Partnership Act 1961 (Revised 1974)

14/04/2016
PartnershipAct1961(Revised1974)
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LAWSOFMALAYSIA
REPRINT
Act135
PARTNERSHIPACT1961
Incorporatingallamendmentsupto1January2006PUBLISHEDBY
THECOMMISSIONEROFLAWREVISION,MALAYSIA
UNDERTHEAUTHORITYOFTHEREVISIONOFLAWSACT1968IN
COLLABORATIONWITH
PERCETAKANNASIONALMALAYSIABHD
2006
2LawsofMalaysiaACT135
Firstenacted..................1961(SabahOrd.No.1of1961)
Revised.....................1974(Act135w.e.f.1July1974)
PREVIOUSREPRINTS
FirstReprint...............1997
SecondReprint...............2000
PARTNERSHIPACT1961
Partnership3
LAWSOFMALAYSIA
Act135
PARTNERSHIPACT1961
http://www.commonlii.org/my/legis/consol_act/pa19611974229/
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ARRANGEMENTOFSECTIONS
PARTI
PRELIMINARY
Section
1.Shorttitle
2.InterpretationPARTII
NATUREOFPARTNERSHIP
3.Definitionofpartnership
4.Certaincircumstancesnotprimafaciepartnerships
5.Postponementofrightsofpersonlendingorsellinginconsiderationofshareofprofitsin
caseofbankruptcy
6.MeaningoffirmandfirmnamePARTIII
RELATIONSOFPARTNERSTOPERSONSDEALING
WITHTHEM
7.Powerofpartnertobindfirm
8.Partnersboundbyactsonbehalfoffirm
9.Partnerusingcreditoffirmforprivatepurposes
10.Effectofnoticethatfirmwillnotbeboundbyactsofpartner
11.Liabilityofpartners
12.Liabilityoffirmforwrongs
13.Misapplicationofmoneyorpropertyreceivedfororincustodyoffirm4Lawsof
MalaysiaACT135
Section
14.Liabilityforwrongsjointandseveral
15.Improperemploymentoftrustpropertyforpartnershippurposes
16.Personsliableby"holdingout"
17.Admissionsandrepresentationsofpartner
18.Noticetoactingpartnertobenoticetofirm
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19.Liabilityofincomingandoutgoingpartners
20.RevocationofcontinuingguaranteebychangeinfirmPARTIV
RELATIONSOFPARTNERSTOONEANOTHER
21.Variationbyconsentoftermsofpartnership
22.Partnershipproperty
23.Propertyboughtwithpartnershipmoney
24.Conversionintopersonalestateoflandheldaspartnershipproperty
25.Procedureagainstpartnershippropertyforpartner'sseparatejudgmentdebt
26.Rulesastointerestsanddutiesofpartners,subjecttospecialagreement
27.Expulsionofpartner
28.Retirementfrompartnershipatwill
29.Wherepartnershipfortermiscontinuedover,continuanceonoldtermspresumed
30.Dutyofpartnerstorenderaccounts,etc.
31.Accountabilityofpartnersforprivateprofits
32.Dutyofpartnernottocompetewithfirm
33.RightsofassigneeofshareinpartnershipPARTV
DISSOLUTIONOFPARTNERSHIPANDITS
CONSEQUENCES
34.Dissolutionbyexpirationornotice
35.Dissolutionbybankruptcy,deathorcharge
36.Dissolutionbyillegalityofpartnership
37.DissolutionbythecourtPartnership5
Section
38.Rightsofpersonsdealingwithfirmagainstapparentmembersoffirm
39.Rightofpartnertonotifydissolution
40.Continuingauthorityofpartnersforpurposesofwindingup
41.Rightsofpartnersastoapplicationofpartnershipproperty
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42.Apportionmentofpremiumwherepartnershipprematurelydissolved
43.Rightswherepartnershipdissolvedforfraudormisrepresentation
44.Rightsofoutgoingpartnerincertaincasestoshareprofitsmadeafterdissolution
45.Retiringordeceasedpartner'ssharetobeadebt
46.Rulesfordistributionofassetsonfinalsettlementofaccounts
47.Savings6LawsofMalaysiaACT135
Partnership7
LAWSOFMALAYSIA
Act135
PARTNERSHIPACT1961
AnActrelatingtopartnership.
