#1 – Partner’s authority #2 – When will a partner be able to bind the other partners in a contract with a third party. #5 – Holding out ; person who is not a partner will be liable as a partner Incoming and outgoing refer to duration of liability of a partner.
Every partner is considered to be an agent of the firm or an agent of the other partners. Unlike with the law of agency a partner can be considered as a principal as well as an agent at the same time. Thus the act of an agent will bind the principal (firm). However only the act of a partner which is within a partner’s authority will bind the other partners. Therefore it is important to determine whether a partner has the authority or not.
ACTUAL – what is actually stated or expressly stated by the principal or in the agreement. i. e. the do’s and don’t’s. As long as there is actual authority of a partner, even if it is not within the partnership business, the other partners will be bound
IMPLIED / USUAL – what is normally the authority of a particular type of agent. For example it is within usual authority of an estate agent to receive deposit on behalf of the partnership. Estate agent is normally allowed to accept deposit. Geoffrey Morse: Is the authority which arises from the status of the particular type of agent involved. If an agent does an act which the third party would regard as a normal thing for that type of agent to do then the principal will be bound by it.
Implied and Apparent refer to what appear to the third party to be the agent’s authority. Even if the partners did not give any express authority, the partners will still be bound. Actual authority is less than usual authority. When a person acts outside his actual authority but within the usual authority, his act will bind the other partners. Thus in determining whether an act of a partner will bind other partners: First have to look into the partnership agreement. Whether the act has been expressly authorized ? If it is not within the agreement, then it is necessary to determine whether the act is within the apparent or implied authority. Note: The third party cannot rely on the implied or apparent authority if he knows that the agent has no actual authority. However, a third party is not expected to check whether a partner has the authority or not. Actual & Apparent – question of fact Implied – question of law Even if an act is not within any of the three above, by ratification or when all partners agree it will bind the firm.
- That is any contract entered should be related with the partnership business. - E.g. bakery - flour, sugar etc. Every partner is an unlimited agent of the other partner in every matter connected with the partnership business. And a third party cannot reasonably assume that a partner has authority to bind the firm in a transaction, which is altogether foreign with the partnership business. Osman v Chan Kang Siew (1942) 4 FMSLR 292 3 Chinese and 3 Malay - partners. Borrowed money guaranteed by Chan (a partner). No payment- lender sued Chan. Chan paid and sued for recovery from all the partners. The other partners admitted except one. H: All partners liable. " The loan taken was in fact for the firm business and payment made by the guarantor was considered as an act lawfully done for the firm."
Mercantile Credit Co Ltd v Garrod (1962) 3 AER 1103 A firm (where P & G were partners) carrying on a garage business i.e. renting out garages and fixing cars. There was a clause in the partnership agreement which excluded buying and selling cars. Parkin (a partner) without G's knowledge sold a car, which he has no title to plaintiff. The money was put into the firm’s account. When the plaintiff found that P had no title, he claimed the money that he had paid for the car. H: G was liable for the act of P, because it is within the usual authority. Though G did not give his consent. (G was also a sleeping partner) If the plaintiff dealt with P individually, not as a partner, only P will be liable.
Polkinghorne v Holland  51 CLR 143 The plaintiff sought financial advice from the defendant who is a partner in a lawyer’s firm. Subsequently, she altered her investment and suffered loss and had acted as a guarantor for a company which she was a shareholder after approached by the defendant who was a director. The plaintiff sought to make the other partners liable. Polkinghorne v Holland  51 CLR 143 The plaintiff sought financial advice from the defendant who is a partner in a lawyer’s firm. Subsequently, she altered her investment and suffered loss and had acted as a guarantor for a company which she was a shareholder after approached by the defendant who was a director. The plaintiff sought to make the other partners liable.
