(1) EQUAL SHARES

s. 26 (a) PA provides
(i) all the partners are entitled to share
equally in the capitol and profits of the
business
(ii) must contribute equally towards the
losses.
1. The important characteristic of
partnership is mutual sharin of profit and
losses.!f contribution of capital is unequal
i.e. some contribute s"ill# some only
finance in such cases the partnership
areement will destroy the presumption
that capital shares are equal
2. $osses must be also shared equally
even the capital contributed are unequal.
%.&Profit' means partnership asset over
iven period# h(ever partners throuh
e)press areement may define
otherwise.
Kilpatrick v Mackay
K only contributed small portion in the
business but still entitle for of the profit
because the business was joint business.
Kelly v Tucker
Partners agreed orally to buy horses in
Australia and send to S/Africa. Tucker
proided !"## and Kelly to do actie work
.$hen dissole T asked back the capital
!"##. %eld & There was implied agreement
that !"## must be return before any
distribution of surplus asset.
(2) INTEREST ON CAPITAL
s. 26 (d) provides
*a partner is not entitle
*before ascertainment of profits
*to interests on the capital subscribed by him
!f there is no areement to the contrary# a
partner is not entitled to any interest on his
capital before the profits are ascertained.
Risht! v "rissel
A principal in a business whose serant or agent
is entitled to remuneration in proportion to the
profit of the business is not entitled to deduct
interest on his capital in the business from the
profits before the serant /agents remuneration
has been deterimined.
(%) INTEREST ON A#$ANCE
s. 26(c) provides that sub+ect to contrary
provision
- a partner contribute to the firm
- any actual payment or advance
- beyond the capital he has paid
- he is entitled for interest at the rates of
,- per year from the date of the
payment(advance
The provision also apply to e)penditure
incurred on behalf of the firm
Kil%ari& v Mrris
%eld& a partner who is a money lender on his own
and adance money for the purposes of the firm
was not a 'lender( with regard to the transaction.
Crai% v 'i!a!ce C!sulta!ts Pty Lt(
Plaintiffs who adance money to their firm and
promised to guaranteed against losses by second
defendant company .%eld) the company is liable
to indemnify the plaintiffs.
(.) !/012/!T3
!f one partner does settle a partnership debt#
either willfully or unwillinly beco) he is one
who has been sued# he has the riht to claim
an indemnity from his other partners.
s. 26(b) in the absent of any provision contrary
*the firm is bound to refund e)penses
e)penses incurred by a partner if
- ( i)it was incurred in the ordinary and
proper conduct of the firm4s business
- (ii ) or in a situation where it becomes
necessary to do so in order to preserve
the business or the firm4s property.
5or 26(b) (ii) there are 2 elements to be fulfill
i.e. ood faith and necessity.
Pra%er v )latspiel
An agent acting w/out authority was entitle to
indemnity from his principal only becos he was
unable to communicate with him and he acted for
goodfaith for what is necessary to the principal
interest.
'INANCIAL A''AIRS CHAN"ES O' PARTNERS
s. 26() sub+ect to any areement
- no person may introduced as a
partner without the consent of all
e)istin partners
!f there is no provision in the partnership
areement which allow introducin new
partners # s. 26() disallow it unless with
consent from all partners.
(2) !f the areement provides that
partners iven option to introduce new
partners than two points to note6
(i)if the provision is wide and no
restriction (limited to certain person) then
even w(out the consent of other partners
the new person can be come a partner.!t
is because the other partner had iven
consent in advance.
)yr!e v Rei(
Partnership agreement gies option to
introduce new partners.%eld it will bind the
partners who did not take part in the
introduction of new partner.
(ii) if the provision in the areement
provide that all partners must consent
then it must be complied.
Re 'ra!kli! * S+aythi!% Ar,itrati!
A nominee who was introduced as a new
partner was unreasonably objected.%e
wanted to refere the matter to arbitration as
proided by agreement. %eld that he is not a
party to the partnership he had no right.
-!% Pe!% .ue! v Se!a!ayake
*ourt regards that consent of infant partner
is not re+uired.