[Sabah29April1961
OtherStates1July1974,ActA240]
PARTI
PRELIMANARY
Shorttitle
1.ThisActmaybecitedasthePartnershipAct1961.Interpretation
2.InthisAct"bankruptcy"means
(a)beingthesubjectofanorderofadjudicationundertheBankruptcyAct1967[Act360]
(b)enteringintoanarrangementtopaycreditorslessthanthefullamountowedor
(c)dyingininsolventcircumstances
"business"includeseverytrade,occupation,orprofession.PARTII
NATUREOFPARTNERSHIP
Definitionofpartnership
3.(1)Partnershipistherelationwhichsubsistsbetweenpersonscarryingonbusinessin
commonwithaviewofprofit.8LawsofMalaysiaACT135
(2)Therelationbetweenmembersofanycompanyorassociationwhichis
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(a)registeredasacompanyundertheCompaniesAct1965[Act125]orasacooperative
societyunderanywrittenlawrelatingtocooperativesocietiesor
(b)formedorincorporatedbyorinpursuanceof(i)anyotherlawhavingeffectin
Malaysiaoranypartthereofor
(ii)anyletterspatent,RoyalCharterorActoftheParliamentoftheUnitedKingdom,
isnotapartnershipwithinthemeaningofthisAct.Certaincircumstancesnotprimafacie
partnerships
4.Indeterminingwhetherapartnershipdoesordoesnotexist,regardshallbehadtothe
followingrules:
(a)jointtenancy,tenancyincommon,jointproperty,commonproperty,orpartownership
doesnotofitselfcreateapartnershipastoanythingsoheldorowned,whetherthetenants
orownersdoordonotshareanyprofitsmadebytheusethereof
(b)thesharingofgrossreturnsdoesnotofitselfcreateapartnership,whetherthepersons
sharingsuchreturnshaveorhavenotajointorcommonrightorinterestinanyproperty
fromwhichorfromtheuseofwhichthereturnsarederived
(c)thereceiptbyapersonofashareoftheprofitsofbusinessisprimafacieevidencethat
heisapartnerinthebusiness,butthereceiptofsuchashare,orofapaymentcontingent
onorvaryingwiththeprofitsofabusiness,doesnotofitselfmakehimapartnerinthe
businessandinparticular(i)thereceiptbyapersonofadebtorotherliquidatedamount,
byinstalmentsorotherwise,outofthe
accruingprofitsofabusinessdoesnotofitselfmakehimapartnerinthebusinessorliable
as
such
Partnership9
(ii)acontractfortheremunerationofaservantoragentofapersonengagedinabusiness
byashareoftheprofitsofthebusinessdoesnotofitselfmaketheservantoragenta
partnerinthebusinessorliableassuch
(iii)apersonbeingthewidoworchildofadeceasedpartner,andreceivingbywayof
annuityaportionoftheprofitsmadeinthebusinessinwhichthe
deceasedpersonwasapartner,isnot,byreason
onlyofsuchreceipt,apartnerinthebusinessorliableassuch
(iv)theadvanceofmoneybywayofloantoapersonengagedorabouttoengageinany
businessona
contractwiththatpersonthatthelendershallreceivearateofinterestvaryingwiththe
profits,orshallreceiveashareoftheprofits,arisingfromcarryingonthebusiness,does
notofitselfmakethelenderapartnerwiththepersonorpersonscarryingon
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thebusinessorliableassuch:
Providedthatthecontractisinwritingandsignedbyoronbehalfofallthepartiesthereto
and
(v)apersonreceiving,bywayofannuityorotherwise,aportionoftheprofitsofabusiness
inconsiderationofthesalebyhimofthegoodwillofthebusinessisnot,byreasononlyof
suchreceipt,apartnerinthebusinessorliableassuch.
Postponementofrightsofpersonlendingorsellinginconsiderationofshareofprofitsin
caseofbankruptcy
5.Intheeventofthebankruptcyofanypersontowhommoneyhasbeenadvancedby
wayofloanuponsuchacontractasismentionedinsubparagraph4(c)(iv),orofanybuyer
ofagoodwillinconsiderationofashareoftheprofitsofthebusiness,thelenderoftheloan
shallnotbeentitledtorecoveranythinginrespectofhisloan,andthesellerofthegoodwill
shallnotbeentitledtorecoveranythinginrespectoftheshareofprofitscontractedfor,
untiltheclaimsofothercreditorsoftheborrowerorbuyerforvaluableconsiderationin
moneyormoney'sworthhavebeensatisfied.
Meaningoffirmandfirmname
6.Personswhohaveenteredintopartnershipwithoneanotherare,forthepurposesofthis
Act,calledcollectivelyafirm,andthenameunderwhichtheirbusinessiscarriedonis
calledthefirmname.
