Partnerships Detailed Principles In Australian Law: A Discussion

By Author: Premkumar Nadarajan.
Total Articles: 26
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Partners have Unlimited Liability which means that their personal assets are liable if the Partnerships Assets are insufficient. Partners have no distinct entity personally from the Partnership. Partners pay personal tax and can be sued personally for anything done in the name of the Partnership. Partners
cannot hold contracts with their own Partnership. Partners must register a Business Name if the Partnership is named something other than the names of the Partners themselves. When the Partnership operates for a fixed period of time or for a one off venture and that time or venture expires. When a Partner gives notice that the Partnership is to be dissolved and there is no agreement to keep it going.
Bankruptcy and Death will end a Partnership, unless the Partners have an agreement to overcome this.
Illegal Partnerships, where the business of the Partnership has become illegal. A Court may end a Partnership where: A Partner is declared of unsound mind and incapable, where through some disability a
Partner cannot continue in the Partnership; Where a Partner is guilty of conduct or an offence which affects ...
... the Partnership; Where a Partner continually breaches the Partnership Agreement; Where the Partnership cannot be carried on without making a loss; Where a court is satisfied that it is just and equitable to dissolve the Partnership; When a Partnership is dissolved then there is a legal process for who receives the property of the Partnership. Every partner is an agent of the firm and his other partners for the purpose of the business of the partnership, and 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 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. Partners are liable for the actions of fellow Partners where those actions: i) are connected to the business of the Partnership. Mercantile Credit v Garrod; ii) are actions done in the usual business manner of the Partnership. Golberg v Jenkins;iii) are actions of a type normally carried on by the Partnership; unless the Partner does not have authority and the outsider was aware of the lack of authority. An outsider on discovering that a person was a Partner cannot hold the Partnership liable, they must have been aware that a Partnership existed. Joint Liability is where the Partners named in litigation are sued together. No further action can be taken against the partnership. Several Liability allows Partners to be sued individually at any time for the liabilities of the Partnership. Torts, Crimes and other wrongs allow for Several Liability. A Partnership will be liable for wrongs whether they receive any benefit or not. Polkinghorne v Holland. The Partnership statutory law distinguishes between obligations where Liability is Joint or Joint and Several. Contractual obligations are joint liabilities. Holding Out or allowing another person to appear as if they are a Partner, either directly or indirectly by conduct will prevent a Partnership later denying the pretender is a Partner. The Partnership must take the liability of a person pretending to be a Partner. The Partnership will be ‘Estopped’ from denying that person is a Partner. The person who allows themselves to appear as a Partner will also have to take responsibility as a Partner.
Partners may draw up an agreement or Deed which sets out the roles, rights and obligations within the Partnership. Where an agreement is silent on a matter then that will be determined by the Partnership Act. Property bought by the Partnership belongs to the Partnership and must only be used within the Partnership. Property purchased with Partnership funds is Partnership property. Partners are entitled to share equally in the Capital and Profits of the Business. Partners are entitled to re-imbursement of any expenses or injuries incurred in the ordinary course of business. Partners are only entitled to a small percentage interest on their lending to the Partnership. All Partners can take part in the Management of the Partnership. No new Partner can be admitted without the consent of other Partners. Differences of opinion are to be decided by a Majority of Partners. The Partnership Books and Accounts are to be available to all Partners on request. Partners have a Fiduciary Relationship to each other. Partners retiring from the Partnership remain liable for all debts and obligations incurred during their time in the Partnership. New Partners are not liable for old debts. In these associations the firm is not a person in law, distinct from Partnerships, the partners who compose the firm. The partners are themselves the firm. They are the joint owners of the partnership property; their shares in the partnership are not transferable, and each of the partners is an agent of the partnership to make contracts, undertake obligations and dispose of partnership property in the ordinary course of the partnership business. Upon all contracts and obligations so incurred the liability of the partners is unlimited. As between themselves, the partners may make what private arrangements they please but as between the partners and the outside world, whatever may be the partners' private arrangements between themselves, each partner is the unlimited agent of every other in every matter connected with the partnership "business, or -which he represents as partnership business, and not being in its nature beyond the scope of the partnership. A partner who may not have a penny of capital left may take moneys or assets of the partnership to the value of large sums of money, may bind the partnership by contracts to any amount, may give the partnership acceptances for any amount, and may even, as has been shown in many involve his innocent partners in unlimited amounts for fraud which he has craftily concealed from them. This can be contrasted with the corporate form where there is a Separation of entities: shareholders and managers are separate entities from the company itself as well as Limited liability of members. The company can make contracts with members since they are separate. The company has as its basic elements the ability to sue and be sued in its own right; Continual existence, ready transference of ownership and tax advantages; besides being a useful means of raising capital.

lecturer at a private learning institution ( UTAR).