GROUP 1

Q1: Explain the right of partners to introduce the new partner

Introduction of new partner: Section 26(g)

Subject to any agreement between partners, no person may be introduced as a partner without the
consent of all existing partners. So, a partner cannot just appoint his relatives or friends as a partner
unless with the consent of all the existing partners. However, if there is a provision in the agreement
that allows him to do so, he may do so even without the other partner’s consent. This section does
not require the consent of retiring partners but it covers existing including dormant partners.

Byrne v Reid

Clause 29 of a partnership agreement gave power to a partner to nominate his son as a partner. The
partner nominated his son to be a partner, but the other partners refused to accept the nomination.
Whether the son was a partner?

Held: By the Court of Appeal, that upon acceptance by the son of the nomination, he became a
partner. The other partners had no choice but to accept him as a partner as this was based on the
agreement.
Q5: State in brief what are the duty of partners

Section 21 of Partnership provides “the mutual rights and duties of partners, whether, as curtained
by agreement or defined by this act, may be varied by the consent of all the partners, and such
consent may be either express or inferred from a course of dealing”.

A partner has a duty of “utmost good faith” to his partner. As a relationship between partners is
based on mutual trust and confident, the duty of utmost good faith is fundamental of their
relationship.

Section 30: Duty of partner to render through account

This section provides that partner are bound to render through account and full information of all
things affecting the partnership towards other partners. If he fails to disclose the information, the
contract will be considered and therefore, may be set aside by the other partners.

Law v Law

William and Jones Law were partners in a wool business. William lives in London and took little part
in the running of the business. Jones later bought William’s share for $21,000. However, William
found out that his share his worth more than that and they were some asset of the business which
doesn’t disclose to him by Jones. William apply to the court to set aside the contract.

Held: There is the duty of Jones who know more about the partnership account compare to William.
He then should have disclose all material fact of the business to the William. The contract was set
aside.
Q9: How to determine the property is a partnership property?

There are 3 factors to determine property as a partnership property:

1. Agreement
It depends on agreement between the partners, either express or implied. This is implied
from the word ‘originally brought into the partnership stock’ under Section 22(1)

2. Intention
If there is no agreement on that property, it is necessary to look at the intention of the
partners, whether they intend to treat the property as partnership property or not.

3. Source of acquiring the property

According to Section 23, the property that buy using firm’s money, it is considered as
partnership property. If the property is bought from the profit, derived from the use of the
individual partners property, it is considered as a partners’ property and not firm’s property.

Wray v Wray

There are four partners in a firm named ‘William Wray’. One of the partners died and his widow
later on became a partner. In 1890, the partners bought a house out of the partnership assets and
property was conveyed to ‘William Wray’. Another partner died. The three continuing partners
sought a court declaration that the house was the firm’s property because it had been bought out of
the partnership assets.

Held: The court granted the declaration as it had been bought out of the partnership assets.

Ponnukon v Jebaratnam

The respondent and the appellant formed a partnership to develop a piece of land into a housing
estate. The land was bought by the respondent with his own money and some with borrowed
money, after the firm failed to obtain a bank loan. The appellant took a legal action in court to seek a
declaration that the land was a property and claimed that the respondent only held it in trust for the
partnership. The learned trial judge dismissed the action. The appellant appealed.

Held: The land was not partnership property but the respondent’s property. The reasons for this
are:

1. There was no provision in the partnership agreement sayong or implying that the land was
to be constructed a partnership property.
2. The business of the firm was to develop a housing estate on the land. So it was not
compulsory for the land to be the firm’s land for such business to be carried on. It could be
someone else’s land.
3. The land was bought with the respondent’s own money as well as borrowed by him
personally and not with the money of the partnership.