SEMESTER I, 2004/2005 SESSION
AHMAD IBRAHIM KULLIYYAH OF LAWS
Programme : Bachelor of Laws Level of : Third
Reading Time : 9.00 a.m. – 9.15 a.m. Date : 17.10.2004
Duration : ( 15 minutes )
Answering Time : 9.15 a.m. – 12.15 p.m. Section(s) : All Sections
Duration ( 3 hours )
Course Title : Company Law I Course Code : LAW 3210
This Question Paper Consists of 9 Printed Pages With 6 Questions in 2 Parts: Part A
and Part B.
INSTRUCTIONS TO CANDIDATES
DO NOT OPEN UNTIL YOU ARE ASKED TO DO SO.
Answer FOUR (4) questions only, at least ONE (1) from each part.
Partnership Act 1961
Companies Act 1965
Any form of cheating or attempt to cheat is a serious
offence which may lead to dismissal
Statutes should be free from any form of annotation.
(a) Amat and Amit were close friends ever since their university days in the IIUM law
faculty. After working for a few years as legal assistants in various firms, they
decided to start their own private practice as Messrs Amat and Amit. Due to the
increasing workload in the firm, Messrs Amat and Amit started to employ legal
assistants. One of the legal assistants was Atun, who had been very competent and
diligent. After a few years, Amat and Amit invited Atun to join them as a salaried
partner. According to the terms of the agreement, Atun was to receive a monthly
salary of RM5000 plus 5% of the profits of the practice. All went well until Atun
got married and started to frequently miss work due to logistic problems when she
moved out of town to her husband’s place. After 6 months, Amat and Amit decided
to dismiss Atun from the firm by giving a notice of termination of employment.
Atun argued that she was a partner, and could not be expelled by notice of
termination of employment. Amat and Amit argued Atun was never a partner but a
mere employee. From the facts, it was found that the firm had all the while been
paying EPF (employees provident fund) contributions for Atun ever since she
joined the firm as a legal assistant.
Discuss. Support your answer with relevant provisions in the Partnership Act 1961
and case law.
(b) “ …it is for the partners to determine by agreement amongst themselves what shall
be the property of the firm, and what shall be the separate property of one or more
of them. If there is no express agreement, attention must be paid to the source
where the property was obtained, the purpose for which it was acquired, and the
mode in which it has been dealt with… Again, it by no means follows that property
used by all the partners for partnership purpose is partnership property.”
- Suffian LP in N.B. Menon v Abdullah Kutty  2 MLJ 159, at p.160.
Discuss the above statement and support your answer with relevant provisions of
the Partnership Act 1961 and cases law.
(a) “Good faith requires that a partner shall not obtain a private advantage at the
expense of the firm. He is bound in all transactions affecting the partnership,
to do his best for the common body and to share with the co-partners any
benefit which he may have been able to obtain from other people and in
which the firm is in honour and conscience to participate…”
- Lord Lindley in Law of Partnership at p.337.
Discuss the above statement with reference to the Partnership Act 1961 and case
(b) Nani, Nana and Lani were partners in a construction firm. They agreed to contribute
to the capital and share the liabilities equally. However, the partnership agreement
expressly stated that Nani shall receive the first 40% of the net profits and both
Nana and Lani will share the balance.
Nani has always been the firm’s representative for big government projects because
of her family connection with a leading politician. In all these projects she normally
obtained additional commissions for concluded deals. The other partners were not
informed about the commissions.
In February 2002, Nana became a guarantor for a loan taken by the firm from ABC
bank. The loan was for the purpose of renovation of the office of the firm. By
November 2003, the Nana was asked by ABC bank for repayment of the balance of
the loan amounting to RM15,000 as the guarantor. Nana paid for the amount and
sought to claim a reimbursement from the other partners. The others denied
Discuss. Support with relevant provisions in the Partnership Act 1961 and case
Nan, Min and Bun are good friends since their childhood days. In January 2003, they set
up a small catering business under the name “Home Recipes”. They agreed to share the
profits, losses and liabilities of the business in equal proportion.
