Law of Partnership

Question 1

A partnership is defined as “the relation which subsists between persons carrying on a business with a common view to profit”

Answer 1

Section 3(1) Partnership Act 1961

Question 2

Section 2 Partnership Act 1961

Answer 2

Business includes every trade, occupation or profession that the parties must agree

Question 3

_________ provides “every partner is an agent for the firm and other partners for the business of partnership”.

Answer 3

S 7 Partnership Act 1961

Question 4

S 7 Partnership Act 1961 supporting case is ____

Answer 4

Chan King Yue v Lee & Wong

Question 5

S 11 Partnership Act 1961 supporting case

Answer 5

Osman b.Haji Mohamed Usop v Chang Kang Swi

Question 6

Any partner who commits criminal offences shall be personally liable. Other partners shall not be liable unless there is evidence.

Answer 6

Chung Shin Kian & Anor v Pendakwaraya

Question 7

All the partners are entitled to share equally in the capital and profits of the business and must contribute equally towards the losses

Answer 7

S 26 (a) Partnership Act 1961

Question 8

The firm must indemnify every partner in respect of payments made and personal liabilities incurred by him

Answer 8

S 26 (b) Partnership Act 1961

Question 9

A partner is not entitled, before the ascertainment of profits, to interest on the capital subscribed by him

Answer 9

S 26 (d) Partnership Act 1961

Question 10

Any difference arising as to ordinary matters connected with the partnership business may be decided by :

Answer 10

a majority of the partners

Question 11

S 30 Partnership Act 1961 supporting case

Answer 11

Law v Law

Question 12

_____________ every partner who uses partnership property, name or business connection, must be done with the consent from all parties.

Answer 12

S 31 Partnership Act 1961

Question 13

__________ the obligation of a partner not to compete with the firm in the business of the same nature without the consent of the other partners

Answer 13

S 32 Partnership Act 1961

Question 14

Dissolution by bankruptcy or death

Answer 14

S35 Partnership Act 1961

Question 15

S34 Partnership Act 1961

Answer 15

Dissolution by expiration or notice

Question 16

When will be a dissolution by Court?

Answer 16

• When a partner is found lunatic
• When a partner becomes permanently incapable of performing his part of the partnership contract:
• When a partner has been found guilty in a court for criminal offences
• Where the business is carried on a loss.

Question 17

Difference between LLP and general partnership

Answer 17

• In a general partnership, partners are jointly liable for all business debts and obligations.
• But in LLP it offers a limited liability to its partners whereby any debts and obligations of the LLP will be borne by the assets of the LLP.

Question 18

Difference between LLP and a company

Answer 18

No issuance of shares
– Flexibility in making decisions
– No formal requirement for Annual General Meetings
– No requirement to submit financial statements to SSM
– Accounts need not be audited

Question 19

Advantages of LLP:

Answer 19

Separate legal personality.
Perpetual succession
Any changes about the partners will not affect the rights and liabilities of the LLP.

Question 20

Disadvantage of LLP

Answer 20

1. Requires a minimum of 2 partners at all times.
2. Difficult to transfer ownership, must go thru SSM.
3. No corporate tax exemption