C.

Kin@aikolian
Company 2 ~ 06/07
COMPANY LAW 2
RELATION OF PARTNERS/
FIRM WITH THE THIRD PARTIES
Part II of Partnership Act 1961 covered the nature in determining what the partnership
all about is.
- Section 3 > Determines what is partner.
> 3 essential elements must eisted
a. Relation between persons
b. Carrying on business in common
c. View of profit
- Section 4 > when person not prima facie as partners and circumstance.
Part III of Partnership Act 1961 covered the relation between partners to other persons
dealing with them and the liabilit! hold b! the partners towards the third parties.
LIABILITY OF FIRM TOWARDS A PARTNERS ACTION
"t is based on the Law of Aenc!.
#nder the law of agenc!$ the principal will be liable for an! action of the agent$ which is
committed within the authorit! given under the agenc! agreement or relationship.
- %he principle is applied on the liabilit! of the firm upon acts done b! the partners
towards third parties.
- %he principles laid down that an! acts done b! the agents in the capacit! of their
dut! will cause the principal liable on such acts &negligence or misconduct' or also
(nown as relation between "Princi#a$ an% Aent&$ "Ma'ter an% Ser(ant
)(icario*' $ia+i$it!,&.
Fir-' &As principal consist of the partners'
)Aenc! Princi#$e', ) Principles a. Between Firm & Partners
#nder *aw of Agenc! b. Between Partner & Another
Partner' &As an agent A. B. C. D + E'
"t will involve the third parties in carr!ing common business.
- A,s act in bu!ing musical instruments within the capacit! of the firm. An!thing
happen upon default b! A$ all partners will be liable.
- "t,s called unlimited liabilit!.
- Doesn,t matter about consent b! other partners or whatever reasons.
- "n professional carr!ing business dut! of care strictl! applies.
- %his to protect the public interest at large.
1
C.Kin@aikolian
Company 2 ~ 06/07
A/T0ORITY OF A PARTNER
#nder the *aw of Agent$ there are three wa!s in which an agent &or partner' can have
this authorit!. Authorit! of the partner can be divided into three-
i. Act*a$ or E1#re''
ii. I-#$ie% or /'*a$
iii. A##arent or O'ten'i+$e
Act*a$ or E1#re'' A*t2orit!
"t is simpl! means that an agent ma! bind his principal to an! act$ which is epressl!
authorised b! his principal to do. %hus for eample$ is a principal authorising an agent to
bu! ). Proton Perdana cars and the agent do so the principal will be bound b! the
contract/ 0hat is epressl! stated/
- 1! the principal
- 1! the partnership agreement
I-#$ie% or /'*a$ A*t2orit!
"t,s arises from the nature of partnership business. "t is the authorit!$ which arises from
the status of the particular t!pe of agent involved. "f an agent does an act which the 3
rd
part! would regard as a normal thing for the t!pe of agent to do then the principal will
bound b! it. "n Rosenboum v Belson$ it was held that instruction from an owner of a
house to an agent to sell the propert! and to be paid a commission on the purchase price
accepted was authorit! to agent to ma(e a binding contract including authorit! to sign an
agreement of sale.
A##arent or O'ten'i+$e A*t2orit!
"t,s arises when where the principal has held out the agent as having authorit! to do
particular thing that the 3
rd
part! relies on the representation. %here has been
representation b! words or conduct b! the partners.
"n Sithambaran Chetty & rs v !op !ing & rs" was illustrated the principal of
2ostensible principal3. 0hereb!$ two persons established in 19)) a business in Penang
for the sale of medicated wines. %heir connection with the business was not made public
and the! too( no part in carr!ing it on. %he! entrusted its entire control to two managers$
the second defendant and one 4 and there was nothing in the circumstances to ma(e it
appear to those dealing with the firm that the managers were not partners or proprietors.
%he second defendant borrowed mone! from the plaintiff in the three actions upon
promissor! notes drawn in the name of the firm and absconded. "t was held that$
whatever was the real position of the second defendant$ the ac(nowledge partner did
allow him to carr! on a particular business as an ostensible principal$ and therefore$
clothed him ever! authorit! incidental to a principal in the business and therefore the
defendant was liable.
