Partnership Act 1891 (SA)

ANNO QUINQUAGESIMO QUARTO ET QUINQUA-

GESIMO QUINTO

VICTORIA3 REGINA.

A.D. 1891.

No. 506.

An Act to declare and amend the Law of Partnership.

[ Assented to, October rgth, 1891. ]

E it Enacted by the Govcrnor of the Province of South Aus- Council and House of Assembly of the said province, in this present B tralia, with the advice and consent of the Legislative Parliament assenilded, as follows:

Nature qf' Partnersh*.

1, ( L ) Partnership is the relation which subsists between per- Definitian of pmtna- ship.

sons carrying on a business in common with a view of profit:

4-506

(2) But the rclation between members of any company or associ,ation which is-

(a) Registered as a company nnder '' The Companies Act, 1864,"

or any other Act of Parliament for the time being in force

and relating to the registration of joint stock companies;

or.

( 6 ) Formed or incorporated by or in pursuance of any other Act

of Parliament, or letters patent, or Royal Charter:

is not a partnership dthin the meaning of this Act.

2, In determining whether a partnership does or does not exist, Rules for determining ematence of partner-

regard hall be had to the following rules- &ip.

I. Joint tenancy, tenancy in common, joint property, common

property, or part ownership does not of itself create a part-

nership

54' & 55' VICTORIW, No. 506.

- -

The Partnership Act.--1891.

nership as to anything so held or owned, whether the tenants or owners do or do not sham any profits made by the use thereof:

Ir. The shaxing of @oss returns does not of itself create a part- nership, whether the persons sharing such returns have or have not a joint or common right or interest in any pro- perty from which or from the use of which the returns are derived:

1x1. The receipt by a person of a share of the profits of a

business is prim(: 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:

( h ) A contract for the remuneration of a servant or agent of a person engaged in a business, by a share of thc profits of the business, does not of itself make the servant or agent a partner in the business or liable as such:

( c ) A person being the widow or child of a deceased partner, and receiving by way of annuity a portion of the profits made in the business in which the deceased person was a partner, is not by reason only of such receipt a.

partner in the business or liable as such:

(d) The advance of money by way of loan to a person en-

gaged or about to engage in any business, on a con- tract with that person that the lender shall receive a

rate of interest varying with the profits, or sball receive

a share of the profits arising from carrying on the busi- ness, does not of itself make the lender a partner with the person or persons carrying on the business or liable as such: Provided that the contract is in writing, and signed by or on behalf of all the parties thereto:

(e) A person receiving, by way of annuity or otherwise, a

portion of the profite of a business in consideration of the sale by him of the goodwill of the business, is not by reason only of such receipt a partner in the business or liable as such.

Postponement of

fights of	ielld-	3. In the event of any person to whom money has been ad-
ifg or selling

nderahon of hare oon- vanced by way of loan upon such a contract as is mentioned in the

of mfihinoare last foregoing section, or of any buyer of a goodwill in consideration

~i fk1vmo3. of a share of the profit8 of the business, being adjudicated insolvent, or

$4" & 55" VICTORIA?, No: 506;

The Partnership Act.--1891.

or taking the benefit of any Act for the relief of insolvent debtors, or entering into an arrangement to pay his creditors less t h m 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 enti- tled 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.

4, Persons who have entered into partnership with one another Meaning of C t firm."

are, for the purposes of this Act, called collectively a firm, and the name under which their business is carried on is called the firm- name.

Relations of Partners to persons dealing with them.

5, Every partner is an agent of the firm and his other partners Power of partner to

for the purpose of the business of the partnership; and the acts of bind the firm.

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 ia a member bind the firm and his partners, unless the partner so acting has in fact no authority to act for the firm in the particular matter, and the person with whom he is dealing either knows that he has no authority, or does not know or believe him to be a partner.

6, An act or instrument relating to the business of the firm and Partners bound by

done or executed in the firm-name, or in any other manner show- h.	acts on behalf of
ing an intention to bind the firm, by any person thereto authorised, whether a partner or not, is binding on the firm and all the part- ners: Vrovided 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 pur- Partner using meat

pose apparently not connected with the firm's ordinary course of of firm for private

purposes.

business, the firm is not bound, unless he is in fact specially authorised by the other partners; but this section does not affect any personal liability incurred by an individual partner.