PARTIII
RELATIONSOFPARTNERSTOPERSONSDEALING
WITHTHEM
Powerofpartnertobindfirm
7.Everypartnerisanagentofthefirmandhisotherpartnersforthepurposeofthe
businessofthepartnershipandtheactsofeverypartnerwhodoesanyactforcarryingon
intheusualwaybusinessofthekindcarriedonbythefirmofwhichheisamemberbind
thefirmandhispartners,unlessthepartnersoactinghasinfactnoauthoritytoactforthe
firmintheparticularmatter,andthepersonwithwhomheisdealingeitherknowsthathe
hasnoauthorityordoesnotknoworbelievehimtobeapartner.Partnersboundbyacts
onbehalfoffirm
8.Anactorinstrumentrelatingtothebusinessofthefirmanddoneorexecutedinthefirm
name,orinanyothermannershowinganintentiontobindthefirm,byanypersonthereto
authorized,whetherapartnerornot,isbindingonthefirmandallthepartners:Provided
thatthissectionshallnotaffectanygeneralruleoflawrelatingtotheexecutionofdeedsor
negotiableinstruments.Partnerusingcreditoffirmforprivatepurposes
9.Whereonepartnerpledgesthecreditofthefirmforapurposeapparentlynotconnected
withthefirm'sordinarycourseofbusiness,thefirmisnotbound,unlessheisinfact
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speciallyauthorizedbytheotherpartnersbutthissectiondoesnotaffectanypersonal
liabilityincurredbyanindividualpartner.
Partnership11
Effectofnoticethatfirmwillnotbeboundbyactsofpartner
10.Ifithasbeenagreedbetweenthepartnersthatanyrestrictionshallbeplacedonthe
powerofanyoneormoreofthemtobindthefirm,noactdoneincontraventionofthe
agreementisbindingonthefirmwithrespecttopersonshavingnoticeoftheagreement.
Liabilityofpartners
11.Everypartnerinafirmisliablejointlywiththeotherpartnersforalldebtsand
obligationsofthefirmincurredwhileheisapartnerandafterhisdeathhisestateisalso
severallyliableinaduecourseofadministrationforsuchdebtsandobligations,sofaras
theyremainunsatisfiedbutsubjecttothepriorpaymentofhisseparatedebts.
Liabilityoffirmforwrongs
12.Where,byanywrongfulactoromissionofanypartneractingintheordinarycourseof
thebusinessofthefirmorwiththeauthorityofhiscopartners,lossorinjuryiscausedto
anypersonnotbeingapartnerinthefirm,oranypenaltyisincurred,thefirmisliable
therefortothesameextentasthepartnersoactingoromittingtoact.
Misapplicationofmoneyorpropertyreceivedfororincustodyoffirm
13.Inthefollowingcases,namely:(a)whereonepartner,actingwithinthescopeofhis
apparentauthority,receivesthemoneyorpropertyofathirdpersonandmisappliesitand
(b)whereafirminthecourseofitsbusinessreceivesthemoneyorpropertyofathird
person,andthemoneyorpropertysoreceivedismisappliedbyoneormoreofthe
partnerswhileitisinthecustodyofthefirm,
thefirmisliabletomakegoodtheloss.
Liabilityforwrongsjointandseveral
14.Everypartnerisliablejointlywithhiscopartnersandalsoseverallyforeverythingfor
whichthefirmwhileheisapartnerthereinbecomesliableundersection12or13.
Improperemploymentoftrustpropertyforpartnershippurposes
15.Ifapartner,beingatrustee,improperlyemploystrustpropertyinthebusinessoronthe
accountofthepartnership,nootherpartnerisliableforthetrustpropertytothepersons
beneficiallyinterestedtherein:
Providedasfollows:
(a)thissectionshallnotaffectanyliabilityincurredbyanypartnerbyreasonofhishaving
noticeofabreachoftrustand
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(b)nothinginthissectionshallpreventtrustmoneyfrombeingfollowedandrecovered
fromthefirm,ifstillinitspossessionorunderitscontrol.