Chan King Yue v Lee & Wong (1962) 28 MLJ 379 Husband obtained loan from wife (P) for the firm. He gave her a receipt in the name of the firm. The money was put into the partnership account. There was no payment, so P took action against the firm. Other partners contended that the husband has no authority to borrow on behalf of the firm. H: Borrowing was an act necessary for the carrying on of the partnership business. Thus the other partners were bound. However, ‘necessary” is not stated anywhere in Sec 7 and thus something which is necessary for the partnership does not mean that it is within the usual way of business. Though differs in wording the principle of agency applied.
Chettinand Bank v Chop Haw Lee (1931-32) FMSLR 31 Pawn business is a trading business though it does not involve buying and selling goods. As long as there is commercial activity it is a trading business. Chop Cheong Tuck v Chop Tack Loong  MLJ 176 3 partners, only one active who is also the MD and had borrowed money. The plaintiff claimed the sum borrowed but the dormant partners stated that there is no authority to do so. Held: There is implied authority. The authority was implied from the nature of the business. Thus the MD of a trading partnership has implied authority to borrow money for partnership purposes and in doing so may bind the partners not withstanding that he may have gone against the actual authority. In this case the article forbade incurring debt without the consent of other partners and thus there is no actual authority however implied authority existed. Usual authority of a partner in trading business includes; Contract debts, borrow money and employ staff etc. Non- trading - where nature of work is advisory, e.g. firm of professionals. Usual authority in non-trading : consultation, employment of staff, A solicitor may accept trust money as agent of a trustee but no authority to be a trustee and an estate agent may receive deposit but cannot sign S&P. Acts which are not usual for trading and non-trading: execution of Deeds, giving guarantee, reference to arbitrator, entering into agree- Ment, allowing third party to used firm's name. Montagnac v Shitta Borrow money in an unusual way - but the only way to borrow. H: Bind the firm, since it is the only way to borrow for the benefit of the company. An agent of a firm has an implied power to borrow money for the purpose of the firm even to borrow money in an unusual term if the money is necessary for the firm's business and he cannot borrow it in any other way.
Re Briggs and Co (1906) 2 KB 209 A firm of father and son. The firm owned certain debts to a creditor, who had given extension to pay. The son assigned the firm's book debt to the creditor in the firm's name. This had been done without the father's knowledge and the son had forged the father's signature. When the firm went bankrupt, the trustee in bankruptcy sought to set aside the assignment. H: The deed of assignment was binding on the firm by virtue of Sec.6 (equiv. Sec. 8) because it was an instrument relating to the business of the firm, executed in the manner showing the intention to bind the firm and executed by the firm thereto authorized. A partner has implied authority to do the assignment and signing of the document.
Galway v Matthew Matthew and Smithson were partners. S caused an advertisement to be published warning all person s not to give credit to M, stating that he would not be liable for any bills or notes issued by M in the name of the partnership. The plaintiff had seen the advertisement but nevertheless had accepted the note from M in the name of the firm. M got the bill discounted and bonafide applied almost all the money in paying the firm's debt. The plaintiff then brought action against the firm as regards to the note. H: Having seen the advertisement, the plaintiff could not recover.
Sec. 11 is about liability of partners - in contractual matters, tax, and judgment debts. Per Lord Lindley: ‘ the general proposition that a partnership is bound by those acts of its agents which are within the scope of their authority …must be taken with the qualification that the agent whose acts are sought to be imputed to the firm, was acting in his character of agent, and not as a …..If he did not act in his character of agent, but as a private individual on his own account, his act cannot be imputed to the firm, and he alone is liable for them, even though the firm may have benefited by them.’ First limb: is about JOINT LIABILITY Meaning when a contract is entered by the partnership, all partners are jointly liable. This limb also refers to the situation where all the partners are alive. Varma v K.. M Oli Mohammad (1950) MLJ 80 Plaintiff brought action in their personal capacity. H: The plaintiff had the alternatives of joining all the partners as plaintiff or by suing in the name of the firm and as they had failed to take either alternatives, the claim must be dismissed. In this matter, the third party can only have one action. A third party can either take action against all the partners jointly or against the firm. Action to one partner is a bar to the other partners. Kendall v Hamilton  4 App Cas 504 K gave loan to X&Y, no payment and K sued them for recovery of debt. However X&Y was bankrupt. K came to know that there was another partner H - a sleeping partner. Thus he initiated another action against H. H: He cannot take action against H. Because the first action was a bar against the subsequent partner over the same matter.
