Determination of partnership Essay Sample

To find whether Nazir and Omar has a valid partnership or non. We need to look and understand the definition of partnership by Partnership Act. 1961. S. 3 ( 1 ) define partnership as ‘Partnership is the relation which subsists between individual transporting on a concern in common with a position of profit’ . 5 words need to be examine. first is ‘relation’ . ’person’ . ‘a business’ . ’carried in common’ and ‘with a position of profit’ . We will look into what type of relation they are in. is the concern running carried in common and are they making the concern with a position of net income. The words ‘person’ and ‘a business’ already stated that these 2 individual have decided to travel a concern together. The concern is rental off the dance hall and map hall for seminars. nuptialss. parties and other similar events.

First. we will analyze the words ‘relation’ between Nazir and Omar. This 2 individual can be assumed that they have informal relation. This because the have behavior that they are spouse. This similar to instances of ‘Chan Yin Jee VS William Jack. In this instances. both spouse shown they are spouse by making some work for the concern. Lapp with Nazir and Omar state of affairs. Nazir has convert a edifice for the concern taking topographic point. meanwhile Omar contribute RM 50000 and does all the paperwork. Nazir really making some work for the concern by promoted their dance hall and map hall to his friends and household. So. one think there is relation between these 2 individual. The relation is informal and by behavior.

We besides need to look the regulations for finding the being of partnership as set out under s. 4 that concerns 3 state of affairss. joint occupancy and occupancy in common. sharing of gross return and reception of portion net incomes. S. 4 ( a ) regulations have stated that a partnership does non be merely because any belongings that is held or owned jointly or common is used. and out of the usage of the belongings there is net income. This regardless of whether such net income obtained is divided amongst the co-owners or renters or non. There are sharing of of joint belongings between Nazir and Omar. But. i it will non valid if there is no ‘carried in common’ by both spouses.

‘Carrrying in common’ agencies by or behalf of both or all the spouses. Even when there is sharing of net incomes out of a concern. it is non a partnership unless the concern is carried on by or behalf of all the spouses. The both partnes must can give. They besides need use their energy and thoughts for their concern and willing to portion net incomes and loss. Nazri and Omar has sacrifice their ain belongings by change overing the edifice and contribute RM 50000 for their concern utilizations. So. one think there is component of carried in common between them.

The concern must be running with a position of net income. Meaning that acceptable is in Re Spanish where is concern must be carried out with the purpose of doing a net income. Where several individual carry on a concern with a position of doing net income. it fulfils the definition of s. 3 ( 1 ) even if they do non do any net incomes. Nazir and Omar clearly has divided every bit net incomes of the concern between them at the a twelvemonth subsequently. It have been cleared that s. 13 ( 1 ) has been fulfilled. So. after examine through all the words from the definition. there is valid partnership between Nazir and Omar. Question 1 ( B ) ( 10 Markss )

In the partnership concern. such as an auditors’s house or a legal house. many minutess may take topographic point on behalf of 3rd parties by the house. Certain paperss of rubric necessary for certain affair or even money or other belongings may be deposited with the house. Sometimes unscrupulous spouses may utilize the belongings or money for their ain personal intents. The house would be apt for the misapplications under the fortunes given by s. 13. In the undermentioned instances. viz. S. 13 ( a ) stated that “where one spouse. moving within the range of his evident authorization. receives the money or belongings of a 3rd individual and missaplies it” . S. 13 ( B ) besides stated that ‘where a house in the class of its concern receives the money or belongings of a 3rd individual. and the money or belongings so standard is misapplied by one or more of the spouses while it is in the detention of the house. The house is apt to do good the loss. ” .

First instances we should look where the money or belongings is received by a spouse. Where one spouse moving within the range of his evident authorization receives the money or belongings of a 3rd individual and misapplies it. the house is apt to do good the loss. For illustration canvassers having money and misapplies it. In the instances of Blair V Bromley. the plainttiff paid a amount of money was into the joint history of a house of canvassers to be used for investings in certain securities. One of the spouses misappropriated the money. but told the plainttiff that the money had been invested as required. It was held by the Court. having money for puting in certain or specific securities comes within the ordinary class of a solicitor’s concern and as such all the other spouses were apt for the misapplications of the money.

Second instances that may happen where the money or belongings is received by the house. In Rhodes V Moules instance. Rhodes wish to obtain a loan. so he mortgaged his belongings. He was told by Rew a spouse in the canvassers house of Messers Hughes and Masterman that the mortgage holders wanted extra security. so he handed him some portion warrants collectible to bearer. Rew misappropriated them. Rhodes so sued the house in regard of the loss under the English equivalents of s. 13 of the Partnership Act. 1961. Held by C. A that the action succeeded. for the warrants had been received by the house in the ordinary class of the concern.

To render the house liable. the misapplications must be made while the money or belongings was in the firm’s detention. Where the money or belongings is placed in the ownership of one of the spouses by fraudelents agencies of such spouse. the money is non considered as in the detention of the house.