Personsliableby"holdingout"
16.Everyonewhobywordsspokenorwrittenorbyconductrepresentshimself,orwho
knowinglysuffershimself,toberepresented,asapartnerinaparticularfirmisliableasa
partnertoanyonewhohasonthefaithofanysuchrepresentationgivencredittothefirm,
whethertherepresentationhasorhasnotbeenmadeorcommunicatedtothepersonso
givingcreditbyorwiththeknowledgeoftheapparentpartnermakingtherepresentationor
sufferingittobemade:
Providedthatwhere,afterapartner'sdeath,thepartnershipbusinessiscontinuedinthe
oldfirmname,thecontinueduseofthatnameorofthedeceasedpartner'snameaspart
thereofshallnotofitselfmakehisexecutor'soradministrator'sestateoreffectsliablefor
anypartnershipdebtscontractedafterhisdeath.Admissionsandrepresentationsof
partner
17.Anadmissionorrepresentationmadebyanypartnerconcerningthepartnership
affairs,andintheordinarycourseofitsbusiness,isevidenceagainstthefirm.
Partnership13
Noticetoactingpartnertobenoticetofirm
18.Noticetoanypartnerwhohabituallyactsinthepartnershipbusinessofanymatter
relatingtopartnershipaffairsoperatesasnoticetothefirm,exceptinthecaseofafraud
onthefirmcommittedbyorwiththeconsentofthatpartner.Liabilityofincomingand
outgoingpartners
19.(1)Apersonwhoisadmittedasapartnerintoanexistingfirmdoesnotthereby
becomeliabletothecreditorsofthefirmforanythingdonebeforehebecameapartner.
(2)Apartnerwhoretiresfromafirmdoesnottherebyceasetobeliableforpartnership
debtsorobligationsincurredbeforehisretirement.
(3)Aretiringpartnermaybedischargedfromanyexistingliabilitiesbyanagreementto
thateffectbetweenhimselfandthemembersofthefirmasnewlyconstitutedandthe
creditors,andthisagreementmaybeeitherexpressorinferredasafactfromthecourseof
dealingbetweenthecreditorsandthefirmasnewlyconstituted.
Revocationofcontinuingguaranteebychangeinfirm
20.Acontinuingguaranteegiveneithertoafirmortoathirdpersoninrespectofthe
transactionsofafirmis,intheabsenceofagreementtothecontrary,revokedastofuture
transactionsbyanychangeintheconstitutionofthefirmtowhich,orofthefirminrespect
ofthetransactionsofwhich,theguaranteewasgiven.PARTIV
RELATIONSOFPARTNERSTOONEANOTHER
Variationbyconsentoftermsofpartnership
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21.Themutualrightsanddutiesofpartners,whetherascertainedbyagreementordefined
bythisAct,maybevariedbytheconsentofallthepartners,andsuchconsentmaybe
eitherexpressorinferredfromacourseofdealing.
Partnershipproperty
22.(1)Allpropertyandrightsandinterestsinpropertyoriginallybroughtintothe
partnershipstockoracquired,whetherbypurchaseorotherwise,onaccountofthefirmor
forthepurposesandinthecourseofthepartnershipbusiness,arecalledinthisAct
partnershippropertyandmustbeheldandappliedbythepartnersexclusivelyforthe
purposesofthepartnershipandinaccordancewiththepartnershipagreement:
Providedthatthelegalestateorinterestinanylandwhichbelongstothepartnershipshall
devolveaccordingtothenatureandtenurethereofandthegeneralrulesoflawapplicable
theretobutintrust,sofarasnecessary,forthepersonsbeneficiallyinterestedintheland
underthissection.
(2)Wherecoownersofanestateorinterestinanyland,notbeingitselfpartnership
property,arepartnersastoprofitsmadebytheuseofthatland,andpurchaseotherland
outoftheprofitstobeusedinlikemanner,thelandsopurchasedbelongstothem,inthe
absenceofanyagreementtothecontrary,notaspartners,butascoownersforthesame
respectiveestatesandinterestsasareheldbytheminthelandfirstmentionedatthedate
ofthepurchase.
Propertyboughtwithpartnershipmoney
23.Unlessthecontraryintentionappears,propertyboughtwithmoneybelongingtothe
firmisdeemedtohavebeenboughtonaccountofthefirm.
Conversionintopersonalestateoflandheldaspartnershipproperty
24.Wherelandoranyinterestthereinhasbecomepartnershipproperty,itshall,unlessthe
contraryintentionappears,betreatedasbetweenthepartners(includingthe
representativesofadeceasedpartner),andalsoasbetweentheheirsofadeceased
partnerandhisexecutorsoradministrators,aspersonalandnotrealestate.Partnership
15
Procedureagainstpartnershippropertyforpartner'sseparatejudgmentdebt
25.(1)Awritofexecutionshallnotissueagainstanypartnershippropertyexceptona
judgmentagainstthefirm.
