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What Is Law Partnership

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Submitted By krishveni
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What is Law of Partnership?
A partnership is a for-profit business association of two or more persons. Because the business component is defined broadly by state laws and because "persons" can include individuals, groups of individuals, companies, and corporations, partnerships are highly adaptable in form and vary in complexity. Each partner shares directly in the organization's profits and shares control of the business operation. The consequence of this profit sharing is that partners are jointly and independently liable for the partnership's debts.
According to Section (2) the relation between members of any company or association
Which is—
(a) Registered as a company under the Companies Act 1965 [Act 125] or as a co-operative society under any written Law relating to co-operative societies; or

(b) Formed or incorporated by or in pursuance of—
(i) Any other law having effect in Malaysia or any part thereof; or
(ii) Any letters patent, Royal Charter or Act of the Parliament of the United Kingdom
RULES FOR DETERMINING EXISTENCE OF PARTNERSHIP
According to section ( 2 ) In determining whether a partnership does or does not exist, regard shall be had to the following rules-

(1) Joint tenancy, tenancy in common, joint property, common property, or part ownership does not of itself create a partnership as to anything so held or owned, whether the tenants or owners do or do not share any profits made by the use thereof.

(2) The sharing of gross returns does not of itself create a partnership, whether the persons sharing such returns have or have not a joint or common right or interest in any property from which or from the use of which the returns are derived.

(3) The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but the receipt of such a share, or of a payment contingent on or varying with the profits of a business, does not of itself make him a partner in the business; and in particular-

(a) The receipt by a person of a debt or other liquidated amount by instalments, or otherwise out of the accruing profits of a business does not of itself make him a partner in the business or liable as such

(b) A contract for the remuneration of a servant or agent of a person engaged in a business by a share of the profits of the business does not of itself make the servant or agent a partner in the business or liable as such

(c) A person being the widow or child of a deceased partner, and receiving by way of annuity a portion of the profits made in the business in which the deceased person was a partner, is not by reason only of such receipt a partner in the business or liable as such

(d) The advance of money by way of loan to a person engaged or about to engage in any business on a contract with that person that the lender shall receive a rate of interest varying with the profits, or shall receive a share of the profits arising from carrying on the business, does not of itself make the lender a partner with the person or persons carrying on the business or liable as such. Provided that the contract is in writing, and signed by or on behalf of all the parties thereto

(e) A person receiving by way of annuity or otherwise a portion of the profits of a business in consideration of the sale by him of the goodwill of the business is not by reason only of such receipt a partner in the business or liable as such.
MEANING OF 'FIRM'

In Section 4 (1) Persons who have entered into partnership with one another are for the purposes of this Act called collectively a firm and the name under which their business is carried on is called the firm-name.

(2) In Scotland a firm is a legal person distinct from the partners, of whom it is composed, but an individual partner may be charged on a decree or diligence directed against the firm, and on payment of the debts is entitled to relief pro rata from the firm and its other members.
FUNDAMENTALS OF A LIMITED LIABILITY PARTNERSHIP
3. Separate legal personality and capacity
(1) A limited liability partnership is a body corporate and shall have legal personality separate from that of its partners.
(2) A limited liability partnership shall have perpetual succession.
(3) Any change in the partners of a limited liability partnership shall not affect the existence, rights or liabilities of the limited liability partnership.
(4) A limited liability partnership shall have unlimited capacity and shall be
Capable of-
(a) Suing and being sued;
(b) Acquiring, owning, holding and developing or disposing of property; and
(c) Doing and suffering such other acts and things as bodies corporate may lawfully do and suffer.

However in my point of view, I felt that the formation of Limited Liability Partnership is an disadvantage compare to the Limited Liability Partnership Act 2012. This is because the formation of Limited Liability Partnership Act 2012 is done more organized and has more legal power. Now, I will discuss about the formation of Limited Liability Partnership Act 2012 has stated in Section (7):
FORMATION OF LIMITED LIABILITY PARTNERSHIPS
Subject to sections 7 and 8, any two or more persons, consisting of, wholly or partly, individuals or bodies corporate, associated for carrying on any lawful business with a view to profit may form a limited liability partnership in accordance with the terms of the limited liability partnership agreement.
Limited Liability Partnerships can carry on business with less than minimum partners
(1) A limited liability partnership may carry on business with fewer than two partners for a period not exceeding six months or a longer period as may be determined by the Registrar upon an application from the remaining partner, provided that the period so extended by the Registrar does not exceed one year.
(2) if a limited liability partnership carries on business with fewer than two partners for a period longer than the period referred to in subsection (1), a person shall, notwithstanding subsections 21(1) and (2), be personally liable, jointly and severally with the limited liability partnership, for any obligation of the limited liability partnership incurred during the period that the limited liability partnership so carries on business after the period referred to in subsection (1) if, at the time the obligation was incurred, the person -
(a) Was a partner of the limited liability partnership; and
(b) Knew or ought to have known that the limited liability partnership was carrying on business with fewer than two partners for a period longer than the period referred to in subsection (1).
(3) If a limited liability partnership carries on business with fewer than two partners for a period longer than the period referred to in subsection (1)-
(a) The limited liability partnership; and
(b) the person who is a partner during the period that the limited liability partnership so carries on business after the period referred to in subsection (1) and is cognizant of the fact that it is carrying on business with fewer than two partners during that period, commit an offence and shall, on conviction, be liable to a fine not exceeding two hundred thousand ringgit.
(4) Upon conviction of the limited liability partnership under subsection (3), the court may order the limited liability partnership to be dissolved and its name to be struck-off the register.
Other than that, the advantage of Limited Liability Partnership is that according to Section ( 9 ) Limited liability partnership agreement
(1) Except as otherwise provided by this Act, the mutual rights and duties of the partners of a limited liability partnership, and the mutual rights and duties of the limited liability partnership and its partners, shall be governed-
(a) By the limited liability partnership agreement; and
(b) In the absence of agreement as to any matter set out in the second schedule, by any provision relating to that matter as set out in the second schedule.
(2) The limited liability partnership agreement shall be in the national language or English language, and shall consist of the following particulars:
(a) The name of the limited liability partnership;
(b) The nature of business of the limited liability partnership;
(c) The amount of capital contribution by each partner; and
(d) That the partners have agreed to become partners of the limited liability partnership. In partnership the disadvantage is that, doesn’t have a proper registration but In Limited Liability Partnership there is have several rules and condition which is:
(1) Upon being satisfied that the application under section 10 has complied with the requirements of registration under this Act, the Registrar shall-
(a) Register the limited liability partnership and allocate a registration number for the limited liability partnership; and
(b) Issue a notice of registration in such form as the Registrar may determine.
(2) On and from the date of registration specified in the notice of registration under subsection (1), there shall be a limited liability partnership by the name and registration number as specified in the notice.
(3) The notice of registration under subsection (1) is conclusive evidence that the requirements of this Act in respect of the registration have been complied with and that the limited liability partnership is duly registered under this Act.
(4) Upon application by a limited liability partnership and on payment of the prescribed fee, the Registrar may issue to that limited liability partnership a certificate of registration in such form as the Registrar may determine.
(5) The registration of any limited liability partnership shall not be taken to imply that the requirements of any other written law in relation to any business carried on by that limited liability partnership have been complied with.

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