Nature of Partnership

This is might be a lil bit to discuss about the Partnership Law as the topic is almost at the end. But I am of the view that for the purpose of academic, it doesn’t matter even it is a late notes.

I believe you now aware that the Partnership is one of many ways where a person or persons can carry out the business.

So, our relevant references will be mainly the Malaysia Partnership Act and the textbook of Partnership Law in Malaysia by Dr. Samsar Kamar Latif. In your hand you must already have the so called notes which had been given by Assoc. Prof. Mahanum (if you are in her class).

Her notes basically are the extraction from Dr. Samsar’s book. So here, I will try to make a very brief discussion about the nature of the partnership. When we’re talking about the nature of the partnership, our main concern in answering the question is to determine whether the partnership exists or not exist.

Simply said, among the things we have to consider are

1.    Section 2 of the Partnership Act 1961 where here it tells us what is “business”
2.    Section 3 of the abovementioned act. The definition of the partnership which consists three main elements namely i) business ii) in common iii) view of profit.
•    However it must be bear in mind that Section 3 per se is not sufficient to hold that partnership exist between the disputing parties.
3.    Section 4. This section provides the circumstances that not prima facie partnership. ( I may not be able to discuss further of each part in this Section 4, so you shall refer to the notes that we have).
4.    The last one is the case of Aw Yong Wai Choo v. Aried Trading Sdn. Bhd. ( This case will be later discussed in my next posting on partnership law)

Let have a look at Section 2 and 3 first. Sec 2 basically mentions to us that there must be a business and the business within the ambit of Sec 2 includes trade, occupation and profession. Under the partnership law, mainly there are trading partnership and professional partnership. For trading partnership members can be from 2 – 20 while professional partnership members can be from 2 – unlimited. :)

Section 3 is important as well. It defines partnership as the relation which subsists between persons carrying on business in common with view of profit. Therefore first thing first there must be a relation. Partnership is a relationship not an organization. No separate legal entity – this is the main different compared to the company. Basically the relation arises from the partnership agreement – express or implied. It is the source of such relation. Then we can say that it is a relation resulting from a contract. The meaning of relation was discussed in a Singapore Hight Court in the case of Wong Peng Yuen v. Senanyake ( 1962) 28 MLJ 204. (please refer page 2 Partnership Law in Malaysia by Dr. Samsar)

to be continued . . .