

Expulsion

Retirement

Renewal Accountabil ity Dissolution

17 P is not liable for anything done by the firm before he becomes a P (s.17(1))
? Outgoing P remains liable for debts or obligations incurred before retirement (s.17(2))
? Outgoing Ps may be discharged from liabilities expressly or impliedly by course of dealings (s.17(3)) (AKA "agreement to release" or "novation". Novation has to be agreed upon by all P's and the relevant creditor (only likely to be accepted by creditor if incoming P accepts liability. If no new P (or new P does not accept) very unlikely that creditor will sign a novation agreement))

19 ? Rights

and duties of Ps may be varied by consent of all parties
? Property bought exclusively for the purpose of P'ship 20
? Held on trust for the Ps
? Share equally in the capital and profits/losses (s.24(1))
? Firm must indemnify every P for liabilities incurred in proper conduct of the business (s.24(2))
? Payment beyond capital advanced for partnership, he's entitled to interest at 5% per annum from date of payment (s.24(3))
? P is not entitled to interest on subscribed capital before profits have been 24 ascertained (s.24(4))
? No P is not entitled to remuneration (s.24(6))
? No person may be introduced as a P without consent of all other Ps (s.24(7))
? Most decisions by simple majority (s.24(8))
? P'ship books are to be kept at the place of business (s.24(9))
? The Act does not permit expulsion. Expulsion requires an express 25 agreement of all Ps.
? P will If No fixed term of P'ship, leaving P just gives notice of intention to all other Ps. 26
? Where P'ship constituted by deed, a signed notice in writing, shall be sufficient for retirem
? Where a fixed term P'ship continues after the fixed term, there is a 27 presumption that it continues on the same terms
? Ps' duty not to compete with P'ship, unless given consent by other Ps.
? If no Consent, then P accounts for any private profits made from a 29 &
transaction concerning the P'ship or a competing business (Competing 30 32

? Applies to a post-dissolution P'ship
? If P'ship is fixed term (s.32(a)) or single undertaking (s.32(b)) by expiration of term or

means: doing the same business as the P'ship)

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