Importance Of Partnership Law

In business, partnership is one of the oldest form. The history of the partnership says that, “laws on partnerships can be found in Hammurabi’s code as well in early Hebrew and Roman texts.” Partnership law can be said as necessary to an entrepreneur or a shareholder of a company because without the partnership law an entrepreneur or a business man cannot run a business successfully. Furthermore, partnership is constructed to make a business successful by giving new ideas and get the part of a divide from the profit they earn. Partnership Act 1961 governs the law of partnership. Partnership is defined by Section 3(1) of the Partnership Act 1961 which said that partnership is the relation which subsists between persons carrying on a business

By virtue of section 4(a), tenancy in common, joint tenancy, joint property, common property, or part ownership does not of itself create a partnership as to anything so held or owned, whether the tenants or owners do or do not share the profits made by the business. For example, if a four-storey shop house is owned by Abu and Rahman and the rental derived from the shop house are barely shared and nothing else, they are not partners. However, they are partners if they run a restaurant in the shop house and they put in capital and run the business with a view to earn profits. Furthermore, by virtue of section 4 (b), whether the person sharing such rewards have or have not a joint or common right or savour from which or from the use of which the returns are received, the sharing of gross return does not of itself create a partnership. For example, Jacky owned a bus but the bus is driven by Jonathan, Jonathan receives part of the gross earnings. But there is no partnership between them. Jacky receives amount of rental for his vehicle while Jonathan is paid wages for his

The term prima facie evidence means that if not balanced or overridden by other evidence, an argument in that the person is a partner in the business may be caused.

In the Australian case of Buckingham v Port Jackson & Manly Steamship Co, even though the share of profits and a reference to a joint venture is provided in the contract, the contract was held not to evident a partnership because the agreement as a whole showed that the party sought to avoid such a relationship. A person cannot consider himself as a partner in the business by using the receipt of such a share of profits of a business. The receipt of sharing of profits does not qualify a person to be a partner since there are few cases listed under this subsection.

Under section 4(c)(i), payments by instalments does not of itself make him a partner of the business. For example, Sam propounds RM10,000 to a firm and the firm repays him by ten months instalments with RM1,000 each, he is still not a partner of that