LEGAL ASPECTS OF TRAVEL

INDUSTRY
LAW360
MADAM ANGAYAR KANNI
FARIZAN NUR ‘IZZATI BINTI MOHAMED KHATIB
2008237428
HAZEERA BINTI HAFEZAH
2008253224
NOOR ELLINA BINTI MAT TALAHA
2008295566
NORSUHANA BINTI MAZARUDDIN
2008252784
 QUESTION
Orchid, Daisy, Tom and Bob want to set up tour
agent business. They are not sure whether they
should register their business as partnership or
company. Advise them on what type of
organization they can form, how to form,
manage, dissolve and their advantages and
disadvantages.
 PARTNERSHIP
• A voluntary association of two or more persons for the
purpose doing business as a partnership entity, for profit.

• Legal definition :

section 3(1) P.A 1961, the relation which subsists

between persons carrying on business in common with
view of profit.
 FORMATION OF PARTNERSHIP
• Partnership must be registered under the REGISTRATION
OF BUSINESS ACT 1956.
• The P.A 1961 does not set out any formality. There for a
partnership agreement can be formed by any written or
verbal agreement.
ESSENTIAL INGREDIENTS :

• Relation which subsists between two or more persons,

Sec 14 Company Act 1965
• Parties must agreed to carry on business

• Contract to carry on business

• Capacity – minor/unsound mind

MAJORITY ACT 1971

Should a partnership firm be registered?
Not necessarily.

Related case :
GULAZAM V NOORAZMAN AND SOBATH
HOW TO MANAGE THE
PARTNESHIP
 RELATIONS BETWEEN PARTNER AND
OUTSIDRES
Power of partner to bind the firm:
 Authority of partner
a. Express
b. Implied
c. Apparent or Ostensible
 Power of partner to bind the firm:
i. Sec.7 PA 1961- every partner is an agent of the firm
ii. Sec.8 PA 1961- acts done on behalf of the firm
iii. Sec.9 PA 1961- use credit of firm for private purposes
iv. Sec.10 PA 1961- “firm will not be bound”
v. Sec.11 PA 1961- tort action, misapplication, liability for
improper employment, contractual and criminal liability
 DURATION OF LIABILITY
LIABILITIES OF INCOMING LIABILITIES OF OUTGOING RETIRING PARTNER
PARTNERS PARTNERS

 An admitted partner  Who is retires from a  A partner may be

into existing firm, does firm does not thereby discharge from existing
not thereby become cease to be liable for liabilities by an
liable to the creditors partnership debts or agreement that effect
before his retirement. obligations. between himself,
members and the
creditors.
RELATIONS OF PARTNERS BETWEEN PARTNERS
1. Duties and obligations of partners :
Sec.26 PA 1961
Sec.30 PA 1961
Sec. 32 PA 1961

2. Partnership agreement – Sec. 21 PA 1961

3. The interest and duties – Sec. 26 PA 1961

a. Agree to share equally in the capital and profits.

b. Indemnify every partner in respect of payments made and personal liabilities.
c. Any actual payment or advance beyond the amount of capital has agreed to
subscribe with the rate of interest.
d. No entitled to interest on capital before ascertainment profits.
e. May take part of the business.
f. Not be entitled to remuneration for partnership business.
g. No person may be introduced without the consent from existing partners.
h. Any changes to be made in the partnership business cannot be made without the
consent of all existing partners.
i. Partnership books may be kept at the place of business and should have the copy.
 Dissolve
i. By agreement
 Mutual agreement among partners
 Duration of agreement/expiry of period
– see S34(1)(a),(b),(c)
ii. By death/bankruptcy
– Section 35(1)
– Case:Khoo Yoke Wah V Lee Choo Holdings Bhd
iii. By charging on shares
– Section 35(2)
iv. By supervening illegality
– Section 36
v. Business running at loss
– Jennings V Baddely
vi. By court order
 Insanity of partner
 Permanent incapacity
– Section 37(b)
– Whitwell V Arthur
 Partner guilty for such conduct that will be prejudicial to the
reputation of business
– Carmicheal V Evans
 Willful or persistent breach of the partnership agreement by
any partner makes the carrying on of the business impractible
– Cheeseman V Price
 Just and equitable
– Ebrahimi V Westbourne Galleries Ltd
– Reyenididge Tobacco Co Ltd
Notice of dissolution
• Section 39

Authority of partners upon dissolution

• Section 40-44
 PARTNERSHIP
ADVANTAGES DISADVANTAGES

• Can be formed without any • Does not have a separate

formalities. legal entity.
• Requires less expenses. • A partner who is owed
• A partner is an agent bounded by money by the partnership
his acts.
cannot claim payment.
• Every partner is entitled to take
part in the management. • The life span depends on
• Partners have more freedom over the life span of the partners.
their business. • Higher risk of problem
• More equities can be gained with between partners.
more partners.
• More ideas, talents and skills.
• Must not necessarily comply with
formalities.
• Can be dissolved by any partner.