Guinness anchor  3 AMR 2735 The plaintiff had commenced an action against the defendant for goods sold and delivered.
Meaning action can be taken against the deceased separately. Therefore, we have two actions here i.e. one against the alive partners-they are jointly liable. And one against the dead partner's representative and known as several liability.
Re Doetsch (Firm was indebted to another firm. D died. The creditor of the firm brought action against D’s estate alleging that the firm’s assets were insufficient to pay the debt.) Held: A creditor may proceed with the estate of the dead partner without showing that the surviving partner is insolvent and partnership property was insufficient to pay partnership debt. Bagel v Miller  2 KB 212 B Supplied goods to a partnership business where M was a member. Some of the goods were ordered and and delivered before M died and the rest of the goods were delivered after his death. B brought an action to recover the price from M's executor. H: The action succeeded in respect of the goods delivered before M's death, but failed in respect of those delivered after his death. Lord Alverstone CJ " a claim for goods sold and delivered would not amount to a debt and the duty to pay would also not amount to an obligation until there was an actual delivery" Note:Refer to the last line of Sec 11, but subject to prior payment of his separate debts. MEANING OF JOINT & SEVERAL Joint liability action can be taken against one or all partners, only one action If taken against one, others cannot later be sued. A partner who is judged liable can claim contribution from other partners. E.g: A, B and C are partners. If the plaintiff sues A and B, but not C, C cannot be sued later. Judgment will be given against A and B. Several liability A partner can be sued individually E.g: A, B and C are partners. The plaintiff can sue A, B and C as a firm and later can sue each partner individually. A company’s or partnership debt cannot be set off against the debt owed to a member of the partners since it is joint and not joint and several liability. Refer Re Pennington However if the cause of action is different, the action can be brought. Wegg Prosser v Evans (1895) 1 QB 108 A rented a piece of land from B. C & D were the guarantors if A failed to pay rental or refuse to pay. A refuse to pay. C gave his check to B but it was bad. B sued C for that. He obtained judgment but no punishment as yet. B then sued D on the basis of guarantee. Held: He can do so since the two actions were based on different cause of action. SOLUTION TO JOINT LIABILITY Sue in the firm’s name – Sec 5 Disclose partners’ name in the note paper or letterhead. Sec 3 of the Civil Liability Act 1978 (UK) Judgment recovered against any person liable in respect of any debt or damage shall not be a ban to an action against any of person who is jointly liable with him in respect of the same debt or damage.
In the case of negligence, when one of the partners gave negligence advice to a client, all of the partners will be liable of the negligent act. If the tortious act is committed without the actual/usual authority, the firm will not be liable.
Willet v Chambers Firm of solicitors and conveyancers. A partner received money to invest on mortgage and the money was misapplied. Held:Other partners were liable. It was a partnership transaction. Harman v Johnson Firm of solicitors. One partner was entrusted with money for the purpose of investing it when good opportunity arises.The partner misapplied the money. Held:The co-partners were not liable as there was no evidence to show that it is part of the business. Plumer v Gregory A solicitor borrowed money from a client without the knowledge of other partners. Held:The other partners were not liable. Under Sec 13, the firm will be liable provided that the third party dealt with the partner as a partner, not as an individual. British Home Corporation v Patterson British Home a company, appointed Atkinson as solicitor of A & A to act for it in a mortgage transaction. Two years after that A gave notice to the company that he had taken P into the partnership and the name of the firm change to A & P. Few weeks after that, the company sent to A a cheque payable to A & A. The cheque was misappropriated. The company sued P. Held:P was not liable, because the company had dealt with A in his personal capacity and not as a partner of the firm.
