PARTNERSHIP ORDINANCE, 1897

PARTNERSHIP ORDINANCE, 1897

--1897.--

No. 1 of 1897.
an ordinance to codify the law relating to partnership.
[15th May, 1897.]

nature of partnership

1.(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 any ordinance relating
to the registration of joint-stock companies; or

(b) formed or incorporated by or in pursuance of any other
ordinance, or any acto of parliament, or letters patent, or
oryal charter.

is not a partnership within the meaning of this ordinance.

2. 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,
comon 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;

As amended by Law Rev. Ord., 1923. The short title of this Ordinance is in
s. 47, the sections having been renumbered by No. 8 of 1912 in order to make
them correspond with those of the Partnership Act, 1890.




(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 receving 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 thd 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; and

(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 in not, by reason
only of such receipt, a partner in the business or liable as
such.

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 section 2, 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 twenty shillings in the pound, or dying in insolvent







circumstance, 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
other creditors of the borrower or buyer for valuable con-
sideration in money or money's worth have been satisfied.

4. persons who have entered into partnership with one
another are, for the purposes of this ordinance, called
collectively a firm, and the name under which their business
is carried on is called the firm-name.

relations of partners to persons dealing with them

5. every partner is an agent of the firm and his other
partners for the prupose 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.

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,

7. where one partner pledges the credit of the firm for a
prupose 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.

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.






9. every partner in a firm is liable jointly with the other
partners 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 to the prior payment of his separate debts.

10. where, by any wrongful act or omission of any partner
acting in the ordinary course oft he 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 therefor to the same extent as
the partner so acting or omitting to act.

11. in the following cases, namely,
(1) where one partner, acting within the scope of his
apparent authorty, receives the money or proprety of a trhird
person and misapplies it; and

(2) where a firm in the course of its business receives the
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.

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 section 10 or section 11.

13. if a partner, being a trustee, improperly employs
trust property in teh business or on the account of the partner-
ship, 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.

as amended by law rev. ord., 1923..






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 part-
nership 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.

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,

16. notice to any partner sho habitually acts in thte part-
nership 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.

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 agreemnet may be either express or inferred as a
fact from the course of dealing between the creditors and
the firm as newly constituted.

18. a continuting guarantee 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 guarantee was given.






RELATIONS OF PARTNERS TO ONE ANOTHER

19. the mutual rights and duties of partners, whether
ascertained by agreement or defined by this ordinance, may
be varied by the consent of all the partners, and such consent
may be either express or inferred from a course of dealing.

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 pruposes and in the course of the partnership business,
are called in this ordinance 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
which belongs to the partnership shall devolve according to
the nature nad tenure thereof and the general rules of law
applicable thereto, 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,
\ not being itself partnership property, are partners as to
profits made by the use of that land, and purchase other land
out of the profits to be used in like manner, the land so
purchased belongs to them, in the absence of any agreement
to the contracry, not as partners, but as co-owners for the
same respective estates and interests as are held by them in
the land first mentioned at the date of the purchase.

21. unless the contracry intention appears, property bought
with money belonging to the firm is deemed to have been
bought on account of the firm.

22. where land or any interest therein has become part-
nership 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 adminis-
trators, as personal and not real estate.

23.(1) a writ of execution shall not issue against any
partnership property except on a judgement against the firm.

(2) the courtf or a judge 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 circum-
stances 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 ordinance.

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 prserva-
tion of the business or property of the firm;

(3) a partner making, for the purposes of the partnership,
any actual payment or advance beyond the amount of capital
which he has agreed to subscribe, is entitled to interest at
the rate of eight 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 exist-
ing partners; and

(9) the partnership books are to be kept at the place of
business of the partnership (or the principal place, if there
are more places than one), and every partner may, when he
thinks fit, have access to and inspect and copy any of them.

25. no majority of the partners can expel any partner,
unless a power to do so has been conferred by express agree-
ment between the partners.

26.(1) where no fixed term has been agreed upon for
the duration of the partnership, any parter may determine
the partnership at any time on giving notice of his intention
to do so 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.

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 consistent with the incidents of a partner-
ship 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.

28. partners are bound to render true accounts and full
information of all things affecting the partnership to any
partner or his legal representatives.