8, If it has been agreed between the partners that any restric- Effect of notice that

tion shall be placed on the power of any one or more of them to by aatgof	firm will not be bound
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.

Q, Every partner in a firm is liable jointly with the other LiabiliQofpartnerr.

partners for all debts and obligations of the firm incurred while he is a partner; and after his death hie estate is also evera ally liable in

a due course of administration for such debts and obligations, so far

as they remain unsatisfied, but subject tb the prior payment of his separate debts. 10, Where,

54O & 5 5 O VICTORIAE, No. 506. - - L - +.-

The Partnership Act,-,189 1. --

Liability of the h 10, Where, by any wrongful act or omission of any partner

for wrongs.	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
ia liable therefor to the same extent as the partner so acting or
omitting to act.

Wipplination of	11, In the following cases, namely--
money or property
received for or in	(a) Where one partner, acting within the scope of his apparent

cwtody of the 5rm.

authority, receives the money or property of a thircl person

and misapplies it; and

( b ) Where a firm in the course of its business receives money or property of a thircl person, and the money or property so received is misapplied by one or more of the partners while it is in the custody of the firm:

the firm is liable to make good the loss.

Liability for wrongs 12, Every partner is liable jointly with his CO-partners, and also

joint and several. severally, for everything for which the firm while hc is a partner therein becomes liable under either of the two last preceding sections.

Improper employ- 13, If a partner, being a trustee, improperly employs trust-

rnentof tmflt-pro-	property in the business or on the account of thc partnership, no
pertx for partnership
other partner - - is liable for the trust-property to the persons beneficially
~ U ~ O S W,
interested therein:

Provided as follows-

I. This section shall riot affect any liability incurred by any

partner by reason of his having notice of a breach of

trust; and

rr. Nothing in this section shall prevent trust money fro= being	followed and recovered from the firm if still in its posses-
sion or under its control.

Persons liable by 14.

(1) Every one who by words spoken or written or by conduct represents himself, or who knowingly suffws himself to be repre- sented, 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.

N holding out."

(2) Provided thnt where after a partner's death the partnership

business is continued in the old firm-name, the continued use of that name, or of the deceased partner's name as part thereof, shall not of itself make his executor's or administrator's estate or effects liable for any partnership debts contracted after his death.

54b & 55' VICTORIA?, NO. 506.

The Partnership Act.-1 89 1,

16. An admission or representation made by any partner con-

cerning the partnership affairs, and in the ordinary course of its pa*em.

business, is evidence against the firm.

Notice to any partner who habitually acts in the partnership

business of any matter relating to partnership affairs operates as to the firm.

notice to the firm, except in the case of a fraud on the firm com-

mitted by or with the consent of that partner.

N $ i; ; r ~ ~ ~ ~ o t i C b

16.

17, (1) A person who is admitted as a partner into an existing Liability and outgoing of in cam in^

firm does not thereby become liable to the creditors of the firm for pa*nem.

anythiug done before he became a partner.

(2) A partner who retires from a firm does not thereby cease to be liable for partnership debts or obligations incurred before his retirement.

(3) A retiring partner may be discharged from any existing liabilities by an agreement to that effect between himself and the members of the firm as newly constituted and the creditors, and this agreement may be either express or inferred as a fact from the course of dealing between the creditors and the firm as newly constituted.

18. A continuing guaranty or cautionary obligation given either Revocation of oan-

to a firm or to a third person in respect of the transactions of a firm change in firm. ,	timing guaranty by
is, in the absence of agreement to the contrary, revoked as to future transactions by any change in the constitution of the firm to which, or of the firm in respect of the transactions of which, the guaranty or obligation was given.

Relations of Partners to one another.

19. The mutual rights and duties of partners, whether ascertained Variation by conesnt

by agreement or defined by this Act, may be varied by the consent BhiP. of terms of partner-

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 origi- Partnership propetty.

nally brought into the partnership stock, or acquired, whether by purchase or otherwise, on account of the firm, or for the purposes and in the course of the partnership business, are called in this Act partnership property, and must be held and applied by the partners exclusively for the purposes of the partnership and in accordance

with the partnership agreement,

(2) Provided that the legal estate or interest in any land which belongs to the partnership shall devolve according to the nature and tenure thereof and the general rules of law thereto applicable, but

in trust, so far as necessary, for the persons beneficially interested

in the land under this section.

