PARTNERSHIP ORDINANCE, 1897

PARTNERSHIP ORDINANCE, 1897

1.897.

No. 1 of 1897.

An Ordindnce 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 Act of Parliament, or letters patent, or Royal 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, 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

The numbering of the sections in this Ordinance, except s. 47, corresponds
with that of the sections in the Partnership Act, 1890. The short title is
in s. 47.





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,.,re,ceipt 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 receiv ' ing by way of annuity.a portion of the profits made
in the business in which t he 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
frorn,carrying on the business, does not of itself make the lender
a partner wi ' th 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

(c) 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.

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 arr arrangement to pay his creditors
less than-twenty shillings in the pound, ar dying in insolvent
circumstances, the lender of the loan shall not be entitled to
recover anything in respe i ct 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 consideration in
money or money's worth have been,satisfied.

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

Relations of pariners to persons dealing with them.

5. Every. partner is an agent of the firm and his other part-
ners 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 anj his partners, unless the
partner so acting has in fact no authority to act for the firm in
the particular rnatteri 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
authorized, 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
purpose apparently not connected with the firm's ordinary
course Pf' business, the firm is not bound, unless he is in fact
specially authorized 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 firni 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 sever 1 ally
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 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 therefor to the same extent as' the partner so
acting or omitting to act.

In the following cases, namely-

(i) where one partner, acting within the scope of his
apparent authority, receives the money or property of a third
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 liab le jointly with his co-partners and
also. severally for everything for, which the firm while he is a
partner therein becomes liable under section io or section ii.

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 sh all 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.

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 repre-





sentation, 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 rnade.

(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 who habitually acts in the 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 he discharged from any existing
liabilities by an agreement to that effect between hirnself 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 newiv constituted.

18. A continuing 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 ascer-
tained 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 purposes 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 and 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
.contrary, 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 contrary intention appears, property bought
with rnoney 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 repre-
sentatives of a deceased partner), and also as between the heirs
of a deceased partner and his executors or administrators, as
personal and not real estate.

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





(2) The court 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 circumstances of the case m.ay 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 com-
pany 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:-

(i) 'all the partners are entitl,ed to share equally in the
capital and profits of the business, and must contribute equally
towards the losses, -~sliether 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 firin ; or

(b) in or about anything necessarily done for the preser-
vation of the business or property of t~e firm;

(,i) a partner mAing, 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 aWexisting 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 ; 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 agreement
between the partners.

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 to do
so to all the other partners.

(2) Where the partnership has originally been constituted
by d eed, 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 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 he a continuance of the partnership.





28. Partners are bound to render true acco unts and full
information of all things all~cting 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.

W.-(i) An assignment by ariv 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 aflairs, or to require any accounts of the partnership trans-
actions, or to inspect the partnership books, but entitles the
as~ignee only to recei-~e 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 partnership
assets to which the assigning partner is entitled as between
himself and the other partners, and, for ithe purpose of ascertain-
ing that share, to an account as from the date of the dissolution.

Dissolution of paitnetship 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 single adventure or undertaking, by
the termination of that adventure or undertaking; or
(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.
(2) In the last-mentioned case the partnership is dissolved
as from the date mentioned in the notice as the date of dis-
solution, 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 partnership
property to be charged under this Ordinance for his separate
debt.

34. A partnership is in every-case dissolved by the happen-
ing 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:-

(i) when a partner is found lunatic by inquisition, or is
shown, to the satisfaction of the court, to be of permanently
unsoundmind, in either of whi~h cases the application may be
made as well on behalf 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, becom~.5
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;





e -than the partner suing, wilfully
(4) when a partner, oth' r;
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;

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 members
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 firin 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 purpose
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, not-,vitti~tanding the
dissolution so far as may be, necessary. to wind up the aff, ir
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 repre-
sented'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 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.

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-

(1) the dissolution is, in the judgment of the court, wholly
or chiefly due to the misconduct 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 fraud or misrepresentation of one of the parties thereto,
the party entitled to rescind is, without prejudice to any other
right, entitled-
( i ) 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

(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 iodemnified by the person guilty of the fraud or
making the. representation against all the debts and liabilities
of the firm.

42.-(1). Where any member of a f~rm 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
agree ment 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 contiquing 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 preceding provisions of this section.

.43. Subject to any agreement between the p artners, the
amount due from surviving or continuing partn~rs to an put-
going 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 dissolu.-
tion of partnership, the following rules shall, stibiect to any
agreement, be observed:-

(i) 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; and

(2) 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 manner and order:-
(a) in paying the debts and liabilities of the firm to persons
who are not partners therein ;

(b) in paying to each partner rateably what is due from the
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 force, except so far as they are
inconsistent With the express provisions of this Ordinance.

47. This Ordinance may he cited as the Partnership Ordin-
ance, 1897.
[Originally No. 2 of 1897.] 53 & 54 Vict. C. 39. Definition of partnership. Rules for determining existence of partnership. Postponement of rights 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 partners to render accounts, etc. Accountability of partners for private profits. Duty of partner not to complete with firm. Rights of assignee of share in partnership. Dissolution by expiration or notices. Dissolution by bankruptcy, 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. Rights 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.] 53 & 54 Vict. C. 39. Definition of partnership. Rules for determining existence of partnership. Postponement of rights 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 partners to render accounts, etc. Accountability of partners for private profits. Duty of partner not to complete with firm. Rights of assignee of share in partnership. Dissolution by expiration or notices. Dissolution by bankruptcy, 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. Rights 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/1457

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