)
C.Kin@aikolian
Company 2 ~ 06/07
SECTION 3 4 POWER OF PARTNER TO BIND FIRM
%here are two limbs where the first will cause the partners5firm liable and the second
limb is an eception which partners5firm will not liable. %his section has bigger scopes
than the *aw of Agent,s principles.
5
't
$i-+
%he first limb should be read together Section 6 &using firm instruments' and Section 7
&credit on the firm,s name'
T2ere are 8 factor' in(o$(e' w2ic2 fir- wi$$ +e $ia+$e9
Fir't factor: T2e Act -*'t +e %one for t2e #*r#o'e of t2e +*'ine''
&6eans act of the partner will bind the firm liable'
4ase- sman !#. $ohama% &sop v Chan 'ang Siew
%he act must be an act for carr!ing on business in the usual wa!.
"n this case a firm st!led 2%he 7ederal %rading 4o3. 7irm consisted of three
4hinese partners who managed it and three 6ala!s who too( no part in the
management. %he three managing partners borrowed from a mone!lender for the
business of the firm and 4 guaranteed the loan. %he mone!lender sued for his
debt and the firm failing to pa! him$ 4 paid the debt and then sued all si partners
for the amount thus paid on their behalf. 7ive admitted liabilit! but the third
defendant$ the appellant$ contested the claim.
%he 4ourt of Appeal held that there was sufficient evidence upon the face of the
promissor! note that it was the note of the firm and not merel! of the three
partners who signed it. %here was an obligation on the firm to repa! to the
plaintiff the mone! paid to discharge the debts of the firm. %he pa!ment to the
mone!lender being an act lawfull! done for the firm$ the firm was bound to ma(e
compensation to the plaintiff.
Secon% factor: T2e Act -*'t +e an act for carr!in on +*'ine'' in t2e *'*a$ wa!
4ase- $ercantile Cre%it Co lt% v (arro%
"n this case Par(in was the active and 8arrod the dormant partner in a business
mainl! concerned with the letting of loc(-up garages and repairing cars. %he
partnership agreement prohibited the bu!ing and selling of cars but Par(in$
without an! epress authorit!$ sold a car to the credit compan! so that it could be
let on a hire-purchase contract to a customer. "t then appeared that Par(in did not
own the car and the compan! claimed the 9.. pounds paid for it from 8arrod.
"n appl!ing the e:uivalent of ;ection 9 of the Partnership Act 1961$ 6ocatta <.
said$ 2Par(in did have implied authorit! to sell the car. " must have regard in
deciding this matter to what was apparent to the outside world in general= to the
facts relevant to business of a li(e (ind to that of the business of this partnership
so far as it appeared to the outside world3.
3
C.Kin@aikolian
Company 2 ~ 06/07
4ase- Pol)inghorne v !ollan%
6r. >olland was a partner in a solicitor firm. >e was also a director in a
compan!. ?ne of the firm,s clients$ 6rs. Pol(inghorne see(s 6r. >olland,s
advice on certain information relating to investment in a particular compan!.
4ourt held- Although investment anal!sis was not part of the firm,s &solicitor'
business$ when a solicitor is approached for en:uiries and competent advice. >is
failure to provide this was related to the business of the firm. @on-trading
compan! ma! give advice if the client see(s partner,s advice or legal opinion.
;uch act is usual wa! carr! on in common business as legal firm therefore an!
wrong acts will cause the firm,s liable.
W2at i' *'*a$ %e#en%' on w2et2er it i' tra%in +*'ine'' or non4tra%in +*'ine''
Tra%in
!iggins v Beauchamp
2"s one which depends on buying an%
selling goods3.
#sual authorit! in trading- 4ontract debts$
borrow mone! and emplo! staff etc.
4ase- Chettinan% ban) v Chop !aw *ee
Non4tra%in
@ature of wor( is a%visory$ e.g. firm of
professionals.
