PARTNERSHIP ORDINANCE, 1897
Title
PARTNERSHIP ORDINANCE, 1897
Description
ORDINANCE No. 1 OF 1897.
Partnership
AN ORDINANCE to codify the Law relating to Partnership.
[15th May,1897.]
BE it enacted by the Governor of Hongkong,with the advice and
consent of the Legislative Council thereof,as follows:-
1.This Ordinance may be cited as the Partnership Ordinance,1897.
2.In this Ordinance,unless the context otherwise requires,-
'The Court' includes every court and judge having jurisdiction
in the case:
'Business' includes every trade,occupation,or profession.
Nature of Partnership.
3.-(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 Ordinance,1865,
or any other Ordinance 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 Ordi-
nance,or any Act or Parliament,or letters patent,or Royal
Charter,
is not a partnership within the meaning of this Ordinance.
4.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 pro-
perty,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 per-
son engaged in a business by a share of the profits of the busi-
ness 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 chat 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;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 is not,by reason only of such
receipt,a partner in the business or liable as such.
5.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 preceding
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 twenty shillings 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.
6.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.
7.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.
8.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 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.
9.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 authorized by the
other partners;but this section does not affect any personal liability
incurred by an individual partner.
10.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.
11.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.
12.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.
13.In the following cases,namely,-
(1.)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 ot make good the loss.
14.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 last two preceding sections.
15.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 there-
in: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.
16.-(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 busi-
ness 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 partner-
ship debts contracted after his death.
17.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.
18.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.
19.-(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 ceases to be
liable for partnership debts or obligations incurred before his retire-
ment.
(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.
20.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 agree-
ment 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.
21.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.
22.-(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 partner-
ship agreement.
(2.)Provided that the legal estate or interest in any land whch
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 ised 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.
23.Unless the contrary intention appears,property bought with
money belonging to the firm is deemed to have been bought on account
of the firm. 24.Where land or any 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 and not real estate.
25.-(1.)After the commencement of this Ordinance,a writ of
execution shall not issue against any partnership property except on a
judgment against the firm.
(2.)The Supreme Court ,or a Judge thereof,may,on the application
by summons of any judgment cerditor 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 sane 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 partner-
ship,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 pur-
chase 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 Ordi-
nance.
26.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 implies,between the partners,by
the following rules:-
(1.)all the partners are entitled to ahare 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 libilities incurred by him-
(a.)in the ordinary and proper conduct of the business of the
firm;or
(b.)in or baout anything necessarily done for the preservation 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 partner-
ship business;
(6.)no partner shall be entitled to remuneration for acting in the
partnership business;
(7.)no person may be intoduced 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 partner busi-
ness 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.
27.No majority of the partners can expel any partner,unless a power
to do so has been conferred by express agreement between the partners.
28.-(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 deed,a
notice in writing,signed by the partner giving it,shall be sufficient for
this purpose.
29.-(1.)Where a partnership entered into for a fixed term is con-
tinued after the term has expirated,and without any express new agree-
ment,the rights and duties of the partnership remain the same as they were
at the expiration of the term,so far as is consistent withh 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 partner.
30.Partners are bound to render true accounts and full information
of all things affecting the partnership to any partner or his legal repre-
sentatives.
31.-(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 untertaken after a part-
nership 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.
32.If a partner,without the consent of the other partners,carries on
any business of the same nature as the completing with that of the firm,
he must account for and pay over to the firm all profits made by him in
that business.
33.-(1.)An assignment by any partner of his share in the partner-
ship,either absolute or by way of mortgage or redeemable charge,does
not,as against the other partners,entitle the assignee,during the con-
tinuance of the partnership,to interfere in the management or adminis-
tration 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 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 enti-
tiled 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 of
the dissolution.
Dissolution of Partnership and its Consequences.
34.-(1.)Subject to any agreement between the partners,a partner-
ship 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 indertaking;or,
(c.)if entered into for an indefined 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 dissolution,or,if no
date is so mentioned,as from the date of the communication of the
notice.
35.-(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.
36.A partnership is in every case dissolved by the happening 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.
37.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
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,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 prejudicially affect the
carrying on of the business;
(4.)when a partner,other than the partner suing,wilfully or per-
sistently commits a breach of the partnership agreement or other-
wise so conducts himself in matters relating to the partnership
business that it is not resonable practicable for the other partner
or partners to carry on the business 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 partner-
ship be dissolved.
