Part v of partnership act 1961


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Dissolution of Partnership in Malaysia

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Part v of partnership act 1961

  2. 2. The matters regarding dissolution of the partnership and its consequences are governed in the Part V of our Partnership Act 1961.  There are about eight (8), distinct conditions that can cause the particular partnership to be dissolved: 
  3. 3. Partners are at liberty to fix the duration of the partnership. Where no fixed term has been agreed upon for the duration of partnership, any partners may terminate the partnership at any time given on giving notice of his intention to do so to all the other partners-Section 28 (1). 2. By operation of law.  Expiration. Section 34 (1) (a), 34 (1) (b)  Notice. Section 34 (1) (c), 34 (2) 1.
  4. 4. 3. The partnership can be dissolve by the existing agreement made between them beforehand. The partnership can be terminated on the expiry of the period stipulated or they also can dissolve the partnership at any time even before the expiry period, provided that the partners are mutually agree on that.
  5. 5. Death or bankruptcy. Partnership is dissolve upon the death or bankrupt of any partners. Refer yourself to Section 35 of Partnership Act. 5. In section 35 (2), the other partners have the option to dissolve the partnership when a partners suffers his share of the partnership property to be charged with payment of his personal debt. 4.
  6. 6. 6. Section 36. If an event occurs which make sit unlawful for the business of the firm to be carried on or for the members of the firm to carry on in partnership. 7. The partnership also can be dissolve by the order of the court. However, this method can only be resorted by the partners in 6 situations:
  7. 7. Sec 37 (a), partners mental incapacity. The mental capacity must be permanent and the that particular partner must incapable to manage his property and affairs.  Sec 37 (b), partner’s physical incapacity. Case: Whitwell v Arthur. In this case, the partner has suffered a condition of paralyzed for some months. However, by the time the case arrived at the Court, the partner has healed from that condition. The Court reject the application to dissolve the partnership.  Sec 37 (c), partners found guilty of misconduct. The misconduct must affected the conduct of the business. Moral misconduct, however usually cannot be a strong ground unless it can be seen as affected the business. Case: Snow v Milford. In this case, the partner has involved into a massive adultery in the area of Exeter. The court held that, the ground is insufficient to grant the order of dissolution under this Section. 
  8. 8. Sec 37 (d), breach of the agreement. This section can only be invoked by virtue of the words ‘virtually’ and ‘willfully’ under this section which means that the breach must be a serious one and resulted to the damages to the business or the firm itself. If a breach is a minor one and does not resulted to the damage to either business or the firm, the Court is reluctant to grant the order of the dissolvent.  Sec 37 (e), if the business can only be carried on at loss, the firm can petitioned of dissolvent of the partnership to the CT. This can be traced back by the objective of the partnership is being established under the section 5(1) of PA 1961.  Sec 37 (f), the court can order for the dissolvent of the partnership if it just and equitable to do so. Case: Yenidje Tobacco Ltd 2 Ch 426. The deadlock between the partners of the firm in regards to the status of their company makes the Court ordered the firm to be dissolved. Based on my opinion, the Court has fully discretion on this section to grant the order of dissolvent under the notion of justice and equity. 
  9. 9. References:  7/partnership-law-346.html 