#sual authorit! in non-trading-
consultation$ emplo!ment of staff
4ases- !iggins v Beauchamp
$arsh v +oseph
4ase- Sithambaran Chetty & rs v !op !ing & rs
"n this case illustrates the principal of 2ostensible principal3. 0hereb!$ two
persons established in 19)) a business in Penang for the sale of medicated wines.
%heir connection with the business was not made public and the! too( no part in
carr!ing it on. %he! entrusted its entire control to two managers$ the second
defendant and one 4 and there was nothing in the circumstances to ma(e it
appear to those dealing with the firm that the managers were not partners or
proprietors. %he second defendant borrowed mone! from the plaintiff in the three
actions upon promissor! notes drawn in the name of the firm and absconded.
Prichard <. held that whatever was the real position of the second defendant$ the
ac(nowledge partner did allow him to carr! on a particular business as an
ostensible principal$ and therefore$ clothed him ever! authorit! incidental to a
principal in the business and therefore the defendant was liable.
4ase- Chan 'ing ,ue v *ee & -ong
%he firm run the business of electrical engineering. Plaintiff,s husband was one
of the partners in the Defendant,s firm. Defendant borrowed some mone! from
the Plaintiff for the firm,s proAects because the firm having mone! difficulties.
>owever$ there is no proAect done b! the Defendant and Plaintiff sued the firm.
All partners contended that firm is not liable because Defendant has no authorit!
to borrow mone! from the Plaintiff on behalf of the firm.
>eld- 1orrowing was an act necessar! for the carr!ing on of the partnership
business. %hus the other partners were bound.
B
C.Kin@aikolian
Company 2 ~ 06/07
8
n%
$i-+
An e1ce#tion in w2ic2 fir- wi$$ not +e $ia+$e o(er #artner' act'9
a. "f partner has no authorit!.
b. %he 3
rd
part! (now that the partner has no authorit! but still entered into
transactions.
c. %he 3
rd
part! (now the! are not partners.
d. %he 3
rd
part! either does or does not (now or believe a person to be a partner.
IMPORTANT NOTE
Sec9 3
5
't
Li-+
0ould be applied together :
Sec9 6 &instruments used' +
Sec9 7 &credits or debts'
%o find the partner & non.partner
liability.
Sec9 3
8
n%
Li-+
0ould be applied together -
Sec9 5; &restriction on power'
%o find the partner & non.partner
liability.
SECTION 6 4 PARTNER BO/ND BY ACTS ON BE0ALF OF FIRM
&Celate to Section 3 to find the firm,s liabilit!'
An act or deal with instrument use relating to the business of the firm or eecuted in the
firm,s name or an! other manner showing an intention to bind the firm$ b! an! person
authorised whether a partner or not is binding on the firm and all the partners.
An act of a partner will bind the firm5partners-
- Celates to the partnership business$
- Dntered in the firm,s name or showing an intention to bind the firm
- Done b! partner or non-partner &authoriEed' F means even a person not a partner
but presented the firm$ therefore$ firm will be liable.
- 7irm,s will be bound b! the act of non-partners
- "nstruments ma! in the form of i.e. using firm letter head$ receipt$ an! documents
either b! the emplo!ee$ relative$ friend$ stranger etc.
4ase- Re Briggs
A two partner firm of father and son were being pressed b! creditor. %he son
agreed to assign the boo( debts &mone! owed to the firm' to the creditor in order
to pla! for time. 7ather (new nothing about this. %he deed of assignment stated
that it was to be made between 2R.B.Briggs an% !.R.Briggs/ tra%ing un%er the
style or firm of Briggs & Co.3 but the father,s named was forged b! the son. %he
issue is whether the father was liable on this deed/
%he court applied the e:uivalent of Section 6 of the PA 1961 since it related to
the business of the firm and was done in a manner showing an intention to bind
the firm and eecuted b! a partner.
G
C.Kin@aikolian
Company 2 ~ 06/07
SECTION 7 4 PARTNER /SIN< CREDIT OF FIRM FOR PRI=ATE P/RPOSE
&Celate to Section 3 to find the firm,s liabilit!'