In March 2003, Nan bought kitchen utensils from GB Cutleries worth RM 5,000. Nan
paid the bill but the receipt was issued under the firm’s name.
In April 2003, Min entered into a contract of loan for RM 30,000 with Mr. Baik. The
money was credited in the firm’s account but Min took RM 5,000 from that amount and
used it to pay deposit for his new motorcycle. The balance of RM 25,000 were used to
pay the firm’s debts.
In May 2003, Bun attended a dinner held by his uncle, Mr. Rich who is a politician and a
successful business man. During a conversation with Mr. Dan, Mr. Rich introduced Bun
to Mr. Dan and started talking about Bun’s catering business. Mr. Rich even told Mr. Dan
that he is a partner of Bun’s firm. Bun smiled pleasantly when his uncle made that
statement as it gave a boost to his business. Believing in Mr. Rich’s statement, Mr. Dan
invested RM 20,000 in Bun’s firm.
(a) In October 2003, the firm received a claim from Mr. Baik for payment of the RM
30,000 loan. Nan and Bun refused to pay for the loan and claimed that the firm was
not responsible for the loan as Min had no authority to enter into any transaction
above RM 10,000. They also claimed that the loan was Min’s personal debt as he
used some of the money for personal purposes.
Advise Mr. Baik.
(b) Recently, the firm and Mr. Rich received a letter from Mr. Dan’s lawyer claiming
for damages for the loss suffered from the investment in the firm (Home Recipes).
Discuss the liabilities of the firm and Mr. Rich for the damages claimed by Mr. Dan
for his loss of investment in the firm.
(c) Meanwhile, Nan became furious with his two other partners when they refused to
pay the amount he paid for the kitchen utensils amounting to RM 5000. Discuss
whether the firm is liable for the transaction.
(a) Al and Ana were husband and wife. They set up a small business selling health
products. After five years of doing business, they decided to form a partnership and
invited Ms. Soo to become their partner. The partnership agreement clearly stated
that the firm shall not be dissolved unless with the consent of all partners. The
business flourished but a big problem occurred in the management of the firm when
Al and Ana started to have marital problems. The situation worsened when Al
decided to divorce Ana. Ana gave a notice to dissolve the firm to her two other
partners but both Al and Ms. Soo refused to accept the notice. They also claimed
that Ana has no right to dissolve the firm by notice.
Advice Ana on her right to dissolve the firm.
(b) When does a partnership for a fixed term become a partnership at will?
Discuss with reference to the Partnership Act 1961 and relevant case law.
(a) On 1st
February, 2004 Malik entered into a contract with Dagang Sdn. Bhd. to sell
100 tons of palm oil. The contract was made by Malik on behalf of Murni Sdn.
Bhd., a company that was incorporated on 3rd
April 2004. In March 2004, the price
for palm oil fell by 5 per cent. The delivery of the palm oil was made in May 2004.
Dagang Sdn. Bhd. however, refused to honour the contract and preferred to buy the
product from other companies that offer cheaper prices. Dagang Sdn. Bhd. claimed
that Murni Sdn. Bhd. could not enforce the contract as the company was not in
existence when the contract was concluded.
(b) “The Articles of Association of a company may freely be altered or added, subject
to the Companies Act 1965. There are, however, restrictions on company’s ability
to amend its articles”.
With reference to the above statement, discuss the restrictions in alteration of
articles. Refer to decided cases.
“The principle of separate legal personality of companies as expounded in Salomon’s
case operates as a screen or ‘veil’ between the company as a legal person and its
shareholders. This principle, however, is subject to certain exceptions. The courts have
not formulated any general test for the lifting of the corporate veil”.
(Krishnan Arjunan, Company Law in Malaysia Cases and Commentary, (1998) MLJ at
With reference to the above statement, discuss the doctrine of separate legal personality
and the exceptions.