(%). An assinee to share the asset of
partnership is not a partner.
Marti! v Th/ps!
Partnership agreement proides that at the
death of partner may by will nominate
widow to his share in the partnership. A
partner before his death put a will to inherit
all his property to his widow. ,t does not
make his widow a partner in the business.
E0PULSION CLAUS
s. 27 provides
* no ma+ority of the partners can e)pel
any partner
* unless power to do so has been
conferred by e)press areement
by the partners
An e)pulsion clause may or may not dissolve
a partnership.
!f only two partners in a partnership# the
e)pulsion of one partner will dissolve the firm.
(8lar" v $each ) only two partners.
9ut if there are more than 2 partners and one
of them is e)pelled than the partnership still
continue.
:alter v 9inham
A bi firm of solicitor ;eld6 e)pulsion will not
amount to dissolution.
(2) !n considerin 1)pulsion clause there %
question to be as"ed and if the answer is yes
then the court will support it.
(i) Is the e1pulsi! +ithi! the ter/s & the
clause itsel&
Car/ichael v Eva!s
A young partner was conicted for not paying
train fare while trael it seeral time..%is
e-pulsion is alid in consistance with an
agreement in partnership agreement which allow
e-pulsion for any 'flagrant breach of the duties of
a partner. %ere although the trip was outside the
scope of busines .held still alid beco- it will
effect the firms business.
(ii) Rule & Natural 2ustice
:hether the partner has been iven riht to
be heard and defends.
I! )ar!es v .u!%
/-pulsion proides that majority partners can
e-pel a partner for breach of certain duties.,t also
proide that in case of disputes must refer to
arbitration. A partner was e-pelled by majority but
w/out informing him the cause of complaint and
did not allow him to answer the allegation was
held unlawful e-pulsion.
"ree! v H+ell
the partnership agreement contained a clause to
the effect that a partner would be e-pelled if he
commits a flagrant breach of his duties.%eld that
a partner who commits a breach of described in
the clause is not entitle to an opportunity to
e-plain what had happened. so long as his co
partners acted in good faith.
(/ot settled yet)
(iii) +hether the c part!ers acte( i! %(
&aith a!( i! accr(a!ce +ith their &i(uciary
(uties3
They must act for the benefit of the firm and
not for own benefit.
)lisset v #e!iel
/-pulsion clause e-ercise in order to get a
discount in the share of the e-pelled partner was
held not alid.
ASSI"NMENT O' PARTNERSHIP SHARE
An assinee is not a partner unless the
contrary is areed . ;e only share the assets
of the firm.
There are two types of assinment6
(1) $lu!tary Assi%!/e!t
s. %% (1) provides
- an assinee
(absolute(mortaee(redeemable
chare)
- cannot interfere in the
manaement(adminstration of firm
- or inspect the boo" or demand any
account
- but only entitle to receive the share of
profit
!f the Partnership dissolve or the assinee
wants to leave the firm# the s. %% (2) provides
he has two rihts6
(i) entitle to receive partnership share
(ii) to an account as from the date of
dissolution to ascertain that share.
-att v #rsicll
A father of one of two partners lent his son a
certain amount of money to form a partnership
and he becomes his sons assignee in the firm.
0ater his son sold his share to other co partnr
w/out his fathers knowledge.%eld& The 1ather as
an assignee was entitle to an account u/s. 22345
PA.
)!!i! v Nea/e
Assignee were held not bound by an arbitration
settlement to a disputes among the partners in
the partnership.,t is beco- an assignee is not a
partner.
An assinee is not liable to indemnity in case
of losses of the firm beco) he is not a partner.
(2) I!vlu!tary Assi%!/e!ts
An e)amply of this type is +udement creditor
who havin been awarded +udement aainst
a partner for a private debt# he wishes to levy
e)ecution of that debt over the parties share
of the firms assets.
;ere the creditor u(s. 2<(2) PA can as" the
court to ma"e him an assinee of the debtors
share in the firm.;e also can as" court to
appoint a receiver but the receiver cannot
interfere in the manaement of the firm.