Partnership Act

This Act may be cited as the Partnership Act.

This section defines “business” as including every trade, occupation, or profession, and defines “Court” as the High Court, unless the context requires otherwise.

This section defines a partnership as people carrying on business together for profit, and excludes certain companies and associations from that definition.

This section lists rules for deciding whether a partnership exists, including when shared property, gross returns, or profit-sharing does not by itself create a partnership.

A lender or goodwill seller cannot recover their loan or profit-share claim until other creditors have been paid, if the borrower or buyer becomes insolvent in the ways described.

Partners are collectively called a firm, and the business name is called the firm-name.

Each partner acts as an agent for the firm, and a partner’s usual business acts can bind the firm and the other partners unless specific exceptions apply.

An act or instrument for the firm’s business, if done in the firm name or otherwise showing intent to bind the firm and done by an authorized person, binds the firm and all partners.

A partner cannot bind the firm by using the firm’s credit for a purpose that appears outside the firm’s ordinary business unless the other partners specially authorize it.

If partners agree to restrict a partner’s power to bind the firm, acts done contrary to that agreement do not bind the firm against people who know about the agreement.

Each partner in a firm is jointly liable for the firm’s debts and obligations incurred while they are a partner. After death, the partner’s estate is also severally liable for unpaid debts and obligations, subject to prior payment of the partner’s separate debts.

The firm is liable for a partner’s wrongful act or omission if the partner acted in the ordinary course of the firm’s business or with co-partners’ authority.

A firm must make good a loss if a partner misapplies money or property received from a third person in the stated circumstances.

Each partner is liable jointly and separately for liabilities the firm incurs under section 12 or 13 while the person remains a partner.

If a trustee-partner uses trust property improperly in the partnership business, the other partners are not liable for it, but liability for notice of breach of trust is preserved and trust money can still be recovered if the firm still has it.

A person who holds themself out as a partner in a firm, or knowingly allows that to happen, can be treated as a partner to someone who relied on that representation when giving credit.

A partner’s admission or representation about partnership affairs, made in the ordinary course of business, may be used as evidence against the firm.

Notice to a partner who usually acts in the partnership business counts as notice to the firm, unless it involves fraud on the firm by or with that partner’s consent.

An incoming partner is not liable for earlier firm debts, and a retiring partner remains liable for debts or obligations incurred before retirement unless discharged by agreement with the new firm and creditors.

A continuing guarantee or cautionary obligation is revoked for future transactions when the firm changes, unless the parties agreed otherwise.

Partners may vary their mutual rights and duties if all partners consent.

Property brought into a partnership, or acquired for partnership purposes, is partnership property and must be used only for the partnership.

Property bought with partnership money is treated as bought for the firm, unless there is a contrary intention.

Land or heritable interest that becomes partnership property is treated as personal estate, not real estate, unless there is a contrary intention.

A writ of execution cannot be issued against partnership property unless there is a judgment against the firm. The court or judge may, on application, charge a partner’s interest and appoint a receiver, and the other partners may redeem or buy the interest.

This section sets default rules for partners’ shares, duties, management rights, access to books, and limits on admitting new partners or changing the business without unanimous consent, unless the partners agree otherwise.

A majority of partners cannot expel a partner unless the partners have expressly agreed to give that power.

A partner may end a partnership at any time if no fixed term was agreed, by giving notice to the other partners.

If a fixed-term partnership keeps going after the term ends without a new agreement, the partners’ rights and duties stay the same as before, as far as that fits a partnership at will.

Partners must render true accounts and full information about matters affecting the partnership to any partner or that partner’s legal representatives.

Every partner must account to the firm for benefits gained without the other partners’ consent from partnership transactions or use of partnership property, name, or business connection.

A partner must not compete with the firm without the other partners’ consent, and must account for and pay over profits made from that competing business.

An assignee of a partner’s share may receive profits, and on dissolution may receive the relevant partnership assets, but cannot interfere in management or inspect partnership books during the partnership.

A partnership ends if its fixed term expires, if a single venture ends, or if a partner gives notice for a partnership with no fixed term, subject to any agreement between the partners.

This section says a partnership can end if a partner dies, becomes bankrupt, has a share charged for a separate debt, or is declared subject to forfeiture, and it sets out what the remaining partners, the Administrator General, and the court must or may do after forfeiture.

A partnership must be dissolved if an event makes the firm’s business, or the partners carrying it on in partnership, unlawful.

The Court may dissolve a partnership if a partner applies and one of the listed grounds is proved.

A person dealing with a firm after a change in its constitution may treat the old firm’s apparent members as still being members until notice of the change. The estate of certain partners is not liable for later partnership debts.

When a partnership is dissolved or a partner retires, any partner may publicly notify it and may require the other partner(s) to join in necessary acts.

After a partnership dissolves, each partner’s authority to bind the firm continues only as needed to wind up the partnership and finish unfinished transactions.

When a partnership is dissolved, each partner is entitled to have partnership property used to pay the firm’s debts and liabilities, and any remaining assets used to settle amounts due to the partners.

If a fixed-term partnership ends early, the Court may order repayment of all or part of a premium paid by one partner to another, unless the payer caused the dissolution by misconduct or the dissolution agreement says there is no return of the premium.

If a partnership contract is rescinded for fraud or misrepresentation by one party, the rescinding party has specified rights against partnership assets and the person responsible.

An outgoing partner or the partner’s estate may claim profit share or 5% annual interest after dissolution, unless a purchase option in the partnership contract is duly exercised.

A departing or deceased partner’s share is treated as a debt owed by the surviving or continuing partners, unless the partners agree otherwise.

When a partnership is dissolved, its assets and losses must be distributed in the order set out here, unless the partners agree otherwise.

Rules of equity and common law for partnerships continue to apply unless they conflict with this Act.