.(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.RULES FOR DETERMINING EXISTENCE OF PARTNERSHIP
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 prima facie evidence that he is a partner in the
business, but the receipt of such a share, or of a payment
contingent on or varying with the profits of a business, does not
of itself make him a partner in the business; and in particular-
(a) The receipt by a person of a debt or other liquidated
amount by instalments, or otherwise out of the accruing profits of
a business does not of itself make him a partner in the business or
liable as such
(b) A contract for the remuneration of a servant or agent of
a person engaged in a business by a share of the profits of the
business does not of itself make the servant or agent a partner in
the business or liable as such
(c) A person being the widow or child of a deceased partner,
and receiving by way of annuity a portion of the profits made in
the business in which the deceased person was a partner, is not by
reason only of such receipt a partner in the business or liable as
such
(d) The advance of money by way of loan to a person engaged
or about to engage in any business on a contract with that person
that the lender shall receive a rate of interest varying with the
profits, or shall receive a share of the profits arising from
carrying on the business, does not of itself make the lender a
partner with the person or persons carrying on the business or
liable as such. Provided that the contract is in writing, and
signed by or on behalf of all the parties thereto
(e) A person receiving by way of annuity or otherwise a
portion of the profits of a business in consideration of the sale
by him of the goodwill of the business is not by reason only of
such receipt a partner in the business or liable as such.
POSTPONEMENT OF PERSON LENDING OR SELLING IN CONSIDERATION
OF SHARE OFPROFITS IN CASE OF INSOLVENCY
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 one hundred pence 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.
MEANING OF 'FIRM'
4.(1) Persons who have entered into partnership
with one another 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 OF PARTNERS TO PERSONS DEALING WITH THEM
POWER OF PARTNER TO BIND THE FIRM
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 he is dealing either
knows that he has no authority, or does not know or believe him to
be a partner.
PARTNERS BOUND BY ACTS ON BEHALF OF FIRM
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.
PARTNER USING CREDIT OF FIRM FOR PRIVATE PURPOSES
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.
EFFECT OF NOTICE THAT FIRM WILL NOT BE BOUND BY ACTS OF
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.
LIABILITY OF PARTNERS
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.
LIABILITY OF THE FIRM FOR WRONGS
10.Where, by any wrongful act or omission of any
partner acting 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 therefore to the same extent as the
partner so acting or omitting to act.
MISAPPLICATION OF MONEY OR PROPERTY RECEIVED FOR OR IN
CUSTODY OF THEFIRM
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.
LIABILITY FOR WRONGS JOINT AND SEVERAL
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.
IMPROPER EMPLOYMENT OF TRUST PROPERTY FOR PARTNERSHIP
PURPOSES
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.
PERSON LIABLE BY HOLDING OUT
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
ADMISSIONS AND REPRESENTATIONS OF PARTNERS
15.An admission or representation made by any
partner concerning the partnership affairs, and in the ordinary
course of its business, is evidence against the firm.
NOTICE TO ACTING PARTNER TO BE NOTICE TO THE FIRM
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.
LIABILITIES OF INCOMING AND OUTGOINGS PARTNERS
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.
REVOCATION OF CONTINUING GUARANTY BY CHANGE IN
FIRM
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.
RELATIONS OF PARTNERS TO ONE ANOTHER
VARIATION BY CONSENT OF TERMS OF PARTNERSHIP
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.
PARTNERSHIP PROPERTY
20. (1) All property and rights and interests in
property originally brought into the partnership stock or acquired,
whether by purchase or otherwise, on account 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 Scotland 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.
PROPERTY BROUGHT WITH PARTNERSHIP MONEY
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.
CONVERSION INTO PERSONAL ESTATE OF LAND HELD AS PARTNERSHIP
PROPERTY
22.Where land or any heritable interest therein
has become partnership property, it shall, unless the contrary
intention appears, be treated as between the partners (including
the representatives of a deceased partner), and also as between the
heirs of a deceased partner and his executors or administrators, as
personal or movable and not real or heritable estate.
PROCEDURE AGAINST PARTNERSHIP PROPERTY FOR A PARTNER'S
SEPARATEJUDGMENT DEBT
23. (1) A writ of execution shall not issue
against any partnership property except on a judgment against the
firm.
(2) The High Court, or a judge thereof, or a county court,
may, on the application by summons of any judgment creditor of a
partner, make an order charging that partner's interest in the
partnership property and profits with payment of the amount of the
judgment debt and interest thereon, and may by the same or a
subsequent order appoint a receiver of that partner's share of
profits (whether already declared or accruing), and of any other
money which may be coming to him in respect of the partnership, and
direct all accounts and inquiries, and give all other orders and
directions which might have been directed or given if the charge
had been made in favour of the judgment creditor by the partner, or
which the circumstances of the case may require.