A partner who deals with a firm can onl! ma(e firm liable for that debts if partner with
whom he dealt had authorit! to contract it. 7or implied authorit! to eist the act must
relate to the business of the firm otherwise firm will not be liable.
i.e. 0hen a partner used the firm,s credit for a purpose not connected with the firm,s
ordinar! course of business or private purpose the partner is said personall! liable
/NLESS speciall! authorised to do so.
4ase- Chan 'ing ,ue v *ee & -ong
7irm run the business of electrical engineering. Defendant,s borrowing from
Plaintiff. >eld that borrows such mone! was an act necessar! for the carr!ing on
of the partnership business. %hus the other partners were bound.
4ase- sman !#. $ohama% &sop v Chan 'ang Siew
7irm st!led 2%he 7ederal %rading 4o3 consisted of 3 4hinese partners who
managed it and 3 6ala!s who too( no part in the management. %he 3 managing
partners borrowed from a mone!lender for the business of the firm and 4
guaranteed the loan. %he mone!lender sued for his debt and the firm failing to
pa! him$ 4 paid the debt and then sued all si partners for the amount thus paid
on their behalf. 7ive admitted liabilit! but the third partner &defendant' contended
the claim.
%he 4ourt of Appeal held that there was sufficient evidence act is for the purpose
of the firm and not merel! of the 3 partners who signed it. %herefore$ there was
an obligation on the firm to repa! the mone! to discharge the debts of the firm.
%he pa!ment to the mone!lender being an act lawfull! done for the firm$ the firm
was bound to ma(e compensation to the plaintiff.
SECTION 5; 4 EFFECT OF T0E NOTICE T0AT FIRM WILL NOT BE BO/ND
BY ACTS OF PARTNER
Deal with restrictions.
0hen there is a restriction on the power of partners to bind the firm and the third part!
has notice about that restriction$ the act done will not bind the firm.
- 6eans up to such limitation of power$ ever! acts of the partner must have consent
from the partners.
- %here is -*'t 2a(e a notice to t2e 3
r%
#art! otherwise firm will liable.
- Cead together with Section 3 > 5
't
$i-+ then 8
n%
$i-+ and loo( to Section 5;
- Proviso > 5
't
$i-+ of Sec9 3 read together Sec9 6 and Sec9 7 F to find firm,s
$ia+i$it!.
- Proviso > 8
n%
$i-+ of Sec9 3 read together Sec9 5; F to find the re'triction.
4ase- (alway v $atthew
4ase- $ercantile Cre%it Co *t% v (arro%
6ocatta <. said$ 2Par(in did have implied authorit! to sell the car. 0hat was
apparent to the outside world in general= the fact is relevant to business of a li(e
(ind to that of the business of this partnership so far as it appeared to the outside
world3.
6
C.Kin@aikolian
Company 2 ~ 06/07
SECTION 55 > LIABILITY OF PARTNER
&Celate to Section 3. 6. 7 ? 5; to find the firm,s liabilit!'
- %his section deal with liabilit! in contracts and debts
- Act can be ta(en against all partners as along as the! were still in partners.
- >owever$ if action has been ta(en over 3 out of B partners who are apparent then
later discovered there is one more partner in somewhere else thus some action against
the left partner cannot be ta(en with same cause of action.
- "t could be referred to Sec9 3$ Sec9 6$ Sec9 7$ + Sec9 5; to find the partner
liabilit!.
Fir't $i-+- @OINT LIABILITY
Dver! partner is liable Aointl! with the other partners for all debts and
obligations of the firm incurred while he is a partner.
4ase- 'en%all v !amilton
A creditor sued all the obvious members of a partnership and was
awarded Audgement against them. >e failed to recover the debts in
full. >e subse:uentl! discovered a wealth! dormant partner whom
he sought to sue for the balance of the debt. %he >ouse of *ords
decided that since the debt was a Aoint onl! one$ b! suing the
apparent partners the creditor elected to sue onl! them and could
not commence fresh proceedings against the other partner.