(2)Thecourtmayontheapplicationbysummonsofanyjudgmentcreditorofapartner,
makeanorderchargingthatpartner'sinterestinthepartnershippropertyandprofitswith
paymentoftheamountofthejudgmentdebtandinterestthereon,andmay,bythesameor
asubsequentorder,appointareceiverofthatpartner'sshareofprofits(whetheralready
declaredoraccruing),andofanyothermoneywhichmaybecomingtohiminrespectof
thepartnership,anddirectallaccountsandinquiries,andgiveallotherordersand
directions,whichmighthavebeendirectedorgivenifthechargehadbeenmadeinfavour
ofthejudgmentcreditorbythepartner,orwhichthecircumstancesofthecasemay
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require.(3)Theotherpartnerorpartnersshallbeatlibertyatanytimetoredeemthe
interestcharged,or,incaseofasalebeingdirected,topurchasethesame.
Rulesastointerestsanddutiesofpartners,subjecttospecialagreement
26.Theinterestsofpartnersinthepartnershipproperty,andtheirrightsanddutiesin
relationtothepartnership,shallbedetermined,subjecttoanyagreement,expressor
implied,betweenthepartners,bythefollowingrules:
(a)allthepartnersareentitledtoshareequallyinthecapitalandprofitsofthebusiness,
andmustcontributeequallytowardsthelosses,whetherofcapitalorotherwise,sustained
bythefirm
(b)thefirmmustindemnifyeverypartnerinrespectofpaymentsmadeandpersonal
liabilitiesincurredbyhim(i)intheordinaryandproperconductofthebusinessofthefirm
or
(ii)inoraboutanythingnecessarilydoneforthepreservationofthebusinessorpropertyof
the
firm
(c)apartnermaking,forthepurposesofthepartnership,anyactualpaymentoradvance
beyondtheamountofcapitalwhichhehasagreedtosubscribe,isentitledtointerestatthe
rateofeightpercentperannumfromthedateofthepaymentoradvance
(d)apartnerisnotentitled,beforetheascertainmentofprofits,tointerestonthecapital
subscribedbyhim
(e)everypartnermaytakepartinthemanagementofthepartnershipbusiness
(f)nopartnershallbeentitledtoremunerationforactinginthepartnershipbusiness
(g)nopersonmaybeintroducedasapartnerwithouttheconsentofallexistingpartners
(h)anydifferencearisingastoordinarymattersconnectedwiththepartnershipbusiness
maybedecidedbyamajorityofthepartners,butnochangemaybemadeinthenatureof
thepartnershipbusinesswithouttheconsentofallexistingpartnersand
(i)hepartnershipbooksaretobekeptattheplaceofbusinessofthepartnership(orthe
principalplace,iftherearemoreplacesthanone)andeverypartnermay,whenhethinks
fit,haveaccesstoandinspectandcopyanyofthem.
Expulsionofpartner
27.Nomajorityofthepartnerscanexpelanypartner,unlessapowertodosohasbeen
conferredbyexpressagreementbetweenthepartners.
Retirementfrompartnershipatwill
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28.(1)Wherenofixedtermhasbeenagreeduponforthedurationofthepartnership,any
partnermaydeterminethepartnershipatanytimeongivingnoticeofhisintentiontodoso
toalltheotherpartners.
(2)Wherethepartnershiphasoriginallybeenconstitutedbywrittendocument,anoticein
writing,signedbythepartnergivingit,shallbesufficientforthispurpose.
Partnership17
Wherepartnershipfortermiscontinuedover,continuanceonoldtermspresumed
29.(1)Whereapartnershipenteredintoforafixedtermiscontinuedafterthetermhas
expired,andwithoutanyexpressnewagreement,therightsanddutiesofthepartners
remainthesameastheywereattheexpirationoftheterm,sofarasconsistentwiththe
incidentsofapartnershipatwill.
(2)Acontinuanceofthebusinessbythepartnersorsuchofthemashabituallyacted
thereinduringtheterm,withoutanysettlementorliquidationofthepartnershipaffairs,is
presumedtobeacontinuanceofthepartnership.
Dutyofpartnerstorenderaccounts,etc.
30.Partnersareboundtorendertrueaccountsandfullinformationofallthingsaffecting
thepartnershiptoanypartnerorhislegalrepresentatives.
