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(6) When the business of the partnership can only be carried on at a loss ?.

255. A partnership is in all cases dissolved by its business Prohibition

of partbeing prohibited by law ?

nership

business. 256. If a partnership entered into for a fixed term be con- Rights and tinued after such term has expired, the rights and obligations obligations

of partners of the partners will, in the absence of any agreement to the in partnercontrary, remain the same as they were at the expiration

ship conof the term, so far as such rights and obligations can be after exapplied to a partnership dissolvable at the will of any term.

piry of partner 3.

tinued

duties of

257. Partners are bound to carry on the business of the General partnership for the greatest common advantage, to be just

partners. and faithful to each other, and to render true accounts and full information of all things affecting the partnership to any partner or his legal representatives.

the offending partner. Thus the adultery of one partner with the wife of his co-partner is ground for dissolution, Abbot v. Crump, 5 Ben. 109.

1 The expectation of profit is implied in every partnership. If, then, à partnership is entered into for a term of years, or if the partners contract with each other that one of themi sball manage the business during his lifetime, and the business cannot be carried on except at a loss, the Court may dissolve the partnership, I Bom. 468, 474

When a partnership is wound up by the Court, all questions arising between the partners out of the partnership transactions should be disposed of in the winding-up suit, 8 Bom. H. C., O. C. J. 209.

Dissolution by order of the Court takes effect as from the date of the judgment, unless ordered on the ground of a specific breach of duty giving the innocent member or members a right to dissolve the partnership, in which case alone it may relate back to the event, 17 Ch. D. 529.

2 or for the members of the firm to carry it on in partnership. The following illustrations of this rule are taken

from Pollock on Partnership, p. 75%

(a) A and B charter a ship to go to a foreign port and receive a cargo on their joint adventure. War breaks out between England and the country where the port is situate before the ship arrives at the port and continues until after the time appointed for loading. The partnership between A and B is dissolved.

(6) 4 is a partner with ten other persons in a certain business. An Act is passed which makes it unlawful for more than ten persons to carry on that business in partnership. The partnership of which A was a member is dissolved.

(c) A, an Englishman and domiciled in England, is a partner with B a domiciled foreigner. War breaks out between England and the country of B's domicile. The partnership between A and B is dissolved.

3 A continuance of the business by the acting partner or partners without any settlement or liquidation of the partnership affairs is presumed to be à continuance of the partnership 4 D. F. J., 474; Pollock, Ptp. 68.

Account, 258. A partner must account to the firm for any benefit to firm, of benefit

derived 1 from a transaction affecting? the partnership 3. derived from trans

Illustrations. action

(a) A, B and C are partners in trade. C, without the knowaffecting partner

ledge of A and B, obtains for his own sole benefit a lease of the ship. house in which the partnership business is carried on. A and B

are entitled to participate, if they please, in the benefit of the lease.

(6) A, B and C carry on business together in partnership as merchants trading between Bombay and London. D, a merchant in London, to whom they make their consignments, secretly allows C a share of the commission which he receives upon such consignments, in consideration of C's using his influence to obtain the consignments for him. C is liable to account to the firm for the

money so received by him 4. Obliga- 259. If a partner, without the knowledge and consent of tions, to

the other partners, carries on any business competing or interfirm, of partner fering with that of the firm, he must account to the firm for carrying on competing

all profits made in such business, and must make compensation business.

to the firm for any loss occasioned thereby. Revocation 260. A continuing guarantee, given either to a firm or to of con

a third person, in respect of the transactions of a firm, is, in tinuing guarantee the absence of agreement to the contrary, revoked as to y change future transactions by any change in the constitution of the

firm to which, or in respect of the transactions of which, such

guarantee was given 5. Non-liabi- 261, The estate of a partner who has died is not, in the lity of deceased

absence of an express agreement, liable in respect of any oblipartner's gation incurred by the firm after his death estate.