(3) The other partner or partners shall be at liberty at any
time to redeem the interest charged, or in case of a sale being
directed, to purchase the same.
(4) This section shall apply in the case of a cost-book
company as if the company were a partnership within the meaning of
this Act.
(5) This section shall not apply to Scotland.
RULES AS TO INTEREST AND DUTIES OF PARTNERS SUBJECT TO
SPECIALAGREEMENT
24. The interests of partners in the partnership
property and their rights and duties in relation to the partnership
shall be determined, subject to any agreement express or implied
between the partners by the following rules-
(1) All the partners are entitled to share equally in the
capital and profits of the business, and must contribute equally
towards the losses whether of capital or otherwise sustained by the
firm.
(2) The firm must indemnify every partner in respect of
payments made and personal liabilities incurred by him
(a) In the ordinary and proper conduct of the business of the
firm, or
(b) In or about anything necessarily done for the
preservation of the business or property of the firm.
(3) A partner making, for the purpose of the partnership, any
actual payment or advance beyond the amount of capital that he has
agreed to subscribe, is entitled to interest at the rate of five
per cent per annum from the date of the payment or advance.
(4) A partner is not entitled, before the ascertainment of
profits, to interest on the capital subscribed by him.
(5) Every partner may take part in the management of the
partnership business.
(6) No partner shall be entitled to remuneration for acting
in the partnership business.
(7) No person may be introduced as a partner without the
consent of all existing partners.
(8) Any difference arising as to ordinary matters connected
with the partnership business may be decided by a majority of the
partners, but no change may be made in the nature of the
partnership business without the consent of all existing partners.
(9) The partnership books are to be kept at the place of
business of the partnership (or the principal place, if there is
more than one), and every partner may, when he thinks fit, have
access to and inspect and copy any of them.
EXPULSION OF PARTNER
25. No majority of the partners can expel any
partner unless a power to do so has been conferred by express
agreement between the partners.
RETIREMENT FROM PARTNERSHIP AT WILL
26. (1) Where no fixed term has been agreed upon
for the duration of the partnership, any partner may determine the
partnership at any time on giving notice of his intention so to do
to all the other partners.
(2) Where the partnership has originally been constituted by
deed, a notice in writing, signed by the partner giving it, shall
be sufficient for this purpose.
WHERE PARTNERSHIP FOR TERM IS CONTINUED OVER, CONTINUANCE
ON OLD TERMSPRESUMED
27. (1) Where a partnership entered into for a
fixed term is continued after the term has expired, and without any
express new agreement, the rights and duties of the partners remain
the same as they were at the expiration of the term, so far as is
consistent with the incidents of a partnership at will.
(2) A continuance of the business by the partners or such of
them as habitually acted therein during the term, without any
settlement or liquidation of the partnership affairs, is presumed
to be a continuance of the partnership.
DUTY OF PARTNERS TO RENDER ACCOUNTS
28.Partners are bound to render true accounts and
full information of all things affecting the partnership to any
partner or his legal representatives.
ACCOUNTABILITY OF PARTNERS FOR PRIVATE PROFITS
29. (1) Every partner must account to the firm for
any benefit derived by him without the consent of the other
partners from any transaction concerning the partnership, or from
any use by him of the partnership property name or business
connection.
(2) This section applies also to transactions undertaken
after a partnership has been dissolved by the death of a partner,
and before the affairs thereof have been completely wound up,
either by any surviving partner or by the representatives of the
deceased partner.
DUTY OF PARTNER NOT TO COMPETE WITH FIRM
30.If a partner, without the consent of the other
partners, carries on any business of the same nature as and
competing with that of the firm, he must account for and pay over
to the firm all profits made by him in that business.
RIGHTS OF ASSIGNEE OF SHARE IN PARTNERSHIP
31. (1) An assignment by any partner of his share
in the partnership, either absolute or by way of mortgage or
redeemable charge, does not, as against the other partners, entitle
the assignee, during the continuance of the partnership, to
interfere in the management or administration of the partnership
business or affairs, or to require any accounts of the partnership
transactions, or to inspect the partnership books, but entitles the
assignee only to receive the share of profits to which the
assigning partner would otherwise be entitled, and the assignee
must accept the account of profits agreed to by the partners.
(2) In case of a dissolution of the partnership, whether as
respects all the partners or as respects the assigning partner, the
assignee is entitled to receive the share of the partnership assets
to which the assigning partner is entitled as between himself and
the other partners, and, for the purpose of ascertaining that
share, to an account as from the date the dissolution.
