Shirley Trust Company Limited

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Dissolution by expiration or notice

34. Subject to any agreement between the partners, a partnership is dissolved

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

(b) if entered into for a single adventure or undertaking, by the termination of that adventure or undertaking; or

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

Dissolution by bankruptcy, death or charge

35.(1) Notwithstanding the provisions of section 21, every partnership is dissolved as regards all the partners by the death or bankruptcy of any partner unless all of the remaining partners vote within 90 days after the event giving rise to the dissolution to continue the partnership.

(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 Act for his separate debt.

Dissolution by illegality

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.

Dissolution by the court

37.(1) On application by a partner the court may decree a dissolution of the partnership in any of the following cases -

(a) when a partner is shown to the satisfaction of the court to be permanently of unsound mind in an application made on behalf of that partner by his committee or next friend or person having title to intervene or any other partner;

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

(c) 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 prejudicially to affect the carrying on of the business;

(d) when a partner, other than the partner suing, wilfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable for the other partner or partners to carry on the business in partnership with him;

(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.

Rights of persons dealing with firm against apparent partners of firm

38.(1) Where a person deals with a firm after a change in its constitution he is entitled to treat all apparent partners of the old firm as still being partners of the firm until he has notice of the change.

(2) An advertisement in the Gazette shall be sufficient notice as to persons who had dealings with the firm before the date of the dissolution or change so advertised.

(3) The estate of a partner who dies, or who becomes bankrupt, or of a partner who, not having been known to the person dealing with the firm to be a partner, retires from the firm, is not liable for partnership debts contracted after the date of such death, bankruptcy or retirement.

Right of partners to notify dissolution.

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.

Continuing authority of partners for purposes of winding up

40.(1) Subject to subsection (2), after the dissolution of a partnership the authority of each partner to bind the firm, and the other rights and obligations of the partners, continue notwithstanding the dissolution so far as may be necessary to wind up the affairs of the partnership and to complete transactions begun but unfinished at the time of the dissolution, but not otherwise.

(2) The firm is in no case bound by the acts of a partner who has become bankrupt, but this exception 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.

Rights of partners as to application of partnership property

41.(1) Subject to subsection (2), 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,

(a) to have the property of the partnership applied in payment of the debts and liabilities of the firm; and

(b) 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 partner to the firm, and for that purpose any partner or his executors or administrators may on the termination of the partnership apply to the court to wind up the business and affairs of the firm.

(2) Where the dissolution of a partnership is caused by a wrongful act of a partner in contravention of the partnership agreement such partner shall be entitled only to the value of his interest in the partnership at the dissolution less any damages payable by him to the other partners for his breach of the partnership agreement.

Apportionment of premium where partnership prematurely dissolved

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 partnership contract and to the length of time during which the partnership has continued, unless

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

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

Rights where partnership dissolved for fraud or misrepresentation.

43. Where a partnership contract is rescinded on the grounds of the fraud or misrepresentation of one of the parties thereto, the party entitled to rescind is, without prejudice to any other right, entitled

(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;

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

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

Right of outgoing partner in certain cases to share profits made after dissolution

44.(1) Where any partner of a firm has died or otherwise ceased to be a partner, and the surviving or continuing partners carry on the business of the firm with its capital or assets without any final settlement of accounts as between the firm and the outgoing partner or his estate, then, in the absence of any agreement to the contrary, the outgoing partner or his estate is entitled at the option of himself or his executors or administrators 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 such rate as may be determined by the court.

(2) Notwithstanding the provisions of subsection (1), 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 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 subsection (1).

Retiring or deceased partner's share to be a debt

45. Subject to any agreement between the partners, the amount due from surviving or continuing partners to an outgoing partner or the executors or administrators 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.

Rule for distribution of assets on final settlement of accounts

46. In settling accounts between the partners after a dissolution of partnership, the following rules shall, subject to any agreement, be observed -

(a) losses, including losses and deficiencies of capital, shall be paid first out of profits, next out of capital, and lastly if necessary, by the partners individually in the proportion in which they were entitled to share profits; and

(b) the assets of the firm including the sum, if any, contributed by the partners to make up losses or deficiencies of capital, shall be applied in the following manner and order -

(i) in paying the debts and liabilities of the firm to persons who are not partners therein,

(ii) in paying to each partner rateably what is due from the firm to him for advances as distinguished from capital,

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

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