(a) When

6 54" & 55" VICTORIW, No. 506.

me Partnership Act.-1891.

(3) When 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 or estate, and purchase other land or estate out

of the profits to be used in like manner, the land or estate so pur- chased belongs to them, in the absence of an agreement to the contrary, not as partners, but as CO-owners for the same respective estates and interests as are held by them in the land or estate first mentioned at the date of the purchase.

Property boughtwith 21. Unless the contrary intention appears, property bought with

partnership money.

money belonging t o the firm is deemed to have been bought on

account of the firm.

Conversion into

reonal estate of land 22. Where land or any interest therein has become partnership

cld partnership

property, it shall, unless the contrary intention appears, be treated

property

as between the partners (including the representatives of a deceased

partner) as personal and not real estate.

Procedure agsinat

rrtnerahip property 23. (1) After the commencement of this Act a writ of execution

or a partner'n	shall not issue against any partnership property, except on a judg-
" 'M'Bjuaflent
deit.	ment against the firm.
(2) The Supreme Court, or a Judge thereof, or a Local Court of Full Jurisdiction, may, on the application by summons of any judg- ment 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 favor of the judgment
require, creditor by the partner, or which the circumstances of the case may (3) The other partner or partners shall be at liberty at any time to redeem the interest charged, or, in case of n sale being directed, to purchase the same.
Buh a. inter-
and duties of partners	24, The interests of partners in the partnership property and their rights and duties in relation to the partnership shall be deter-

mbjoct t, ,eCida

agreement.

mined, subject to any agreement, express or implied, between the

partners, by the following rules :-

I. All the partners are entitled to share equally in the capital

and profits of the business, and must contribute equally

towards the losses, whether of capital or otherwise, sus-

tained by the firm:

11. The

54" & 55' VICTORIW, No. 506. 7

The Partnersh@ Act-1891.

11. The firm must indemnify every partner in respect of payments made and personal liabilities incurred by him-

( a ) In the ordinary and proper conduct of the business of

the firm; or

( b ) In or about anything necessarily done for the preserva-

tion of the business or property of the firm:

I n. A partner making, for the purpose of the partnership, any actual payment or advance beyond the amount of capital which he has agreed to subscribe, is entitled to interest at thc rate of seven per centurn per annum from the date of the payrnen t or advance t

rv. A partner is not entitled, before the ascertainment of profits, to interest on the capital subscribed by him:

v. Every partner may take part in the management of the part-

nership business:

vr. No partner shall be entitled to remuneration for acting in the

partnership business:

VII. No person may be introduced as a partner without the consent

of all existing partners:

VIII. 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:

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

25. No majority of the partners can expel any partner unless a Expulsion partner.

power to do so has been conferred by express agreement between

the partners.

duration of the partnership, any partncr may determine the partner- partnersbp at wdl. 26. (1) Where no fixed term has been agreed upon for the Retiremevt from.

ship at any time on giving notice of his intention so to do to all the

other partners.

(2) Where the partnership has originally been constituted by deed, a notice in writing, signed by the partner giving it, shall be sufficient for this purpose.

27. (1) Where a partnership entered into for a fixed term ie wherepaherahip for term ie continued

continued aftcr the term has expired,- and wilhout any express , , , , ,,tinu,, ,,

new agreement, the rights and duties of tile partners remain the ~ldhm"rm-ea.

same as they were at the expiration of the term, so far as is con-

siatent with the incidents of a partnership at will.

(2) a

8 5 4 O & 55' VICTORIW, No. 506.

The Partnership Act.-1891.

(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 con- tinuance of the partnership.

Duty of partners to

render accounts, &c. tion of a11 things affecting the partnership to any partner or his	28. Partners are bound to rendcr true accounts and full informa- legal representatives.
dccountsbility of	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:
partnm8for private
profit&

(2) This section applies also to transactions undertaken after a

partnership has been dissolved by the death of a partner, and before

the affairs thereof have been completely wound up, either by any

surviving partner or by the representatives of the deceased partner.

Duty of partner not

to compete with fim. carries on any busirless of the same nature as and competing with 30. If a partner, without the coiisent of the other partners,

that of the firm, he must account for and pay over to the firm all

profits made by him in that business.