Accountabilityofpartnersforprivateprofits
31.(1)Everypartnermustaccounttothefirmforanybenefitderivedbyhim,withoutthe
consentoftheotherpartners,fromanytransactionconcerningthepartnershiporfromany
usebyhimofthepartnershipproperty,name,orbusinessconnection.(2)Thissection
appliesalsototransactionsundertakenafterapartnershiphasbeendissolvedbythe
deathofapartner,andbeforetheaffairsthereofhavebeencompletelywoundup,eitherby
anysurvivingpartnerorbytherepresentativesofthedeceasedpartner.
Dutyofpartnernottocompetewithfirm
32.Ifapartner,withouttheconsentoftheotherpartners,carriesonanybusinessofthe
samenatureasandcompetingwiththatofthefirm,hemustaccountforandpayoverto
thefirmallprofitsmadebyhiminthatbusiness.
Rightsofassigneeofshareinpartnership
33.(1)Anassignmentbyanypartnerofhisshareinthepartnership,eitherabsoluteorby
wayofmortgageorredeemablecharge,doesnot,asagainsttheotherpartners,entitlethe
assignee,duringthecontinuanceofthepartnership,tointerfereinthemanagementor
administrationofthepartnershipbusinessoraffairs,ortorequireanyaccountsofthe
partnershiptransactions,ortoinspectthepartnershipbooks,butentitlestheassigneeonly
toreceivetheshareoftheprofitstowhichtheassigningpartnerwouldotherwisebe
entitled,andtheassigneemustaccepttheaccountofprofitsagreedtobythepartners.
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(2)Inthecaseofadissolutionofthepartnership,whetherasrespectsallthepartnersoras
respectstheassigningpartner,theassigneeisentitledtoreceivetheshareofthe
partnershipassetstowhichtheassigningpartnerisentitledasbetweenhimselfandthe
otherpartners,and,forthepurposeofascertainingthatshare,toanaccountasfromthe
dateofthedissolution.PARTV
DISSOLUTIONOFPARTNERSHIPANDITSCONSEQUENCES
Dissolutionbyexpirationornotice
34.(1)Subjecttoanyagreementbetweenthepartners,apartnershipisdissolved
(a)ifenteredintoforafixedterm,bytheexpirationofthatterm
(b)ifenteredintoforasingleadventureorundertaking,bytheterminationofthat
adventureorundertakingor(c)ifenteredintoforanundefinedtime,byanypartnergiving
noticetotheotherorothersofhisintentiontodissolvethepartnership.
(2)Inthelastmentionedcasethepartnershipisdissolvedasfromthedatementionedin
thenoticeasthedateofdissolution,or,ifnodateissomentioned,asfromthedateofthe
communicationofthenotice.
Partnership19
Dissolutionbybankruptcy,deathorcharge
35.(1)Subjecttoanyagreementbetweenthepartners,everypartnershipisdissolvedas
regardsallthepartnersbythedeathorbankruptcyofanypartner.
(2)Apartnershipmay,attheoptionoftheotherpartners,bedissolvedifanypartner
suffershisshareofthepartnershippropertytobechargedunderthisActforhisseparate
debt.Dissolutionbyillegalityofpartnership
36.Apartnershipisineverycasedissolvedbythehappeningofanyeventwhichmakesit
unlawfulforthebusinessofthefirmtobecarriedonorforthemembersofthefirmtocarry
itoninpartnership.
Dissolutionbythecourt
37.Onapplicationbyapartner,thecourtmaydecreeadissolutionofthepartnershipin
anyofthefollowingcases:(a)whenapartnerisfoundlunaticorisshown,tothe
satisfactionofthecourt,tobeofpermanentlyunsoundmind,ineitherofwhichcasesthe
applicationmaybemadeaswellonbehalfofthatpartnerbyhiscommittee,ornextfriend,
orpersonhavingtitletointerveneasbyanyotherpartner
(b)whenapartner,otherthanthepartnersuing,becomesinanyotherwaypermanently
incapableofperforminghispartofthepartnershipcontract
(c)whenapartner,otherthanthepartnersuing,hasbeenguiltyofsuchconductas,inthe
opinionofthecourt,regardbeinghadtothenatureofthebusiness,iscalculatedtoaffect
prejudiciallythecarryingonofthebusiness(d)whenapartner,otherthanthepartner
suing,wilfullyorpersistentlycommitsabreachofthepartnershipagreementorotherwise
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soconductshimselfinmattersrelatingtothepartnershipbusinessthatitisnotreasonably
practicablefortheotherpartnerorpartnerstocarryonthebusinessinpartnershipwith
him
(e)whenthebusinessofthepartnershipcanonlybecarriedonatalossand
(f)wheneverinanycasecircumstanceshavearisenwhich,intheopinionofthecourt,
renderitjustandequitablethatthepartnershipbedissolved.