Note- %he third part! onl! has one action against the firm. Action to one partner is a
bar to other partner F see (uinness Anchor $ar)eting
4ase- (uinness Anchor $ar)eting S0B
%he essence of Aoint liabilit! under Sec 55 is that if a Audgement is
obtained against a partner in the partnership for debt owed b! the
partnership and the Audgment remains unsatisfied because of the
partner,s ban(ruptc! or otherwise$ an! other partner who has not
been sued in the first instance cannot then be sued in a subse:uent
proceeding. A Aoint liabilit! essentiall! means that there is onl!
one cause of action for the recover! of debt.
Secon% $i-+- SE=ERAL LIABILITY
- Cefers to action ta(en against the estate of a person who was a partner
when the debt was incurred.
- "t is more on personal liabilit! or action against particular partner
which relief another partner.
- "t,s happened due to the death or retirement of the partner.
- Sec9 55 provides that ever! partner is liable Aointl! with the other
partners for all debts and obligations of the firm incurred while he is
partner. %his in effect creates the unlimited liabilit! of a partner.
- Sec9 55 also deal on$! wit2 %e+t' an% o+$iation of a contractual
nature$ the liabilit! of partners for torts and other wrongs is Aoint and
several as provided b! Sect9 54 of PA 1961.
9
C.Kin@aikolian
Company 2 ~ 06/07
4ase- Re 1oetsch
2A creditor ma! proceed with the estate of the dead partner
without showing that the surviving partner is insolvent and p5ship
propert!. "t,s was insufficient to pa! p5ship debt.3
)I-#ortant, 4ase- Bagel v $iller
7irm contracted to bu! various shipments of goods. ?ne of the
partners died before all the goods full! delivered. "t was held that
the deceased,s partner estate was onl! severall! liable for deliver!
of goods before his death and not the deliver! after his death.
%herefore$ 2action succee%e% in respect of the goo%s %elivere%
before $iller2s %eath an% not after his %eath3 1! virtue of ;ec.
). of the ;ale + 8oods Act$ stated that liabilit! to ma(e pa!ment
for the goods eists at the time of deliver!.
Dample- C$ai- +a$ance of %e+t' *#on %ecea'e% #artner e'tate
P/ 3/ R
&S died'
Are partners and Aointl! liable Debts C6 1..$ .... ..
Paid onl! C6 H.$ .... ..
1alance C6 ).$ .... ..
S ;everall! liable 4ontributes after personal debts
deducted
>old C6 G.$ .... ..
Debts C6 B.$ .... ..
1alance C6 1.$ .... ..
S Practice S onl! can contribute
C6 1.$ .... ..
@ot all C6 ).$ .... ..
4reditor Debt 4reditor ma! onl! get
C6 1.$ ...... out of
C6 ).$ .... .. from S.
Dample- Cannot c$ai- *#on 2i%%en #artner
P/ 3/ R Action ta(en over P + 3 Debts C6 1..$ .... ..
Paid onl! C6 H.$ .... ..
1alance C6 ).$ ......
R
&>ide partner'
*ater discovered R eist partner
+ tr! to recovered the balance
4reditor cannot claim from R
because court not allowe% claim
un%er same cause of action.
H
C.Kin@aikolian
Company 2 ~ 06/07
SECTION 58 4 LIABILITY OF FIRM FOR OT0ER WRON<S
&Celate to Section 54 to find the partner both Aointl! + severall! liable'
- Deal with liabilit! for other wrongs such as in negligence$ criminal conduct for
the purpose of partner within the authorit! of the partner.
- %his section need to be read together Sec9 54 where partner would be both Aointl!
and severall! liable.
- An! wronf*$ act or o-i''ion$ which is within A4%#A* or #;#A* authorit!
thus firm$ would be liable.
4ases- *yol% v (race Smith
6ust be borne in mind$ where the fraud is committed$ not onl! upon the
co-partners$ but also upon client of the firm$ the firm is liable if the fraud
was committed in the ordinar! course of its business. An! advice in
connection with that transaction must be imputed to the firm. Darl of
*oreburn eplain the principle is 2if the agent commits the frau%
purporting to act in the course of business such as he was authorise%/
or hel% out as authorise%/ to transact on account of his principal then
the latter may hel% liable for it3.
