- Commenced on 1 October 2010
- [This is the version of this document at 31 December 2014.]
- [Note: This version of the Act was revised and consolidated in the Fifth Revised Edition of the Laws of Malawi (L.R.O. 1/2018), by the Solicitor General and Secretary for Justice under the authority of the Revision of the Laws Act.]
Part 1 – Preliminary
1. Short titleThis Act may be cited as the Partnership Act.
2. InterpretationIn this Act, unless the context otherwise requires—“business” includes every trade, occupation or profession;“Court” means the High Court.
Part II – Nature of partnership
3. Definition of a partnership
4. Rules for determining existence of partnershipIn determining whether a partnership does or does not exist regard shall be had to the following rules—
5. Postponement of rights of person lending or selling in consideration of share of profits in case of insolvencyIn the event of any person to whom money has been advanced by way of loan upon such a contract as is mentioned in section 4, or of any buyer of a goodwill in consideration of a share of the profits of the business, being adjudged a bankrupt, entering into an arrangement to pay his creditors less than twenty shillings in the pound, or dying in insolvent circumstances, the lender of the loan shall not be entitled to recover anything in respect of his loan, and the seller of the goodwill shall not be entitled to recover anything in respect of the share of profits contracted for, until the claims of the other creditors of the borrower or buyer for valuable consideration in money or money’s worth have been satisfied.
6. Meaning of firmPersons who have entered into partnership with one another are for the purposes of this Act called collectively a firm and the name under which their business is carried on is called the firm-name.
Part III – Relations of partners to persons dealing with them
7. Power of partner to bind the firmEvery partner is an agent of the firm and his other partners for the purpose of the business of the partnership. The acts of every partner who does any act for carrying on in the usual way business of the kind carried on by the firm of which he is a member bind the firm and his partners, unless the partner so acting has in fact no authority to act for the firm in the particular matter, and the person with whom he is dealing either knows that he has no authority, or does not know or believe him to be a partner.
8. Partners bound by acts on behalf of firmAn act or instrument relating to the business of the firm done or executed in the firm-name, or in any other manner showing an intention to bind the firm, by any person thereto authorized, whether a partner or not, is binding on the firm and all the partners:Provided that this section shall not affect any general rule of law relating to the execution of deeds or negotiable instruments.
9. Partner using credit of firm for private purposesWhere one partner pledges the credit of the firm for a purpose apparently not connected with the firm’s ordinary course of business, the firm is not bound, unless he is in fact specially authorized by the other partners; but this section does not affect any personal liability incurred by an individual partner.
10. Effect of notice that firm will not be bound by acts of partnerIf it has been agreed between the partners that any restriction shall be placed on the power of any one or more of them to bind the firm, no act done in contravention of the agreement is binding on the firm with respect to persons having notice of the agreement.
11. Liability of partnersEvery partner in a firm is liable jointly with the other partners for all debts and obligations of the firm incurred while he is a partner; and after his death his estate is also severally liable in a due course of administration for such debts and obligations, so far as they remain unsatisfied, but subject to the prior payment of his separate debts.
12. Liability of the firm for wrongsWhere, by any wrongful act or omission of any partner acting in the ordinary course of the business of the firm, or with the authority of his co-partners, loss or injury is caused to any person not being a partner in the firm, or any penalty is incurred, the firm is liable therefor to the same extent as the partner so acting or omitting to act.
13. Misapplication of money or property received for or in custody of the firmIn the following cases, namely—
14. Liability for wrongs joint and severalEvery partner is liable jointly with his co-partners and also severally for everything for which the firm while he is a partner therein becomes liable under section 12 or section 13.
15. Improper employment of trust property for partnership purposesIf a partner, being a trustee, improperly employs trust property in the business or on the account of the partnership, no other partner is liable for the trust property to the persons beneficially interested therein;Provided that—
16. Persons liable by "holding out"Everyone who by words spoken or written or by conduct represents himself, or who knowingly suffers himself to be represented, as a partner in a particular firm, is liable as a partner to any one who has on the faith of any such representation given credit to the firm, whether the representation has or has not been made or communicated to the person so giving credit by or with the knowledge of the apparent partner making the representation or suffering it to be made:Provided that where after a partner's death the partnership business is continued in the old firm's name, the continued use of that name or of the deceased partner's name as part thereof shall not of itself make his executors or administrators, estate or effects, liable for any partnership debts contracted after his death.
17. Admissions and representations of partnersAn admission or representation made by any partner concerning the partnership affairs, and in the ordinary course of its business, is evidence against the firm.
18. Notice to acting partner to be notice to the firmNotice to any partner who habitually acts in the partnership business of any matter relating to partnership affairs operates as notice to the firm, except in the case of a fraud on the firm committed by or with the consent of that partner.
19. Liabilities of incoming and outgoing partners
20. Revocation of continuing guarantee by change of firmA continuing guarantee or cautionary obligation given either to a firm or to a third person in respect of the transactions of a firm is, in the absence of agreement to the contrary, revoked as to future transactions by any change in the constitution of the firm to which, or of the firm in respect of the transactions of which, the guarantee or obligation was given.
Part IV – Relations of partners to one another
21. Variation by consent of terms of partnershipThe mutual rights and duties of partners, whether ascertained by agreement or defined by this Act, may be varied by the consent of all the partners, and such consent may be either express or inferred from a course of dealing.