38.-(1.)Where a person deals with a firm after a change in its
constitution,he is entitled to trear 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 firm whose principal
place of business is in the Colony shall be notice as to persons who had
not dealings with the firm before th date of the dissoution 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 contratced after the date of the death,bankruptcy,or retirement
respectively.
39.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.
40.After the dissolution of a partnership,the authority of each partner
to bind the firm,and the pther 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.
41.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.
42.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 partner-
ship contract and to the length of time during which the partnership
has continued;unless-
(1.)the dissolution is,in the judgmnet of the Court,wholly or chiefly
due to the misconduct of the partner who paid the premiun;or
(2.)the partnership has been dissolved by an agreement containing
no provision for a return of any part of the premium.
43.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-
(1.)to a lieu 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 indemnified by the person guilty of the fraud or making
the representation against all the debts and liabilities of the firm.
44.-(1.)Where any member of a firm has dies 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 repre-
sentatives,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 partner-
ship assets,as 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 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 is 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 proivisions of this section.
45.Subject to any agreement between the partners,the amount due
from surviving or continuing partners to an outgoing or the re-
presentatives 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.
46.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 deficiencies of capital,shall be paid
first out of profits,next out of capital,and lastly,if necessary,by
the partners individually in the proprtion in which they were
entitled to share profits;and
(2.)the assets to 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.
Miscellaneous Provisions.
47.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.
A.D. 1897. Ordinance No. 2 of 1897. 53 & 54 Vict.c. 39. Short title. Interpretation of terms. Definition of partnership. No.1 of 1865. 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. Partner bound by acts on behalf of firm. Partner using credit of firm for private purpose. 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. Person 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 compete with firm. Rights of assignee of share in partnership. Dissolution by expiration or notice. 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. Right of outgoing partner in certain cases to share profits made after dissolution. Retiring or deceased partner's share to be a debt. Rule for distribution of assets on final settlement of accounts. Saving for rules of equity and of common law.
Partnership
AN ORDINANCE to codify the Law relating to Partnership.
[15th May,1897.]
BE it enacted by the Governor of Hongkong,with the advice and
consent of the Legislative Council thereof,as follows:-
1.This Ordinance may be cited as the Partnership Ordinance,1897.
2.In this Ordinance,unless the context otherwise requires,-
'The Court' includes every court and judge having jurisdiction
in the case:
'Business' includes every trade,occupation,or profession.
Nature of Partnership.
3.-(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 Ordinance,1865,
or any other Ordinance 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 Ordi-
nance,or any Act or Parliament,or letters patent,or Royal
Charter,
is not a partnership within the meaning of this Ordinance.
4.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 pro-
perty,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 per-
son engaged in a business by a share of the profits of the busi-
ness 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 chat 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;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 is not,by reason only of such
receipt,a partner in the business or liable as such.
5.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 preceding
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 twenty shillings 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.
6.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.
7.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.
8.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 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.
9.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 authorized by the
other partners;but this section does not affect any personal liability
incurred by an individual partner.
10.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.
11.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.
12.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.
13.In the following cases,namely,-
(1.)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 ot make good the loss.
14.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 last two preceding sections.
15.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 there-
in: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.
16.-(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 busi-
ness 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 partner-
ship debts contracted after his death.
17.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.
18.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.
19.-(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 ceases to be
liable for partnership debts or obligations incurred before his retire-
ment.
(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.
20.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 agree-
ment 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.
21.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.
22.-(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 partner-
ship agreement.
(2.)Provided that the legal estate or interest in any land whch
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 ised 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.
23.Unless the contrary intention appears,property bought with
money belonging to the firm is deemed to have been bought on account
of the firm. 24.Where land or any 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 and not real estate.
25.-(1.)After the commencement of this Ordinance,a writ of
execution shall not issue against any partnership property except on a
judgment against the firm.
(2.)The Supreme Court ,or a Judge thereof,may,on the application
by summons of any judgment cerditor 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 sane 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 partner-
ship,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 pur-
chase 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 Ordi-
nance.
26.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 implies,between the partners,by
the following rules:-
(1.)all the partners are entitled to ahare 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 libilities incurred by him-
(a.)in the ordinary and proper conduct of the business of the
firm;or
(b.)in or baout anything necessarily done for the preservation 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 partner-
ship business;
(6.)no partner shall be entitled to remuneration for acting in the
partnership business;
(7.)no person may be intoduced 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 partner busi-
ness 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.
27.No majority of the partners can expel any partner,unless a power
to do so has been conferred by express agreement between the partners.
28.-(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 deed,a
notice in writing,signed by the partner giving it,shall be sufficient for
this purpose.