Rightsofpersonsdealingwithfirmagainstapparentmembersoffirm
38.(1)Whereapersondealswithafirmafterachangeinitsconstitution,heisentitledto
treatallapparentmembersoftheoldfirmasstillbeingmembersofthefirmuntilhehas
noticeofthechange.
(2)AnadvertisementintheFederalGazetteastoafirmwhoseprincipalplaceofbusiness
isinPeninsularMlaysia,intheSabahGazetteastoafirmwhoseprincipalplaceof
businessisinSabah,andintheSarawakGazetteastoafirmwhoseprincipalplaceof
businessisinSarawak,shallbenoticeastopersonswhohadnodealingswiththefirm
beforethedateofthedissolutionorchangesoadvertise.
(3)Theestateofapartnerwhodiesorwhobecomesbankrupt,orofapartnerwho,not
havingbeenknowntothepersondealingwiththefirmtobeapartner,retiresfromthefirm,
isnotliableforpartnershipdebtscontractedafterthedateofthedeath,bankruptcy,or
retirementrespectively.
Rightofpartnertonotifydissolution
39.Onthedissolutionofapartnershiporretirementofapartner,anypartnermaypublicly
notifythesame,andmayrequiretheotherpartnerorpartnerstoconcurforthatpurposein
allnecessaryorproperacts,ifany,whichcannotbedonewithouthisortheirconcurrence.
Continuingauthorityofpartnersforpurposesofwindingup
40.Afterthedissolutionofapartnership,theauthorityofeachpartnertobindthefirm,and
theotherrightsandobligationsofthepartners,continue,notwithstandingthedissolution,
sofarasmaybenecessarytowinduptheaffairsofthepartnership,andtocomplete
transactionsbegunbutunfinishedatthetimeofthedissolution,butnototherwise:
Providedthatthefirmisinnocaseboundbytheactsofapartnerwhohasbecome
bankruptbutthisprovisiondoesnotaffecttheliabilityofanypersonwhohas,afterthe
bankruptcy,representedhimselforknowinglysufferedhimselftoberepresentedasa
partnerofthebankrupt.
Partnership21
Rightsofpartnersastoapplicationofpartnershipproperty
41.Onthedissolutionofapartnership,everypartnerisentitled,asagainsttheother
partnersinthefirmandallpersonsclaimingthroughtheminrespectoftheirinterestsas
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partners,tohavethepropertyofthepartnershipappliedinpaymentofthedebtsand
liabilitiesofthefirm,andtohavethesurplusassetsaftersuchpaymentappliedinpayment
ofwhatmaybeduetothepartnersrespectively,afterdeductingwhatmaybeduefrom
themaspartnerstothefirmandforthatpurposeanypartnerorhisrepresentativesmay,
ontheterminationofthepartnership,applytothecourttowindupthebusinessandaffairs
ofthefirm.
Apportionmentofpremiumwherepartnershipprematurelydissolved
42.Whereonepartnerhaspaidapremiumtoanotheronenteringintoapartnershipfora
fixedterm,andthepartnershipisdissolvedbeforetheexpirationofthattermotherwise
thanbythedeathofapartner,thecourtmayordertherepaymentofthepremium,orof
suchpartthereofasitthinksjust,havingregardtothetermsofthepartnershipcontract
andtothelengthoftimeduringwhichthepartnershiphascontinuedunless
(a)thedissolutionis,inthejudgmentofthecourt,whollyorchieflyduetothemisconduct
ofthepartnerwhopaidthepremiumor
(b)thepartnershiphasbeendissolvedbyanagreementcontainingnoprovisionfora
returnofanypartofthepremium.
Rightswherepartnershipdissolvedforfraudor
misrepresentation
43.Whereapartnershipcontractisrescindedonthegroundofthefraudor
misrepresentationofoneofthepartiesthereto,thepartyentitledtorescindis,without
prejudicetoanyotherright,entitled
(a)toalienon,orrightofretentionof,thesurplusofthepartnershipassets,aftersatisfying
thepartnershipliabilitiesforanysumofmoneypaidbyhimforthepurchaseofasharein
thepartnershipandforanycapitalcontributedbyhimandis
(b)tostandintheplaceofthecreditorsofthefirmforanypaymentsmadebyhimin
respectofthepartnershipliabilitiesand
(c)tobeindemnifiedbythepersonguiltyofthefraudormakingtherepresentationagainst
allthedebtsandliabilitiesofthefirm.