DISSOLUTION OF PARTNERSHIP AND ITS CONSEQUENCES
DISSOLUTION BY EXPIRATION OR NOTICE
32. Subject to any agreement between the partners
a partnership is dissolved
(a) If entered into for a fixed term, by the expiration of
that term
(b) If entered into for a single adventure or undertaking, by
the termination of that adventure or undertaking
(c) If entered into for an undefined time, by any partner
giving notice to the other or others of his intention to dissolve
the partnership.
In the last-mentioned case the partnership is dissolved as
from the date mentioned in the notice as the date of dissolution,
or, if no date is so mentioned, as from the date of the
communication of the notice.
DISSOLUTION BY BANKRUPTCY, DEATH OR CHARGE
33. (1) Subject to any agreement between the
partners, every partnership is dissolved as regards all the
partners by the death or bankruptcy of any partner.
(2) A partnership may, at the option of the other partners,
be dissolved if any partner suffers his share of the partnership
property to be charged under this Act for his separate debt.
DISSOLUTION BY ILLEGALITY OF PARTNERSHIP
34.A partnership is in every case dissolved by the
happening of any event that makes it unlawful for the business of
the firm to be carried on or for the members of the firm to carry
on in partnership.
DISSOLUTION BY THE COURT
35. On application by a partner the Court may
decree dissolution of the partnership in any of the following cases
(a) Repealed
(b) When a partner, other than the partner suing, becomes in
any other way permanently incapable of performing his part of the
partnership contract
(c) When a partner, other than the partner suing, has been
guilty of such conduct as, in the opinion of the Court, regard
being had to the nature of the business, is calculated to
prejudicially affect the carrying on of the business
(d) When a partner, other than the partner suing, wilfully or
persistently commits a breach of the partnership agreement, or
otherwise so conducts himself in matters relating to the
partnership business that it is not reasonably practicable for the
other partner or partners to carry on the business in partnership
with him
(e) When the business of the partnership can only be carried
on at a loss
(f) Whenever in any case circumstances have arisen which, in
the opinion of the Court, render it just and equitable that the
partnership be dissolved.
RIGHTS OF PERSONS DEALING WITH FIRM AGAINST APPARENT
MEMBERS OF FIRM
36. (1) Where a person deals with a firm after a
change in its constitution he is entitled to treat all apparent
members of the old firm as still being members of the firm until he
has notice of the change.
(2) An advertisement in the London Gazette as to a firm whose
principal place of business is in England or Wales, in the
Edinburgh Gazette as to a firm whose principal place of business is
in Scotland, and in the Dublin Gazette as to a firm whose principal
place of business is in Ireland, shall be notice as to persons who
had not dealings with the firm before the date of the dissolution
or change so advertised.
(3) The estate of a partner who dies, or who becomes
bankrupt, or of a partner who, not having been known to the person
dealing with the firm to be a partner, retires from the firm, is
not liable for partnership debts contracted after the date of the
death, bankruptcy, or retirement respectively.
RIGHT OF PARTNERS TO NOTIFY DISSOLUTION
37.On the dissolution of a partnership or
retirement of a partner any partner may publicly notify the same,
and may require the other partner or partners to concur for that
purpose in all necessary or proper acts, if any, which cannot be
done without his or their concurrence.
CONTINUING AUTHORITY OF PARTNERS FOR PURPOSES OF WINDING
UP
38.After the dissolution of a partnership the
authority of each partner to bind the firm, and the other rights
and obligations of the partners, continue notwithstanding the
dissolution so far as may be necessary to wind up the affairs of
the partnership, and to complete transactions begun but unfinished
at the time of the dissolution, but not otherwise.
Provided that the firm is in no case bound by the acts of a
partner who has become bankrupt; but this proviso does not affect
the liability of any person who has after the bankruptcy
represented himself or knowingly suffered himself to be represented
as a partner of the bankrupt.
RIGHTS OF PARTNERS AS TO APPLICATION OF PARTNERSHIP
PROPERTY
39.On the dissolution of a partnership every
partner is entitled, as against the other partners in the firm, and
all persons claiming through them in respect of their interests as
partners, to have the property of the partnership applied in
payment of the debts and liabilities of the firm, and to have the
surplus assets after such payment applied in payment of what may be
due to the partners respectively after deducting what may be due
from them as partners to the firm; and for that purpose any partner
or his representatives may on the termination of the partnership
apply to the Court to wind up the business and affairs of the firm.