Rhodes v Moules Firm of solicitors. A partner was asked by a client to obtain for him a loan upon mortgage of his estate. R obtained the loan but falsely sated that the mortgage required collateral security. The client handed to R some share warrants payable to bearer. R misappropriated it. Other partners had no knowledge about the share warrant. Evidence showed that the firm was in the habit of receiving the share warrant. Court of Appeal: The other partners were liable. The warrants had been received by the firm in the ordinary course of business. However if the misapplication was done when the property was not in the firm’s custody – the firm was not liable. Tendring Hundred Water Works Co v Jones Plaintiffs wished to purchase an estate. They employed J & G who were solicitors in partnership to negotiate the purchase them. For their convenient the plaintiff arranged for the property to be conveyed into G’s name. G had misapplied it by handed it over to someone else. Plaintiffs sued the other partner, J, claiming he was liable for the fraud of his partner. Held: Action failed. The deed were given to G by the plaintiffs as an individual, not as a partner. Thus the deeds were not in the custody of the firm as mentioned by Sec13 (b) as they were in G’s custody as private individual. Note:By virtue of Sec 14 the liability under Sec 13 is joint and several.
Ex parte Heaton A father and sons were partners. The sons who were also the trustees had used the trust money for partnership purposes instead of applying it according to the trust deed. Held:Father not liable since he had no knowledge that the money were trust funds.
Sec 12 & 13(14) only limited to civil liability. Nothing in PA discussed about criminal liability. Chung Shin Kian Facts:A shop belong to a partnership of two partners were raid by trade officer. Both were accused of an offence I.e. fraudulently using trade-name under Trade description Act. At the time of the raid only the first accused/appellant was present. Magistrate Court: Convicted both partners Appeal: The appeal by the second appellant was allowed because there was no evidence that he was involved except by the fact that he was a partner. Judge:Sec 14 provides for joint liability but not for criminal offences except if the firm itself had been accused of the offence. Thus only the partner who was found with the clothing was convicted.
HO – is a branch of the doctrine of estoppel Waugh v Carver But if he lent his name as a p’ner, he becomes against the rest of the world a p’ner not upon the ground of the real transaction between them but upon the principle of general policy. To prevent the fraud to which creditors would be liable. Thus the basis of this doctrine to prevent fraud.
Knowingly suffers – this refer to the situation when that person did not actually make the representation but the representation was made by a partner in the capacity as a partner. Whether a person knows that he has bee represented is a question of fact- have to look to the circumstances( Wood v Duke of Argll)
Tower Cabinet Ltd. Facts: Christmas & Ingram carried on business under the name ‘ Merry’s’. Partnership was dissolved and C carried on business under the same name. Plaintiff then received order from M’s. Price was never paid and Plaintiff sought to enforce judgment against the Defendant. The only knowledge which the company had of the Defendant was that his name had appeared on the old headed note paper used by C, without Defendant’s authority and which Defendant failed to destroy before he left the firm. Chan Yin Tee v William Jack Facts: The appellant had held himself out to be a partner with Y(a minor). On this representation business commenced between the appellant and respondent. Held:Irrespective of whether Y was the appellant’s partner or not. The appellant was liable because he had held out Y as his agent who had authority to act on his behalf.
Lynch v Stiff Facts: L employed as solicitor and his name appeared as partner but he is actually an employee. Mr S a client, and had his account handled by L. Later the business was taken over by the employer’s son who informed S that his account will be handled by L.S gave money to the firm and the son misappropriated it. S brought action against L. i)…Where a person has by words/ conduct represented himself or knowingly suffered himself to be represented as a partner
Martyn v Gray (1863) 14 C.B. 824 Facts: A told B that he is a partner in a firm CDE. B conveyed this to F, who gave debt based on this statement to CDE. Held: A is considered to have hold out himself as a partner in CDE to F and therefore liable as a partner of CDE to F. It must have influenced the third party to give debt to the firm/ give credit.(restricted to debt only,not tortious act) Bunny Pty Ltd V Atkins Such requirement is not necessary. As long as the plaintiff acted reasonably and there was a representation by a person that he is a partner. .It is sufficient to apply holding out Wong Peng Yuen v Senanayake Held: Wong’s name was registered as a partner and therefore liable though hehad no involvement in running the business of the firm. Not related to Sec 16 however it shows how estoppel is used to prevent a person from evading liability.