4ase- !amlyn v !ouston
?ne of the partners was re:uested b! the firm to obtain some important
information about electrical business. %he partner bribed a cler( in
electrical firm and ta(es some confidential information. %hus$ the partner
was committed in tort of inducing breach of contract &tort offence'. 1ribe
with mone!$ which come from the firm account and resulting profits went
to firm account. %he electrical firm sued the other partners under tort.
>eld- Section 58 was applied and firm was liable and partner was acted
within the authorit! and for the purpose of the partnership business.
Although$ his obAects were lawful the fact it,s obtained b! unlawful
means.
SECTION 53 4 MISAPPLICATION OF MONEY A PROPERTY
- 6isapplication of mone! + propert!
- 7ind the 4 limbs in this sectionI
o 5
't
$i-+ once partner receive mone!5propert! within his apparent
authority
Sec 53 )a, - 6one! or propert! received b! a partner acting within the scope of
his apparent authorit! and his misapplies it.
T0E FIRM IS LIABLE FOR T0E LOSSES
4ases- !arman v +ohnson
British !ome Assurance Corporation *t% v Patterson
9
C.Kin@aikolian
Company 2 ~ 06/07
o 8
n%
$i-+ once partner or firm act in actual or implie% authority
Sec 53 )+, F 6one! or propert! received b! the firm in the ordinar! course of
business and the partners misappl! it while it is in the custod!.
T0E FIRM IS LIABLE FOR T0E LOSSES
4ases- Rho%es v $oules
"t,s illustrate the overlapping of the Section' 53 )a, + 53 )+,. "n this case
plaintiff sought to raise mone! b! wa! of mortgage on his propert!. >e
use a solicitor in a firm who had told him that the lender wanted
additional securit! and so be handed the solicitor some share warrants to
bearer. %he solicitor misappropriated them and the plaintiff now sued the
firm under Section 53 of the PA 1961. %he firm was held liable under
both subsections in respect of the same transaction. >owever$ in his
Audgement *ord *indle! clearl! indicated that there ma! be occasions
where a partner who receives the mone!$ when purporting &allege' to act
within the scope of apparent authorit!$ does not receive it in the course of
the firm,s business.
4ases- 5en%ring !un%re% -aterwor)s Co v +ones
"n this case$ the plaintiff,s corporation had appointed 7$ a solicitor
practising on his own account$ to deal with its legal business. ;ome time
later 7 too( P$ the defendant$ into partnership and give notice of this
change to the plaintiff,s manager. >owever$ the manager$ who had
previousl! conducted all the corporations business with 7 ignored the
notice and continued to deal with 7 as if he was still practising on his own
account. "nter alia$ the manager continued to address all correspondence
to 2At(inson + At(inson3$ firm which 7 formerl! practiced and not to
2At(inson + Paterson3.
>eld that$ even though there is misappropriation of mone! b! a partner
belonging to a compan! and partner absconded &escape'$ the firm is not
liable. "t is because 7 was not acting as far as the plaintiff concerned with
apparent authorit! from P$ therefore P not liable as e:uivalent under
;ection 13 of the PA 1961.

SECTION 54 4 LIABILITY FOR WRON<S @OINT ? SE=ERAL
Note: Sec9 58 an% Sec9 53 wo*$% rea% toet2er Sec 54 )@oint$! ? 'e(era$$! $ia+$e,
1.
C.Kin@aikolian
Company 2 ~ 06/07
SECTION 5B 4 IMPROPER EMPLOYEMENT OF TR/ST PROPERTY
FOR PARTNERS0IP P/RPOSES9
0hen a partner is also a trustee &in his personal capacity' + had used the trust mone!
for partnership purposes$ other partners will not be liable.
>owever$ other partners will be liable if-
- 0hen the! have notice of the breach of trust
- %he trust mone! is still in the firm,s possession or traceable.
4ase- 67 parte !eaton
CRIMINAL LIABILITY
- Personal liabilit!