APPORTIONMENT OF PREMIUM WHERE PARTNERSHIP PREMATURELY
DISSOLVED
40.Where one partner has paid a premium to another
on entering into a partnership for a fixed term, and the
partnership is dissolved before the expiration of that term
otherwise than by the death of a partner, the Court may order the
repayment of the premium, or of such part thereof as it thinks
just, having regard to the terms of the partnership contract and to
the length of time during which the partnership has continued;
unless-
a) the dissolution is, in the judgment of the Court, wholly
or chiefly due to the misconduct of the partner who paid the
premium, or
b) the partnership has been dissolved by an agreement
containing no provision for a return of any part of the premium.
RIGHTS WHERE PARTNERSHIP DISSOLVED FOR FRAUD OR
MISREPRESENTATION
41.Where a partnership contract is rescinded on
the ground of the fraud or misrepresentation of one of the parties
thereto, the party entitled to rescind is, without prejudice to any
other right, entitled-
(a) to a lien on, or right of retention of, the surplus of
the partnership assets, after satisfying the partnership
liabilities, for any sum of money paid by him for the purchase of a
share in the partnership and for any capital contributed by him,
and is
(b) to stand in the place of the creditors of the firm for
any payments made by him in respect of the partnership liabilities,
and
(c) to be indemnified by the person guilty of the fraud or
making the representation against all the debts and liabilities of
the firm.
RIGHT OF OUTGOING PARTNER IN CERTAIN CASES TO SHARE PROFITS
MADE AFTERDISSOLUTION
42. (1) Where any member of a firm has died or
otherwise ceased to be a partner, and the surviving or continuing
partners carry on the business of the firm with its capital or
assets without any final settlement of accounts as between the firm
and the outgoing partner or his estate, then, in the absence of any
agreement to the contrary, the outgoing partner or his estate is
entitled at the option of himself or his representatives to such
share of the profits made since the dissolution as the Court may
find to be attributable to the use of his share of the partnership
assets, or to interest at the rate of five per cent per annum on
the amount of his share of the partnership assets.
(2) Provided that where by the partnership contract an option
is given to surviving or continuing partners to purchase the
interest of a deceased or outgoing partner, and that option is duly
exercised, the estate of the deceased partner, or the outgoing
partner or his estate, as the case may be, is not entitled to any
further or other share of profits; but if any partner assuming to
act in exercise of the option does not in all material respects
comply with the terms thereof, he is liable to account under the
foregoing provisions of this section.
RETIRING OR DECEASED PARTNER'S SHARE TO BE A DEBT
43. Subject to any agreement between the partners,
the amount due from surviving or continuing partners to an outgoing
partner or the representatives of a deceased partner in respect of
the outgoing or deceased partner's share is a debt accruing at the
date of the dissolution or death.
RULE FOR DISTRIBUTION OF ASSETS ON FINAL SETTLEMENT OF
ACCOUNTS
44.In settling accounts between the partners after
a dissolution of partnership, the following rules shall, subject to
any agreement, be observed-
(a) Losses, including losses and deficiencies of capital,
shall be paid first out of profits, next out of capital, and
lastly, if necessary, by the partners individually in the
proportion in which they were entitled to share profits-
(b) The assets of the firm including the sums, if any,
contributed by the partners to make up losses or deficiencies of
capital, shall be applied in the following order -
1.In paying the debts and liabilities of the firm to persons
who are not partners therein
2.In paying to each partner rateably what is due from the
firm to him for advances as distinguished from capital
3.In paying to each partner rateably what is due from the
firm to him in respect of capital
4.The ultimate residue, if any, shall be divided among the
partners in the proportion in which the profits are divisible.
DEFINITIONS OF COURT AND BUSINESS
45.In this Act, unless the contrary intention
appears
The expression `Court' includes every Court and judge having
jurisdiction in the case;
The expression `business' includes every trade, occupation,
or profession.
SAVING FOR RULES OF EQUITY AND COMMON LAW
46.The rules of equity and of common law
applicable to partnership shall continue in force except so far as
they are inconsistent with the express provisions of this Act.
PROVISION AS TO BANKRUPTCY IN SCOTLAND
47. (1) In the application of this Act to Scotland
the bankruptcy of a firm or of an individual shall mean
sequestration under the Bankruptcy (Scotland) Acts, and also in the
case of an individual the issue against him of a degree of cessio
bonorum.
(2) Nothing in this Act shall alter the rules of the law of
Scotland relating to the bankruptcy of a firm or of the individual
partners thereof.
REPEAL
48. Repealed
COMMENCEMENT OF ACT
49. Repealed
SHORT TITLE
50. This Act may be cited as the Partnership Act
1890.
SCHEDULE
Repealed