29.-(1.)Where a partnership entered into for a fixed term is con-
tinued after the term has expirated,and without any express new agree-
ment,the rights and duties of the partnership remain the same as they were
at the expiration of the term,so far as is consistent withh 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 partner.
30.Partners are bound to render true accounts and full information
of all things affecting the partnership to any partner or his legal repre-
sentatives.
31.-(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 untertaken after a part-
nership 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.
32.If a partner,without the consent of the other partners,carries on
any business of the same nature as the completing with that of the firm,
he must account for and pay over to the firm all profits made by him in
that business.
33.-(1.)An assignment by any partner of his share in the partner-
ship,either absolute or by way of mortgage or redeemable charge,does
not,as against the other partners,entitle the assignee,during the con-
tinuance of the partnership,to interfere in the management or adminis-
tration 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 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 enti-
tiled 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 of
the dissolution.
Dissolution of Partnership and its Consequences.
34.-(1.)Subject to any agreement between the partners,a partner-
ship 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 indertaking;or,
(c.)if entered into for an indefined 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 dissolution,or,if no
date is so mentioned,as from the date of the communication of the
notice.
35.-(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.
36.A partnership is in every case dissolved by the happening 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.
37.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
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,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 prejudicially affect the
carrying on of the business;
(4.)when a partner,other than the partner suing,wilfully or per-
sistently commits a breach of the partnership agreement or other-
wise so conducts himself in matters relating to the partnership
business that it is not resonable practicable for the other partner
or partners to carry on the business 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 partner-
ship be dissolved.
38.-(1.)Where a person deals with a firm after a change in its
constitution,he is entitled to trear 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 firm whose principal
place of business is in the Colony shall be notice as to persons who had
not dealings with the firm before th date of the dissoution 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 contratced after the date of the death,bankruptcy,or retirement
respectively.
39.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.
40.After the dissolution of a partnership,the authority of each partner
to bind the firm,and the pther 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.
41.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.
42.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 partner-
ship contract and to the length of time during which the partnership
has continued;unless-
(1.)the dissolution is,in the judgmnet of the Court,wholly or chiefly
due to the misconduct of the partner who paid the premiun;or
(2.)the partnership has been dissolved by an agreement containing
no provision for a return of any part of the premium.
43.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-
(1.)to a lieu 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 indemnified by the person guilty of the fraud or making
the representation against all the debts and liabilities of the firm.
44.-(1.)Where any member of a firm has dies 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 repre-
sentatives,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 partner-
ship assets,as 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 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 is 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 proivisions of this section.
45.Subject to any agreement between the partners,the amount due
from surviving or continuing partners to an outgoing or the re-
presentatives 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.
46.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 deficiencies of capital,shall be paid
first out of profits,next out of capital,and lastly,if necessary,by
the partners individually in the proprtion in which they were
entitled to share profits;and
(2.)the assets to 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.
Miscellaneous Provisions.
47.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.
A.D. 1897. Ordinance No. 2 of 1897. 53 & 54 Vict.c. 39. Short title. Interpretation of terms. Definition of partnership. No.1 of 1865. 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. Partner bound by acts on behalf of firm. Partner using credit of firm for private purpose. 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. Person 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 compete with firm. Rights of assignee of share in partnership. Dissolution by expiration or notice. 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. Right of outgoing partner in certain cases to share profits made after dissolution. Retiring or deceased partner's share to be a debt. Rule for distribution of assets on final settlement of accounts. Saving for rules of equity and of common law.
Abstract
A.D. 1897. Ordinance No. 2 of 1897. 53 & 54 Vict.c. 39. Short title. Interpretation of terms. Definition of partnership. No.1 of 1865. 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. Partner bound by acts on behalf of firm. Partner using credit of firm for private purpose. 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. Person 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 compete with firm. Rights of assignee of share in partnership. Dissolution by expiration or notice. 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. Right of outgoing partner in certain cases to share profits made after dissolution. Retiring or deceased partner's share to be a debt. Rule for distribution of assets on final settlement of accounts. Saving for rules of equity and of common law.
Identifier
https://oelawhk.lib.hku.hk/items/show/696
Edition
1901
Volume
v2
Subsequent Cap No.
38
Cap / Ordinance No.
No. 1 of 1897
Number of Pages
12
Files
Collection
Historical Laws of Hong Kong Online
Citation
“PARTNERSHIP ORDINANCE, 1897,” Historical Laws of Hong Kong Online, accessed November 20, 2024, https://oelawhk.lib.hku.hk/items/show/696.