Righbof uaigaee of

&are in partnership, 31. (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 trhe assignee, during the continuance of the partnership, to interfere in the management or administration of the partnership business or affairs, or to require any accounts of the partnership transactions, or to inspect the part- nership books, but entitles the assignee only to receive the share of profits to which the assigning partner woulrl otherwise be entitled, and the assignee must accept the account of profits agreed to by the partners.

(2) In case of a dissolution of the partnership, whether as res- pects all the partners or *as respects the assigning partner, the assignee is entitled to receive the share of the partnership assets to which the assigning partner is entitled as between himself and the other partners, and, for the purpose of ascertaining that share, to an account as from the date of the dissolution. Dissolution. of Partnership and its Consequences,

Dissolution by 32. Subject to any agreement between the partners, a partner-

expiration or notice. &ip is dissolved-

(a) If entered into for a fixed term, by the expiration of that

term:

(h) If entered into for a single adventure or undertaking, by the

termination of that adventure or undertaking:

54O & 5 5 O VICTORIE, No. 506.

me Partnership Act.-1891.

(c) If entered into for an undefined time, by any partner giving

notice to the other or others of his intention to dissolve

the partnership.

In the last-mentioned case the partnership is dissolved as from the date mentioned in the notice as the date of dissolution, or, if no date is so mentioned, as from the date of the communication of the notice.

33. ( 1 ) Subject to any agreement between the partners, every Dis~olutim by

partnership is dissolved as regards all the partners by the death or or

insolvenoy, death,

insolvency 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 pro-

perty to be charged under this Act for his separate debt.

34. A partnership is in every case dissolved by the happening Dissolutionby

of any event which makes it unlawful for the business of the firm i;p":litJ'

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 disso- DiwlutionbytJie

lution of the partnership in any of the following cases- court.

(a) 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 com- mittee or next friend or person having title to intervene as by any other partner:

( b ) When a partner, other than the partner suing, becomes in any other may permanently incapable of performing his part of thc partnership contract:

(c) When a partner, other than the partner suing, has been regard being had to the nature of the business, is calcu- guilty of such conduct as, in the opinion of the Court, latcd to prcjudicially affcct the carrying on of the business:

(d) When a partner, other than the partner suing, wilfully or persistently commits a breach of the partnership agree- ment, or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practi- cable for the other partner or partners to carry on the business in partnership with him:

(e) When the business of the partnership can only be carried on

at a loss:

( f ) Whenever in any case circumstances have arisen which, in the opinion of the Court, render it just and equitable that the partnership be dissolved.

36. (1) Whme

B-506

54O & 55' V I C T O R I ~, No. 506.

The Partnership Act.-18 91.

Bights of p m m *

dealing with firm 36, (1) Where a person deals with a firm after a change in its

~gsinst apparent constitution, he is entitled to treat all apparent members of the old

membsnofBrm-

firm as still being members of the firm until he has notice of the

change.

(2) An advertisement in the Government Gazette 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 insolvent,

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, in-

solvency, or retirement, respectively.

Rightafpahemto

notify dissolution.	37. On the dissolution of a partnership or retirement of a partner any partner may publicly notify the same, and may require the other partner or partners to concur for that purpose in all necessary or proper acts, if any, which cannot be done without his or their concurrence,
Continnine authority

of partners for pur- 38. After the dissolution of a partnership the authority of each

pwee of winding up,

partner to bind the firm, and the other rights and obligations of the partners, continue, notwithstanding the dissolution, so far as may be necessary to wind up the affairs of the partnership, and to complete transactions begun but unfinished at the time of the dissolution, but not otherwise: Provided that the firm is in no case bound by the acts of a partner who has become insolvent; but this proviso does not affect the liability of any person who has after the insolvency represented himself, or knowingly suffered himself to be represented,

as a partner of the insolvent.

Rights of partner5 as 39. On the dissolution of a partnership every partner is entitled,

to ap~licntion of

partnership property. through them in respect of their interests as partners, to have the	as against the other partners in the firm, and all persons claiming
property of the partnership applied in payment of the debts and liabilities of the firm, and to have the surplus assets after such pay- ment applied in payment of what may be due to the partners respectively after deducting what may be due from them as partners to the firm; and for that purpose any partner or his representatives
may on the termination of the partnership apply to the Court to wind
up the business and affairs of the firm.
Apportionment of

premium where 40. Where one partner has paid a premium to another on enter-

psrtnmhip pm..	ing into a partnership for a fixed term, and the partnership is dis-
turb'~ dimolved.	solved before the expiration of that term otherwise than by the death of a partner, the Court may order the repayment of the pre- mium, or of such part thereof as it thinks just, having regard to the terms of the partnership contract and to the length of time during which the partnership has continued; unless

(a) The

54" & 55' VICTORIW, No. 506.