Continuing contract entered by the firm; if divisible will only liable for contracts after he become a partner. Duke v Brewer Facts: Contract for supply of bricks Held: Incoming partner is liable for the supply of bricks after his partnership because every delivery is considered as a new contract. Court v Berlin Facts: The plaintiff was a solicitor who was employed by a partnership, to recover a debt due to the firm. The partnership consisted of B, who was the managing partner and two dormant partners. While the action brought by the solicitor to recover the debt was in the proceeding the two dormant partners retired from the partnership. The plaintiff continued the proceedings and then sued B and the dormant partners for his costs. But the dormant partners refused to pay.They contended that it was incurred after their retirement. Held:Dormant partners were liable for the costs. The solicitor’s retainer was one entire contract to conduct the proceedings to the end.
Goh Hooi Yin Facts: Plaintiff was a retired partner and the deceased was the continuing partner. According the deed of dissolution , the continuing partner would discharge all debts and liability. Later when the partnership was dissolved, the plaintiff was assessed for tax in respect of the partnership income 9 ½ months preceding the dissolution. Held: The continuing partner would be liable for the tax.
Tan Sin Moh Held: The respondent was a person who had habitual dealings with the partnership and was therefore should be specifically notified of the withdrawal of the appellant from the partnership. Philips S’pore Pty Ltd Held:Persons having prior dealings with the partnership should have been given actual notice of retirement.( Registration in the registry is not sufficient because he might not check it, \\ Jemco Sdn Bhd Held: When the mode of notice is not mentioned. Oral notice of the retirement is sufficient. Sec 38(3)- The estate of a partner who dies/bankrupt/retire/ not known to be a partner will not be liable for the partnership debt contracted after those circumstances. Sec 40; After dissolution, the authority of each partner to bind the firm will still continue for winding op purposes which begun but unfinished at the time of resolution.
Relation of Partners to Persons Dealing with Them
Relation of Partners/Firm withThe Third PartiesLAW 3211/ COMPANY LAW II
Liability of firm towards apartner’s action Based on the law of agency. Principal will be liable for any action ofthe agent which are committed withinthe authority given under the agencyagreement/relationship.
Authority of a partner Authority can be divided:# 1 – Actual# 2 – Implied / Usual# 3 – Apparent / Ostensible
Actual Authority What is expressly stated :-By the principal-By the partnership agreement
Implied / Usual Authority Arises from the nature of partnershipbusiness
Apparent / OstensibleAuthority There has been a representation bywords or conduct by the partners. Arises from the representation
Section 7An act of a partner will bind the firm: The act must be done for the purposeof the businessCase: Osman v Chan Kang Siew The act must be an act for carrying onbusiness in the usual way
The act must be an act for carrying onbusiness in the usual wayCases:Mercantile Credit Co Ltd v GarrodPolkinghorne v HollandSithambaran Chetty & Ors v Hop Hing &OrsChan King Yue v Lee & Wong
Mercantile Credit Co Ltd vGarrod Mocatta J:I must have regard in deciding thismatter to what was apparent to theoutside world in general…to the factsrelevant to business of a like kind to thatof the business of this partnership so faras it appeared to the outside world.
Polkinghorne v HollandMr.H was a partner in a solicitor firm.He was also a director in a company.One of the firm’s client, Mrs.P seekMr.H’s advise on certain informationrelating to investment in a particularcompany
Court Held: Although investment analysis was notpart of the firm’s (solicitor) business,when a solicitor is approached forenquiries and competent advice.Hisfailure to provide this was related to thebusiness of the firm.
Held:Borrowing was an act necessary for thecarrying on of the partnership business.Thus the other partners were bound.