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 connexion.

(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.

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.

31.(1) an assignment by any partner of his share in
the partnership, either absolute or by way or mortgage or
redeemable charge, does not, as against the other partners,
entitle the assignee, during the continuance of the partnership,
to interfere in the managemnet 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 receiver the share of
the 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 the 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
partbership assets to which the assigning paratner is entitled
as between himself and the other partners, and , for the
purpose of ascertaining that share, to an account as from the
date of the dissolution.

DISSOLUTION OF PARTNERSHIP AND ITS CONSEQUENCES.

32.(1) 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; or.
(b) if entered into for a signle adventure or undertaking,
by the termination of that adventure or undertaking; or,







(c) if entered into for an undefined time, byany partner
giving notice to the other or others of his intention to dissolve
the partnership.

(2) 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.

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 partner-
ship property to be charged under this ordinance for his
separate debt.

34. a partnership is in every case dissolved by the hap-
pening of any event which makes it unlawful for the business
of the firm to be carried on or for the members of the firm
to carry it on in partnership.

35. on application by a partner, the court may decree a
dissolution of the partnership in any of the following cases:-

(1) when a partner is found lunatic by inquisition, or is
shown, to the satisfaction of the court, to be of permanently
unsound mind, in either of which cases the application may
be made as well on behalkf of that partner by his committee,
or next friend, or person having title to intervene as by any
other partner;

(2) when a partner, other than the partner suing, becomes
in any other way permanently incapable of performing his
part of the partnership contract;

(3) 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 affect
prejudicially the carrying on of the business;

(4) when a partner, other than the partner suing, wifully
or perisstenty commits a hreach of the partnership agree-
yaent or otherwise so conducts hiniself in matters relating to
the partnership 'business that it is not reasonably practicable
for the other partner or partners to carry on the busines in
partnership with him ;




(5) when the business of the partnership can only be
carried on at a loss; and

(6) whenever in any case circumstances have arisen which,
in the opinion of the court, render it just and equitable that
the partnership be dissolved.

36.(1) where a person deals with a firm after a change
in its constitution, he is entitled to treat all apparent mem-
bers of the old firm as still being members of the firm until
he has notice of the change.

(2) an advertisement in the gazette as to a firm whose
principal place of business is in the colony 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.

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
prupose in all necessary or proper acts, if any, which cannot
be done without his or their concurrence.

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.

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 pay-
ment 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.

40. where one partner has paid a premium to another on
entering into a partnership for a fixed term, and the partner-
ship 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 partner-
ship has continued; unless-

(1) the dissolution is, in the judgment of the court, wholly
or chiefly due to the misocnduct of the partner who paid the
premium; or

(2) the partnership has been dissolved by an agreement
containing no provision for a return of any part of the
premium.

41. where a partnership contract is rescinded on the
ground of the fraund or misrepresentation of one of the parties
thereto, the party entitled to rescind is, without prijudice to
any other right, entitled

(1) 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 parid by him for the purchase of a
share in the partnership and for any capital contributed by
him; and is

(2) to stand in the place of the creditors of the firm for
any payments made by him in respect of the partnership
liabilities; and

(3) to be indemnified by the person guilty of the fraund or
making the representation against all the debts and liabilites
of the firm.

42.(1) where any member of a firm has died or other-
wise 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 eight 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
purchaser the interest of a deceased or outgoing partner, and
that option is duly exercised, the estate of teh 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 preceding
provisions of this section.

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.

44. in settling accounts between the partners after a
dissolution of partnership, the following rules shall, subject
to any agreement, be observed;

(1) losses, including losses and deficienceis 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; and

(2) the assets of teh firm, including the sums, if any, con-
tributed by the partners to make up losses or deficiencies of
capital, shall be applied in the following manner and order;

(a) in paying the debts and liabilities of the firm to per-
sons who are not partners therein;

(b) in paying to each partner rateably what is due from
teh firm to him for advances as distinguished from capital

(c) in paying to each partner rateably what is due from
the firm to him in respect of capital; and

(d) the ultimate residue, if any, shall be divided among
the partners in the proportion in which profits are divisible.


