Partnership, the relation which subsists between persons carrying on a business with a view to profit--so defined by s. 1, sub-s. 1, of the (English) Partnership Act, 1890 (53 & 54 Vict. c. 39), a codifying Act of fifty s.s, 'to declare and amend the law of partnership,' which, in effect, transfers the law of the subject from the region of reported cases to that of the statute; Bovill's Act' (see that title) of 1865 (28 & 29 Vict. c. 86), and a small part of the (English) Mercantile Law Amendment Act of 1856, being the only previous statutory enactments on the subject.
Rules, which, however, subject to any agreement express or implied between the partners, are laid down by s. 24 for determining the interest of partners in the partnership property and their rights and duties in relation to the partnership. They provide, amongst other things, for equal shares in profits and equal contributions to losses; for indemnification of every partner by the firm in respect of payments properly made for the firm; that every partner may take part in the business; that no partner is to be entitled to remuneration; that 'no person may be introduced as a partner without the consent of all existing partners'; that differences as to ordinary matters may be decided by a majority, but that 'no change may be made in the nature of the business without the consent of all existing partners'; and that the partnership books are to be kept at the place of business of the partnership where every partner may have access to them.
The Act of 1890 is mainly declaratory. The chief amendment is that of the 23rd s., by which the judgment creditor of a partner, instead of being able to execute not only against his debtor's separate property but also against the property of the firm, may obtain only an order charging the partner's interest in the partnership property, and appointing a receiver of his share of profits.
The dissolution of partnerships and the taking of partnership accounts are matters assigned to the Chancery Division [(English) Jud. Act, 1925, s. 56 (1) (b), replacing (English) Jud. Act, 1873, s. 34)]. The County Court has jurisdiction if the assets do not exceed 500l. [(English) County Courts Act, 1934, s. 52 (f)]
Limited Partnership.--The (English) Limited Partner-ships Act, 1907 (7 Edw. 7, c. 24), purposes to put the law relating limited partners upon a definite and systematic footing so that an investor may utilize his capital in a trading concern, which not been converted into a limited liability company, without taking upon himself too heavy a burden, and at the same time retain the right of reasonable investiga-tion in to the manner in which his money is being applied.
The principle of limited partnership is very similar to what is known in France as en commandite (see that title), the limited partners themselves being termed commanditaires.
A 'limited partner' is person(including in this word a company [s. 4 (4)] who, at the time of entering in to the partnership, contributes thereto a sum or sums as capital or property valued at a stated amount, and who is not liable for the debts or obligations of the firm beyond the amount so contributed.
Any partner who is not a limited partner is a 'general partner,' and there must be in the partnership at least one general partner who is liable for all debts and obligations of the firm (s. 3). The partners will be known and described collectively by a 'firm name' (s. 3). A limited partnership in a banking business must not consist of more than ten, and in any other business, twenty partners. [(English) Companies Act, 1929, s. 357]
A limited partner remains a general partner, and does not secure for himself the limitation of liability until the limited partnership is registered with the Registrar of Joint Stock Companies, the registration being effected (s. 8) by the delivery of a statement, signed by the partners, containing certain specified particulars, viz., the firm name and the names of the partners, the nature and place of the business, the term of mencement, a statement that the partnership is limited and the description of every limited partner as much, and the sum contributed by each limited partner, and whether paid in cash or how otherwise. If the nature of the partnership is changed in any of these particulars, the registrar must be notified within seven days.
As in an ordinary partnership, so in a limited partnership, the parties are to a great extent free to make whatever terms and conditions they please for controlling their actions inter se. but there are certain things which a limited partners must not do; thus, he cannot take part in the management of the business or bind the firm (s. 6), and if he does take part in the management, he becomes for the time being to all intents and purposes a general partner.
Further, a limited partner may not, either directly or indirectly, draw out or receive back any part of his contribution, and if he does he in no way lessens his liability [s. 4 (3)]
The limited partner, however, may inspect the books of the firm and examine into the state and pros-pects of the partnership business, and may also advise with the partners thereon. There are certain other conditions which will bind the partnership unless there is an agreement which provides differently. Thus by s. 6 (5)--
(a) Any difference arising as to ordinary matters connected with the business may be decided by a majority of the general partners;
(b) A limited partner may, with the consent of the general partners, assign his share, and upon such assignment the assignee becomes a limited partner with all the rights of the assignor;
(c) The other partners shall not be entitled to dissolve the partnership by reason of any limited partner suffering his share to be charged for his separate debt;
(d) A person may be introduced as a partner without the consent of the existing limited partners;
(e) A limited partners shall not be entitled to dissolve the partnership by notice.
A limited partnership is not dissolved by the death of a limited partner, and in the case of his becoming a lunatic the Court will not consider this a ground for dissolution of the partnership unless the lunatic's share cannot be otherwise ascertained and realized [s. 6 (2)]. The bankruptcy law applies to limited partnerships as if they were ordinary partnerships, and if all the general partners become bankrupt the assets of the partnership vest in the trustee [(English) Bankruptcy Act, 1914, s. 127]. Consult Pollock or Lindley on Partnership; Hemmant on Limited Partnerships.
Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all, Dulichand Laxminarayan v. Commissioner of Income Tax, AIR 1956 SC 354 (357): (1956) SCR 154 [Partnership Act, 1932, s. 4]
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