What is usual depends on whether it is tradingbusiness or non-trading business TradingHiggins v Beauchamp“ Is one which depends onbuying and sellinggoods" Usual authority intrading:Contract debts, borrowmoney and employ staffetc.Case: Chettinand Bank vChop Haw Lee Non-trading nature of work isadvisory, e.g. firm ofprofessionals.Usual authority in non-trading : consultation,employment of staffCases:Higgins v BeauchampMarsh v Joseph
An act of a partner will not bind thefirm : The partner has no authority The third party knows that he has noauthority The third party does not know that he isa partner The third party does not believe that heis a partner
Section 8An act of a partner will bind the firm/partners: Relates to the partnership business, Entered in the firm’s name or showing anintention to bind the firm Done by partner or non-partner(authorized)Case: Re Briggs
Section 9Firm will not be liable:When a partner used the firm’s credit for apurpose not connected with the firm’sordinary course of business(privatepurpose).- personally liableUNLESS specially authorize to do so.Case: Chan King Yue v Lee & WongOsman v Chan Kang Siew
Section 10When there is a restriction on the power ofpartners to bind the firm and the third partyhas notice about that restriction, the act donewill not bind the firm.Case: Galway v MatthewMercantile Credit Co Ltd v Garrod
Liability in Contract- Sec 11First limb: JOINT LIABILITYEvery partner is liable jointly with the otherpartners for all debts and obligations of thefirm incurred while he is a partner. Kendall v HamiltonNote:The third party only have one actionagainst the firm.Action to one partner is a barto otherpartners – Guinness Anchor Marketing
Guinness Anchor MarketingS/BThe essence of joint liability under Sec 11 isthat if a judgment is obtained against apartner in the partnership for debt owed bythe partnership and the judgment remainsunsatisfied because of the partner’sbankruptcy or otherwise, any other partnerwho has not been sued in the first instancecannot then be sued in a subsequentproceeding. A joint liability essentially meansthat there is only one cause of action for therecovery of debt.
Second limb: SEVERAL LIABILITYRefers to action taken against theestate of a person who was a partnerwhen the debt was incurred.Cases: Re DoetschBagel v Miller
Re Doetsch‘A creditor may proceed with the estate of thedead p’ner without showing that the survivingp’ner is insolvent and p/ship prop. wasinsufficient to pay p/ship debt.’ Bagel v Miller‘Action succeeded in respect of the goodsdelivered before Miller’s death…’
Liability For other wrongs – Sec12 Any wrongful act/omission which iswithin ACTUAL /USUAL authority- FirmWould liableCases:Lyold v Grace SmithHamlyn v Houston
Misapplication of money & propertySec 13 Sec 13(a) – Money or property receivedby a partner within his apparentauthority and he misapplies it.THE FIRM IS LIABLE FOR THELOSSES
Cases Harman v Johnson British Home Assurance CorporationLtd v Patterson
Sec 13 (b) – Money or propertyreceived by the firm in the ordinarycourse of business and the partnersmisapply it while it is in the custody .THE FIRM IS LIABLE FOR THELOSSES
CASESRhodes v MoulesTendering Hundred Waterworks Cov JonesNote: Sec 14
Sec 15 – Improper employment of trust property forpartnership purposes.When a partner is also a trustee (in hispersonal capacity) & had used the trustmoney for p/ship purposes, Other partnerswill not be liable. However, other partners will be liable :-- When they have notice of the breach of trust - The trust money is still in the firm’spossession or traceable. Case: Ex parte Heaton
Criminal Liability Personal liability Firm not liable, unless all partners had been aparty to the crime “…a principal will not be liable for offencesrequiring mens rea merely by the fact that hisagent had the necessary mens rea”Case: Chung Shin Kian v PP
Section 16- Holding out A person who is not a partner but has beenrepresented as a partner, he will become apartner. (partnership by estoppel)Waugh v Carver“If he lent his name as a partner, he becomesagainst the rest of the world a partner…uponthe principle of general policy”
Elements of Holding Out1) Representation2) Knowingly suffers3) Third party has given credit based onsuch representation.