I

The Partnersht@ Act.-1891.

(a ) The dissolution is, in the judgment of the Court, wholly or chiefly due to the misconduct of the partner who paid the a

premium, or:

( b ) The partnership has been dissolved by an agreement containin g

no pravision for a return of any part of the premium.

42. Where a partnership contract is rescinded on the ground of Riwwherepartnsr- ship dissolved for

the fraud or misrepresentation of one of the parties thereto, the party f raud or misrepreeen-

entitled to rescind is, without prejudice to any other right, entitled- tation.

( a ) To a lien on, or right of retention of, the surplus of the partnership assets, after satisfying the partnership liabilities, for any sum of money paid by him for the purchase of a share in the partnership and for any capital contributed

by him; and is

(6) To stand in the place of the creditors of the firm for any pay- ments made by him in respect of the partnership liabilities; -7'

and

(c) To be indemnified, by the person guilty of the fraud or making the representation, against all the debts and liabilities of )j the firm.

to be a partner, and the surviving or continuing partners carry on caBes to sham pate partner in certain 42, (1) Where any member of a firm has died or otherwise ceased Right of outgoing

the business of the firm with its capital or assets without any final madeafterdissolu-

settlement of accounts as between the firm and the outgoing partner	tion.
or his estate, then, in the absence of any agreement to the contrary, the outgoing partner or his estate is entitled, at the option of himself or his representatives, to such share of the profits made since the dissolution as the Court may find to be attributable to the use of his share of the partnership assets, or to interest at the rate of seven per

aSsets. centum per annum on the amount of his share of the partnership (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, arid that option is duly exercised,

the estate of the deceased partner, or the outgoing partner or his estate, as the case may be, is not entitled to any further or other share of profits; but if any partner, assuming to act in exercise of the option, does not in all material respects comply with the terms thereof, he is liable to account under the foregoing provisions of this section.

43. Subject to any agreement between the partners, the amount Retiring d ~ ~ & # ~ d

due from surviving or continuing partners to an outgoing partner, ~ F ' U	to boa
or the representatives of a deceased partner in respect of the out going or deceased partner's share is a debt accruing at the date of the dissolution or death.

54" & 55" VICTORIE, No. 506.

The Partnership Act.-1891.

--

Rule for distribution 44, I n settling accounts between the partners after a dissolution

of seseb on final

rettlement of of partnership, the following rules shall, subject to any agreement,

a~rc~~nts. be observed :-

(a) Losse~, including losses and deficiencies of capital, shall be

paid first out of profits, next out of capital, and lastly, if necessary, by the partners individually in the proportion in which they were entitled to share profits:

( b ) The assets of the firm including the sums, if any, contributed

by the partners to make up losscs or deficiencies of capital,

shall be applied in the following manner and order:

I. I n paying the debts and liabilities of the firm to persons

who are not partners therein:

11. In paying to each partner ratably what is due from the

firm to him for advances, as distinguished from capital:

111. I n paying to each partner ratably what is due from the

firm to him in respect of capital:

IT. The ultimate residue, if any, shall be divided among the

partners in the proportion in which profits are divisible.

Supplements l,

Definitions of

court" and 45, I n this Act, unless the contrary intention appears-

" busfsess." The expression " Court" means the Supreme Court of the

province, or any Judge thereof.

The expression " bnsiness " includes every trade, occupation, or

profession.

Saving for rules of

equity and common 46. The " rules of equity and of common lam applicable to

law.

partnership shall contipue in force except so far as they are incon-

sistent with the express provisions of this Act.

Repeal. 47. Act No. 4 of 1866-7, intituled An Act to amend the Law

of Partnership," is hereby repealed.

Bhort title. 48. This Act may be cited as The Partnership Act, 1891."

In the name and on behalf of Her Majesty, I hereby assent

to this Bill.

KINTORE, Governor.

Adelaide : By authority, C. E. BEISTOW, Government Printer, North-terrace.