1 i.e. derived by him without the partner, and before the affairs thereof consent of the other partners.

have been completely wound up, such 2 concerning

transaction has been undertaken or from any use by him of the either by any surviving partner or by partnership property, name, or busi- the representatives of the deceased ness connexion. This rule applies to partner, the rule laid down by this transactions undertaken after a part. section applies to such transaction. nership has been dissolved by the * See the less concisely worded death of a partner, and before its provision in 19 & 20 Vic. c. 97, affairs have been completely wound up, either by any surviving partner, 6 There is a similar rule as to the or by the representatives of the de- estate of a partner who beoumes ceased partner, Pollock, Ptp. 70. And bankrupt or who, not having been see the Trusts Act, infra, sec. 88. known to the creditor to be a partner,

3

4 Where after a partnership has retires from the firm, Lindley, i. 404; been dissolved by the death of a 405.

sec. 4:

262. Where there are joint debts due from the partnership, Payment and also separate debts due from any partner, the partnership of partner

ship-debts, property must be applied in the first instance in payment of and of

separate the debts of the firm, and if there is any surplus, then the

debts. share of each partner must be applied in payment of his separate debts or paid to him. The separate property of any partner must be applied first in the payment of his separate debts, and the surplus (if any) in the payment of the debts of the firm. 263. After a dissolution of partnership, the rights and ob- Continu

ance of ligations of the partners continue in all things necessary for

partners' winding-up the business of the partnership 1.

rights etc.

after dis264. Persons dealing with a firm will not be affected by a solution. dissolution, of which no public notice has been given, unless Notice of

. they themselves had notice of such dissolution”,

265. Where a partner is entitled to claim a dissolution of Right of partnership, or where a partnership has terminated, the Court partners

to apply may, in the absence of any contract to the contrary, wind up for windthe business of the partnership, provide for the payment of its juge colu

by Court. debts, and distribute the surplus according to the shares of the partners respectively 3.

266. Extraordinary partnerships, such as partnerships with Limited limited liability, incorporated partnerships, and joint-stock

liability

partnercompanies, shall be regulated by the law for the time being ships, and in force relating thereto 4.

joint-stock

companies. 1 i.e. for settling and liquidating 3 Sec. 265 is here printed as existing demands and for completing amended by Act IV of 1886. See transactions begun but unfinished at form of plaint, Civ. Proc. Code, the time of the dissolution.

schedule No. 113. For conjectures as to the meaning + See the Indian Companies Act, of this section see 8 Cal. 683, 684. 1882, the Presidency Banks Act, The effect seems to be that all per- and the Acts relating respectively sons dealing with a firm, whether to the Bengal Bonded Warehouse, old or new customers, see sec. 208, the Oriental Gas Company, the are bound by public notice' of its Comptoir d’Escompte de Paris, and dissolution, and that when such notice the Madras Equitable Assurance has been given (by advertisement in Society. See, too, the public and gazettes or otherwise) the special private statutes relating to Indian notice to which old customers have Railway Companies, the Red Sea hitherto been entitled (Lindley, Ptp. and India Telegraph Company, the 4th edit. p. 415) is dispensed with. East India Coal Company, and the This can hardly have been intended, Assam (Tea) Company. see I Agra, 198.

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Stat. 29 Car. An Act for prevention of Frauds Sections one, II, cap. 3: and Perjuries.

two, three, four, and seventeen.

Stat. 11 & 12 To consolidate and amend the law Section fortyVic.,cap.21. relating to insolvent debtors in two.

India.

Acts.

No, and year

TITLE.

of Act.

Extent of repeal.

Act XIII of An Act for the amendment of the The whole. 1840.

law regarding factors, by ex-
tending to the territories of the
East India Company, in cases
governed by English law, the
provisions of the Statute 4 Geo.
IV, chap. 83, as altered and
amended by the Statute 6 Geo.
IV, chap. 94.

Act XIV of An Act for rendering a written The whole. 1840.

memorandum necessary to the
validity of certain promises and
engagements, by extending to
the territories of the East India
Company, in cases governed by
English law, the provisions of
the Statute 9 Geo. IV, chap.

14

Acts.

No. and year

of Act.

TITLE.

Extent of repeal.

Act XX of An Act to amend the law relating The whole. 1844.

to Advances bona fide made to
Agents intrusted with goods, by
extending to the territories of
the East India Company, in
cases governed by English law,
the provisions of the Statute
5 & 6 Victoria, c. 39, as altered
by this Act.

The whole.

Act XXI of An Act for avoiding Wagers ·

1848.

Act V of 1866 An Act to provide a summary Sections nine

procedure on bills of exchange, and ten.
and to amend in certain respects
the commercial law of British
India.

Act XV of An Act to amend the law of Part- The whole. 1866.

nership in India.

Act VIII of An Act to amend the law relating The whole. 1867.

to Horse-racing in India.

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