Representation Words spoken, Written or Conduct Made by – that person himself orby a partner
Knowingly suffers Means knows about the representation.Bunny Pty Ltd v AtkinsSochall J: …he was apparently named as oneof the member of the firm, he did nothing toensure the communication to the plaintiff ofany denial by him of his ostensible, suchconduct amounted either to knowingly heldhimself out and to knowingly allowing himselfto be held out as a partner.
Wong Peng Yuen v SenanayakeThe def was a partner in a firm of stockand share broker. The plf some moneyto def in consideration that he is to bemade as one of the partners. The plfthen acted and though himself as apartner. However, he did not take partin the management of the firm and onlyattended two meetings before the firmwas dissolved.
Held: There was representation by theplf that he is partner although he did nottake part in the management of the firm.
Tower Cabinet Co.Ltd v IngramMr.Christmas and Mr.Ingram set up a partnership ofselling household furniture under the name of Merry’s.The partnership was dissolved by mutual agreementin 1947. Later,Mr.Christmas carried on the businesson his own under the same business name (Merry’s).He ordered some furniture from the plf and by mistakethe order was confirmed on an old note paper (belongto the firm) which has Mr.Ingram name on it.When Mr.Christmas failed to make the payment, theplf sought to claim from Mr.Ingram on the ground thathe is a partner to Mr.Christmas.
Held:Mr.Ingram was not liable because hehad not ‘knowingly suffered’ himself tobe represented as a partner. The factthat he might be careless or negligentfor not destroying all the old note paper,was not sufficient to hold him to be‘knowingly suffered’.
The third party has given creditbased on such representationLynch v StiffMr.L (the app) was employed as a solicitor insolicitor firm. Although, his name appeared as apartner in the firm’s note paper, he had neverreceived the firm’s profit or took part in themanagement of the firm. The resp was a client ofthe firm. He gave some money for investment to thefirm on the basis that he believed that Mr.L is apartner as he had known Mr.L for a long time andtrusted him as his solicitor.One of the partnersmisapplied the resp’s money. The aop seek to beexempted from liability on the ground that he wasnot a “partner”
Held: Mr.L is a partner because he allow therepresentation to be made. L had held andsuffered himself to be represented as apartner. The heading of the note paper isconclusive upon this point. Secondly, theclient gave credit in that he entrusted the firmand thirdly, there is evidence that the clientgave the credit because he believe that Mr.Lwhom he entrusted is a partner.
It is sufficient if the representation iscommunicated to the creditor by a third party.– Martyn v Gray(1863) Not necessary for the third party to make aninquiry to ascertain whether a person is apartner or not, unless in suspicious situation- Bunny Pty Ltd v Atkins
Proviso:When there is holding out by the continueduse of a partner’s name (who had died), hisexecutors will not be liable for any contractafter his death.Note: Under Sec 16 a person will be liable as apartner in that particular transaction only.
Sec 19(1) – Incoming Partner Liable for transactions entered by thefirm AFTER becomes a partner Not liable for those transactions beforehe becomes a partnerCase: Court v Berlin
Sec 19(2) – Outgoing partner A retired partner will still be liable fordebts incurred before his retirement, But not liable for those incurred after hisretirement.
Sec 19(3) - Novation An agreement between a retiredpartner, other partners and creditors todischarge the liability of the retiredpartner. Such agreement can be express orinferred by conduct.
Notice –Sec 38(1) Actual notice of retirement should be given toall customer – Sec 38(1) Non customer, notice in the gazette would besufficient – Sec 38(2)Cases: Tan Sin Moh v Lebel LtdTan Boon Cheo v Ho Hong Bank LtdPhilip Singapore Pty LtdJemco Sdn Bhd v Andrew
Tan Boon Cheo v Ho Hong BankLtdPrichard J: Dormant partners who retire, no need notice Previous customer- entitle for a more specificnotice. When a known partner retires or apartnership dissolve – notice to the world byadvertisement and to old customers byspecial communication
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