- 7irm not liable$ unless all partners had been a part! to the crime
- 2=a principal will not be liable for offences re:uiring mens rea merel! b! the
fact that his agent had the necessar! mens rea3
4ase- Chung Shin 'ian v PP

SECTION 5C 4 PERSON LIABLE BY "0OLDIN< O/T&
0o$%in o*t
- A person who is not a partner but has been represented as a partner$ he will
become a partner. &Partnership b! estoppels'
4ase- -augh v Carver
2"f he lent his name as a partner$ he becomes against the rest of the world
a partner= upon the principle of general polic!3.
ELEMENTS OF 0OLDIN< O/T
a' Cepresentation
b' Jnowingl! suffers
c' %hird part! has given credit based on such
representation
Re#re'entation
- -or%s spo)en/ -ritten or Con%uct
- 6ade b! - %hat person himself or
- 1! a partner
Dnowin$! '*ffer'
- 6eans (nows about the representation.
11
C.Kin@aikolian
Company 2 ~ 06/07
4ase- Bunny Pty *t% v At)ins
4ase- 5ower Cabinet Co *t% v "ngram
4ase- Bunny Pty *t% v At)ins
;ochall <=he was apparentl! named as one of the member of the firm$ he
did nothing to ensure the communication to the plaintiff of an! denial b!
him of his ostensible$ such conduct amounted either to (nowingl!
allowing himself to be held out as a partner.
4ase- 5ower Cabinet Co *t% v "ngram
>eld- Defendant was not liable because he had not 2(nowingl! suffered3
himself to be represented as a partner. %he fact that he might be careless
or negligent for not destro!ing all the old notepaper was not sufficient to
hold him to be K(nowingl! suffered,.
T2e t2ir% #art! 2a' i(en cre%it +a'e% on '*c2 re#re'entation
4ase- *ynch v Stiff
Sec 54 o#erate'-
i. ==. =
ii. 0here another person has given credit to the firm on the faith of
such representation.
"t was held that ;tiff can sue *!nch if it can be showed that there was
reliance on the representation.
4ase- $artyn v (ray &1H63'
"t is sufficient if the representation is communicated to the creditor b! a
third part!.
4ase- Bunny Pty *t% v At)ins
@ot necessar! for the third part! to ma(e an in:uir! to ascertain whether a
person is a partner or not$ unless in suspicious situation.
Pro(i'o:
0hen there is holding out b! the continued use of a partner,s name &who had died'$
his eecutors will not be liable for an! contract after his death.
@ote- #nder Sec 5C a person will be liable as a partner in that particular transaction
onl!.
1)
C.Kin@aikolian
Company 2 ~ 06/07
SECTION 57 > LIABILITY OF INCOMIN< ? O/T<OIN< PARTNERS
SECTION 57 )5, > INCOMIN< PARTNERS
- *iable for transactions entered b! the firm A7%DC becomes a partner
- @ot liable for those transactions before he becomes a partner
4ase- Court v Berlin
SECTION 57 )8, 4 O/T<OIN< PARTNER
- A retired partner will still be liable for debts incurred before his retirement$
- 1ut not liable for those incurred after his retirement.
SECTION 57 )3, > NO=ATION
- An agreement between a retired partner$ other partners and creditors to discharge
the liabilit! of the retired partner.
- ;uch agreement can be epress or inferred b! conduct.
SECTION 36 )5, OF T0E PARTNERS0IP ACT 57C5
@otice
- Actual notice of retirement should be given to all customer F Sec9 36 )5,
- @on customer$ notice in the gaEette would be sufficient F Sec9 36 )8,
4ases- 5an Sin $oh v *ebel *t%
5an Boon Cheo v !o !ong Ban) *t%
Philip Singapore Pty *t%
+emco S%n Bh% v An%rew
5an Boon Cheo v !o !ong Bam) *t%
Prichard J-
- Dormant partners who retire$ no need notice
- Previous customer F entitle for a more specific notice.
- 0hen a (nown partner retires or a partnership dissolves F notice to the world b!
advertisement and to old customers b! special communication.
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