45. in this ordinance,

(a) business includes every trade, occupation, or pro-
fession.
(b) the court includes every court and judge having
jurisdiction in the case,

46. the rules of equity and of common law applicable to
partnership shall continue in forec, except so far as they are
inconsistent with the express prdovisions of this ordinance.

47. THIS ORDINANCE MAY BE CITED AS THE PARTNERSHIP
ORDINANCE, 1897.
[Originally No. 2 of 1897. Law Rev. Ord., 1924.] 53 & 54 Vict, c. 39. Definition of partnership. Rules for determining existence of partnership. Postponement of right of person lending or selling in consideration of share of profits in case of insolvency. Meaning of firm and firm-name. Power of partner to bind firm. Partners bound by acts on behalf of firm. Partner using credit of firm for private purposes. Effect of notice that firm will not be bound by acts of partner. Liability of partners. Liability of firm for wrongs. Misapplication of money or property received for or in custody of firm. Liability for wrongs joint and several. Improper employment of trust property for partnership purposes. Persons liable by holding out. Admissions and representations of partner. Notice to acting partner to be notice to firm. Liabilities of incoming and outgoing partners. Revocation of continuing guarantee by change in firm. Variation by consent of terms of partnership. Partnership property. Property bought with partnership money. Conversion into personal estate of land held as partnership property. Procedure against partnership property for partner's separate judgment debt. Rules as to interests and duties of partners, subject to special agreement. Expulsion of partner. Retirement from partnership at will. Where partnership for term is continued over, continuance on old terms presumed. Duty of partner to render accounts, etc. Account-ability of partners for private profits. Duty of partner not to compete with firm. Rights of assignee of share in partnership. Dissolution by expiration or notice. Dissolution by bank-ruptcy, death, or charge. Dissolution by illegality of partnership. Dissolution by the court. Rights of persons dealing with firm against apparent members of firm. Right of partner to notify dissolution. Continuing authority of partners for purposes of winding-up. Rights of partners as to application of partnership property. Apportionment of premium where partnership prematurely dissolved. Rights where partnership dissolved for fraud or misrepresentation. Right of outgoing partner in certain cases to share profits made after dissolution. Retiring or deceased partner's share to be a debt. Rules for distribution of assets on final settlement of accounts. Interpretation. Saving for rules of equity and of common law. Short title.

[Originally No. 2 of 1897. Law Rev. Ord., 1924.] 53 & 54 Vict, c. 39. Definition of partnership. Rules for determining existence of partnership. Postponement of right of person lending or selling in consideration of share of profits in case of insolvency. Meaning of firm and firm-name. Power of partner to bind firm. Partners bound by acts on behalf of firm. Partner using credit of firm for private purposes. Effect of notice that firm will not be bound by acts of partner. Liability of partners. Liability of firm for wrongs. Misapplication of money or property received for or in custody of firm. Liability for wrongs joint and several. Improper employment of trust property for partnership purposes. Persons liable by holding out. Admissions and representations of partner. Notice to acting partner to be notice to firm. Liabilities of incoming and outgoing partners. Revocation of continuing guarantee by change in firm. Variation by consent of terms of partnership. Partnership property. Property bought with partnership money. Conversion into personal estate of land held as partnership property. Procedure against partnership property for partner's separate judgment debt. Rules as to interests and duties of partners, subject to special agreement. Expulsion of partner. Retirement from partnership at will. Where partnership for term is continued over, continuance on old terms presumed. Duty of partner to render accounts, etc. Account-ability of partners for private profits. Duty of partner not to compete with firm. Rights of assignee of share in partnership. Dissolution by expiration or notice. Dissolution by bank-ruptcy, death, or charge. Dissolution by illegality of partnership. Dissolution by the court. Rights of persons dealing with firm against apparent members of firm. Right of partner to notify dissolution. Continuing authority of partners for purposes of winding-up. Rights of partners as to application of partnership property. Apportionment of premium where partnership prematurely dissolved. Rights where partnership dissolved for fraud or misrepresentation. Right of outgoing partner in certain cases to share profits made after dissolution. Retiring or deceased partner's share to be a debt. Rules for distribution of assets on final settlement of accounts. Interpretation. Saving for rules of equity and of common law. Short title.

https://oelawhk.lib.hku.hk/items/show/1170

1923

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