Elements of partnership PDF

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Elements of partnershipAs stated in Section 3 mentioned above, five elements need to be proven to show partnerships between two persons or more.1. RelationFirst, ‘relation’. Partnership is a relationship, it is not an organization in its own right with a separate legal personality. “Relation” implie...

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Elements of partnership As stated in Section 3 mentioned above, five elements need to be proven to show partnerships between two persons or more.

1. Relation First, ‘relation’. Partnership is a relationship, it is not an organization in its own right with a separate legal personality. “Relation” implies that there is some form of agreement or contract between individuals. The said agreement could be in the form of express agreement such as in the form of a partnership agreement or in the form of implied agreement such as from the conduct of the parties or certain circumstances surrounding the relationship. In the case of Wong Peng Yuen v Senanayake [1962] 1 MLJ 204 The sources of relation under the definition of the partnership under the act mean that an agreement whether express or implied resulting from a contract.

Wong Peng Yuen v Senanayake (1962) 28 MLJ 204 The defendant and G were partners of a firm of stocks and share brokers. They executed a partnership deed by which G transferred $14 000 worth of shares from the capital of the firm to each of his 2 infant children. The partners then executed a partnership agreement where T became a partner of the firm. Plaintiff paid the defendant a sum of $20 000 in consideration that he be made one of the partners of the firm. The firm incurred losses and a notice was given for the dissolution of the firm. The plaintiff in order to avoid the burden of sharing the losses, claimed the return of $20 000 on the ground that the he was never a partner of the firm because T and the 2 infants had never consented to his admission as a partner. Held: Wee Chong Jin J. held that An agreement, whether express (written in the partnership agreement) or implied (from association of events, conduct of parties, circumstances surrounding the relationship), is the source of the ‘relation’. Thus, it is a relation resulting from a contract. The partners also must know or impliedly know that there is a form of relationship between one another.

2. Persons (> 1 but not more than 20) A person could not initiate partnership by himself. A partnership must consists of 2 or more perons in order to form a partnership. However, the partnership initiated must be not more than twenty persons under one business as stated in Section 47(2) of the Partnership Act. The entity will not be recognized as a partnership if it exceeds 20 persons. In the case of Tan Tech Hee v Cheng Tian Peng [1915] 2 FMSLR 161

The court held that a firm with 25 persons could not take a legal action in court as a partnership as it was not recognized as a valid partnership.

Tan Ching Cheang v Estate Trust Agencies (1926) Ltd. [1932] F.M.S.L.R.129 the original membership of more than 20 was trimmed down before beginning a legal action. The court still did not recognize it as a partnership. The initial invalidity still remained.

Shim Fatt v Leila Bus Road Co. [1957] SCR 3 the court decided that the plaintiff could not claim their money back from a firm that had more than twenty members, because legal action could not be taken against a firm that was not at law considered as a valid partnership.

3. Carrying on a business A partnership is normally formed for commercial venture. The term ‘business’ has been defined by Section 2 of the Partnership Act 1961. According to the provision, “business” includes every trade, occupation or profession....