Rightsofoutgoingpartnerincertaincasestoshareprofitsmadeafterdissolution
44.Whereanymemberofafirmhasdiedorotherwiseceasedtobeapartner,andthe
survivingorcontinuingpartnerscarryonthebusinessofthefirmwithitscapitalorassets
withoutanyfinalsettlementofaccountsasbetweenthefirmandtheoutgoingpartneror
hisestate,then,intheabsenceofanyagreementtothecontrary,theoutgoingpartneror
hisestateisentitled,attheoptionofhimselforhisrepresentatives,tosuchshareofthe
profitsmadesincethedissolutionasthecourtmayfindtobeattributabletotheuseofhis
shareofthepartnershipassets,ortointerestattherateofeightpercentperannumonthe
amountofhisshareofthepartnershipassets:
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Providedthatwhere,bythepartnershipcontract,anoptionisgiventosurvivingor
continuingpartnerstopurchasetheinterestofadeceasedoroutgoingpartner,andthat
optionisdulyexercised,theestateofthedeceasedpartnerortheoutgoingpartnerorhis
estateasthecasemaybe,isnotentitledtoanyfurtherorothershareofprofitsbutifany
partnerassumingtoactinexerciseoftheoptiondoesnotinallmaterialrespectscomply
withthetermsthereof,heisliabletoaccountundertheprecedingprovisionsofthis
section.
Retiringordeceasedpartner'ssharetobeadebt
45.Subjecttoanyagreementbetweenthepartners,theamountduefromsurvivingor
continuingpartnerstoanoutgoingpartnerortherepresentativesofadeceasedpartnerin
respectoftheoutgoingordeceasedpartner'sshareisadebtaccruingatthedateofthe
dissolutionordeath.
Partnership23
Rulesfordistributionofassetsonfinalsettlementofaccounts
46.Insettlingaccountsbetweenthepartnersafteradissolutionofpartnership,the
followingrulesshall,subjecttoanyagreement,beobserved:
(a)losses,includinglossesanddeficienciesofcapital,shallbepaidfirstoutofprofits,next
outofcapitalandlastly,ifnecessary,bythepartnersindividuallyintheproportioninwhich
theywereentitledtoshareprofitsand(b)theassetsofthefirm,includingthesums,ifany,
contributedbythepartnerstomakeuplossesordeficienciesofcapital,shallbeappliedin
thefollowingmannerandorder:(i)inpayingthedebtsandliabilitiesofthefirmtopersons
whoarenotpartnerstherein
(ii)inpayingtoeachpartnerrateablywhatisduefromthefirmtohimforadvancesas
distinguishedfromcapital
(iii)inpayingtoeachpartnerrateablywhatisduefromthefirmtohiminrespectofcapital
and
(iv)theultimateresidue,ifany,shallbedividedamongthepartnersintheproportionin
whichprofitsaredivisible.
Saving
47.(1)Therulesofequityandofcommonlawapplicableinpartnershipshallcontinuein
force,exceptsofarastheyareinconsistentwiththeexpressprovisionsofthisAct.(2)
NothinginthisActshallbereadtopermitanyassociationofmorethantwentypersonsto
beformedortocarryonanybusinessinpartnershipcontrarytoparagraph14(3)(b)ofthe
CompaniesAct1965[Act125].
LAWSOFMALAYSIA
Act135
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PARTNERSHIPACT1961
LISTOFAMENDMENTS
AmendinglawShorttitleInforcefrom
Sab.G.N.S.Sabah,SarawakdanSingapore16091963129/1963(StateConstitutions)
Orderin
Council1963
L.N.458/1964ModificationofLaws24121964
(Partnership)(Sabah)Order
1964
ActA240Partnership(Amendment)Act01071974
1974
Partnership25
LAWSOFMALAYSIA
Act135
PARTNERSHIPACT1961
LISTOFSECTIONSAMENDED
SectionAmendingauthorityInforcefrom
LongTitleActA24001071974
2ActA24001071974
3ActA24001071974
L.N.458/196424121964
28ActA24001071974
38ActA24001071974
DICETAKOLEH
PERCETAKANNASIONALMALAYSIABERHAD,
KUALALUMPUR
BAGIPIHAKDANDENGANPERINTAHKERAJAANMALAYSIA
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14/04/2016
CommonLII:CopyrightPolicy|Disclaimers|PrivacyPolicy|Feedback
URL:http://www.commonlii.org/my/legis/consol_act/pa19611974229
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