(6) When the business of the partnership can only be carried on at a loss1. 255. A partnership is in all cases dissolved by its business Prohibition being prohibited by law 2. of part nership business. of partners 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 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 expiry of applied to a partnership dissolvable at the will of any term. 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. The expectation of profit is implied in every partnership. If, then, a partnership is entered into for a term of years, or if the partners contract with each other that one of them shall 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. (b) A 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 4 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 a continuance of the partnership 4 D. F. J., 474; Pollock, Ptp. 68. Account, to firm, of benefit derived from trans action affecting partner ship. Obligations, to firm, of 258. A partner must account to the firm for any benefit derived 1 from a transaction affecting the partnership 3. Illustrations. 2 (a) A, B and C are partners in trade. C, without the knowledge of A and B, obtains for his own sole benefit a lease of the 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. (b) 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 Ca 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 1. 259. If a partner, without the knowledge and consent of the other partners, carries on any business competing or interpartner 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 tinuing in respect of the transactions of a firm, is, in person, guarantee the absence of agreement to the contrary, revoked as to by 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. in firm. 261. The estate of a partner who has died is not, in the absence of an express agreement, liable in respect of any obligation incurred by the firm after his death ®. ship-debts, separate 262. Where there are joint debts due from the partnership, Payment and also separate debts due from any partner, the partnership of partnerproperty must be applied in the first instance in payment of and of 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- Continuligations of the partners continue in all things necessary for winding-up the business of the partnership 1. ance of partners' rights etc. after dis Notice of 264. Persons dealing with a firm will not be affected by a solution. dissolution, of which no public notice has been given, unless dissolution. they themselves had notice of such dissolution 2. 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 winding-up the business of the partnership, provide for the payment of its debts, and distribute the surplus according to the shares of the partners respectively3. by Court. partner 266. Extraordinary partnerships, such as partnerships with Limited limited liability, incorporated partnerships, and joint-stock liability companies, shall be regulated by the law for the time being ships, and in force relating thereto. 1i.e. for settling and liquidating existing demands and for completing transactions begun but unfinished at the time of the dissolution. 2 For conjectures as to the meaning of this section see 8 Cal. 683, 684. The effect seems to be that all persons dealing with a firm, whether old or new customers, see sec. 208, are bound by public notice' of its dissolution, and that when such notice has been given (by advertisement in gazettes or otherwise) the special notice to which old customers have hitherto been entitled (Lindley, Ptp. 4th edit. p. 415) is dispensed with. This can hardly have been intended, see I Agra, 198. 3 Sec. 265 is here printed as amended by Act IV of 1886. See form of plaint, Civ. Proc. Code, schedule No. 113. * See the Indian Companies Act, 1882, the Presidency Banks Act, and the Acts relating respectively to the Bengal Bonded Warehouse, the Oriental Gas Company, the Comptoir d'Escompte de Paris, and the Madras Equitable Assurance Society. See, too, the public and private statutes relating to Indian Railway Companies, the Red Sea and India Telegraph Company, the East India Coal Company, and the Assam (Tea) Company. joint-stock companies. Act XIII of An Act for the amendment of the The whole. 1840. law regarding factors, by ex- Act XIV of An Act for rendering a written The whole. 1840. memorandum necessary to the 14. No. and year of Act. A cts. TITLE. Extent of repeal. Act XX of An Act to amend the law relating The whole. 1844 to Advances bona fide made to Act XXI of An Act for avoiding Wagers 1848. The whole. Act V of 1866 An Act to provide a summary Sections nine 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. to Horse-racing in India. 1867. |