Short title and commencement

1. This Act may be cited as the Partnership Act, 1996 and shall come into force on the date which the Governor may appoint by proclamation published in the Gazette.

Interpretation

2. In this Act, unless the contrary intention appears,

"articles means the articles of partnership of a limited partnership formed under this Act;

“business" includes every trade, occupation or profession;

"court" means the High Court or a Judge thereof;

"firm" means the group of persons who have entered into partnership with one another;

"firm-name" means the name under which the business of a firm is carried on;

"general partner", in relation to a limited partnership, means a partner who is not a limited partner as defined herein;

"general partnership" means any partnership that is not a limited partnership;

"international limited partnership" means the limited partnership referred to in section 49 of this Act;

"limited partnership" means a partnership formed under Part VI of this Act referred to in section 47 of this Act;

"limited partner", in relation to a limited partnership, means a partner who does not take part in the control of the partnership business and whose liability is limited subject to the provisions of this Act;

"local limited partnership" means the limited partnership referred to in section 48 of this Act;

"memorandum" means the memorandum of partnership of a limited partnership formed under this Act;

"Minister" means the Minister responsible for finance;

"partner" in relation to a limited partnership includes a limited partner and a general partner;

"person" includes a natural person, a partnership general or limited, domestic or foreign, a company, trust, estate, association, custodian, nominee or any other individual or entity in its own or any representative capacity;

"register" means the register referred to in section 54 of this Act;

"Registrar" means the Registrar of Limited Partnerships referred to in section 52 of this Act;

"substituted limited partner" means a person who, after becoming an assignee of part or all of the interest of a limited partner, is admitted to the limited partnership pursuant to the provisions of its articles or, if the articles are silent on the issue, is admitted with the unanimous consent of the partners.

Definition of partnership

3.(1) Partnership is the relation which subsists between persons carrying on a business in common with a view of profit.

(2) The relation between members of any company or association which is -

(a) registered as a company under the Companies Act or incorporated as a company under the International Business Companies Act; or

(b) formed or incorporated by or in pursuance of any other Act, letters patent or Royal Charter,

is not a partnership within the meaning of this Act.

Rules for determining existence of partnership

4 . In determining whether a partnership does or does not exist, regard shall be had to the following rules:

(a) all circumstances surrounding the contract are to be considered and the true intent of the parties is to be ascertained from their agreement, words and conduct;

(b) joint tenancy, tenancy in common, joint property, common property or part ownership does not of itself create a partnership as to anything so held or owned, whether the tenants or owners do or do not share any profits made by the use thereof;

(c) 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; and

(d) 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 receipt of such a share, or of a payment contingent on or varying with the profits of a business, goes not of itself make him a partner in the business; and in particular

(i) 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;

(ii) a contract for the remuneration of a servant or agent of a person engaged in a business by a share of the profits of the business does not of itself make the servant or agent a partner in the business or liable as such;

(iii) 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;

(iv) the advance of money by way of loan to a person engaged or about to engage in any business on a contract in writing with that person, signed by or on behalf of all the parties thereto, that the lender shall receive a rate of interest varying with 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; and

(v) 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.

Postponement of rights of person lending or selling in consideration of share of profits in case of insolvency

 5.(1) Where a person to whom money has been advanced by way of loan upon a contract as is mentioned in section 4(d)(iv) is adjudged bankrupt, enters into an arrangement to pay his creditors less than one hundred cents in the dollar or dies insolvent, the lender shall not be entitled to recover anything in respect of the loan until the claims of the borrower's other creditors for valuable consideration in money or money's worth have been satisfied.

(2) Where a person who, in consideration of a share of the profits of a business, has bought of its goodwill, is adjudged bankrupt, enters into an arrangement to pay his creditors less than one hundred cents in the dollar or dies insolvent, 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 buyer's other creditors for valuable consideration in money or money's worth are satisfied.

(3) Nothing in this section shall operate so as to prevent a secured creditor from retaining or realising his security.

Nature of partner's interest in partnership

6 . A partner's interest in a partnership within the meaning of this Act is personal property situate in the Territory.

Power of partner to bind the firm

7 .(1) Every partner is an agent of the firm and his other partners for the purpose of the business of the partnership.

(2) 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 partner bind the firm and his partners, unless the partner so acting

(a) has in fact no authority to act for the firm in the particular matter; and

(b) 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.

Partners bound by acts on behalf of firm

8. An act or instrument relating to the business of the firm done or executed in the firm- name, or in any other manner showing an intention to bind the firm, by any person thereby authorised, whether a partner or not, is binding on the firm and all the partners except that this section shall not affect any general rule of law relating to the execution of deeds or negotiable instruments.

Partner using credit of firm for private purposes

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 authorised by the other partners, but this section does not affect any personal liability incurred by an individual partner.

Effect of notice that firm will not be bound by acts of 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.

Liability of partners for debts and obligations

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 the 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.

Liability of the firm for wrongs

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.

Misapplication of money or property received for or in custody of the firm

13. In the following cases, namely -

(a) where one partner acting within the scope of his apparent authority receives the money or property of a third person and misapplies it; and

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

the firm is liable to make good the loss.

Liability of partners for wrongs

14. Every partner is liable jointly and severally with his co-partners for everything for which the firm while he is a partner therein becomes liable under either section 12 or section 13.

Improper employment of trust property for partnership

15. If a partner, being a trustee of a trust which is not part of the business of the firm of which he is a partner, improperly employs the trust property in the business or on the account of the partnership, no other partner is liable for the trust property to the persons beneficially interested therein except that

(a) this section shall not affect any liability incurred by any partner by reason of his having notice of a breach of trust; and

(b) nothing in this section shall prevent trust money from being traced and recovered from the firm if still in its possession or under its control.

Persons liable by "holding out"

16.(1) Everyone 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) Notwithstanding subsection (1) where after a partner's death the partnership business is continued in the same 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 of his estate liable for any partnership debts contracted after his death.

Admissions and representations of partners

17. An admission or representation made by any partner concerning the firm's affairs, and in the ordinary course of its business, is evidence against the firm.

Notice to acting partner to be notice to 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.

Liabilities of incoming and outgoing partners

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 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 expressed or inferred as a fact from the course of dealing between the creditors and the firm as newly constituted.

Revocation of continuing guarantee by change in firm

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 agreement to the contrary, revoked as to future transactions by any change in the constitution of the firm to which, or of the firm in respect of the transactions of which, the guarantee was given.