22. Partnership property
23. Property bought with partnership moneyUnless the contrary intention appears, property bought with money belonging to the firm is deemed to have been bought on account of the firm.
24. Conversion into personal estate of land held as partnership propertyWhere land or any heritable interest therein has become partnership property, it shall, unless the contrary intention be treated as between the partners (including the representatives of a deceased partner), and also as between the heirs of a deceased partner and his executors or administrators, as personal and not real estate.
25. Procedure against partnership property for a partner’s separate judgment debt
26. Rules as to interests and duties of partners subject to special agreementThe interests of partners in the partnership property and their rights and duties in relation to the partnership shall be determined, subject to any agreement express or implied between the partners, by the following rules—
27. Expulsion of partnerNo majority of the partners can expel any partner unless a power to do so has been conferred by express agreement between the partners.
28. Retirement from partnership at will
29. Where partnership for term is continued over, continuance on old terms presumed
30. Duty of partners to render accounts, etc.Partners are bound to render true accounts and full information of all things affecting the partnership to any partner or his legal representatives.
31. Accountability of partners for private profits
32. Duty of partner not to compete with firmIf a partner, without the consent of the other partners, carries on any business of the same nature as and competing with that of the firm, he must account for and pay over to the firm all profits made by him in that business.
33. Rights of assignee of share in partnership
Part V – Dissolution of partnership and its consequences
34. Dissolution by expiration or noticeSubject to any agreement between the partners, a partnership is dissolved—
35. Dissolution by bankruptcy, deathly charge or subjection to forfeiture
36. Dissolution by illegality of partnershipA partnership is in every case dissolved by the happening of any event which makes it unlawful for the business of the firm to be carried on or for the members of the firm to carry it on in partnership.
37. Dissolution by the CourtOn application by a partner the Court may decree a dissolution of the partnership in any of the following cases—
38. Rights of person dealing with firm against apparent members of firm
39. Right of partners to notify dissolutionOn the dissolution of a partnership or retirement of a partner any partner may publicly notify the same, and may require the partner or partners to concur for that purpose, in all necessary or proper acts, if any, which cannot be done without his or their concurrence.
40. Continuing authority of partners for purposes of winding upAfter the dissolution of a partnership, the authority of each partner to bind the firm, and the other rights and obligations of the partners, continue notwithstanding the dissolution so far as may be necessary to wind up the affairs of the partnership, and to complete transactions begun but unfinished at the time of the dissolution but not otherwise:Provided that the firm is in no case bound by the acts of a partner who has become bankrupt; but this proviso does not affect the liability of any person who has after the bankruptcy represented himself or knowingly suffered himself to be represented as a partner of the bankrupt.
41. Rights of partners as to application of partnership propertyOn the dissolution of a partnership every partner, is entitled, as against the other partners in the firm, and all persons claiming through them in respect of their interests as partners, to have the property of the partnership applied in payment of the debts and liabilities of the firm, and to have the surplus assets after such payment applied in payment of what may be due to the partners respectively after deducting what may be due from them as partners to the firm and for that purpose any partner or his representatives may on the termination of the partnership apply to the Court to wind up the business and affairs of the firm.
42. Apportionment of premium where partnership prematurely dissolvedWhere one partner has paid, a premium, to another on entering into a partnership for a fixed term, and the partnership is dissolved before the expiration of that term otherwise than by the death of a partner the Court may order the repayment of the premium, or of such part thereof as it thinks just, having regard to the terms of the partnership contract and to the length of time during which the partnership has continued, unless—
43. Rights where partnership dissolved for fraud or misrepresentationWhere a partnership contract is rescinded on the ground of the fraud or misrepresentation of one of the parties thereto, the party entitled to rescind is, without prejudice to any other right, entitled—
44. Right of outgoing partner in certain eases to share profits made after dissolutionWhere any member of a firm has died or otherwise ceased to be a partner, and the surviving or continuing partners carry on the business of the firm with its capital or assets without any final settlement of accounts as between the firm and the outgoing partner or his estate, then, in the absence of any agreement to the contrary, the outgoing partner or his estate is entitled at the option of himself or his representatives to such share of the profits made since the dissolution as the Court may find to be attributable to the use of his share of the partnership assets, or to interest at the rate of five per centum per annum on the amount of his share of the partnership assets:Provided that where by the partnership contract an option is given to surviving or continuing partners to purchase the interest of a deceased or outgoing partner, and that option is duly exercised, the estate of the deceased partner, or the outgoing partner or his estate, as the case may be, is not entitled to any further or other share of profits; but if any partner assuming to act in exercise of the option does not in all material respects comply with the terms thereof, he is liable to account under the foregoing provisions of this section.
45. Retiring or deceased partner's share to be debtSubject to any agreement between the partners, the amount due from surviving or continuing partners to an outgoing partner or the representatives of a deceased partner in respect of the outgoing or deceased partner's share is a debt accruing at the date of the dissolution or death.
46. Rule for distribution of assets on final settlement of accountsIn settling accounts between the partners after a dissolution of partnership, the following rules shall, subject to any agreement, be observed—
47. Saving for rules of equity and common lawThe rules of equity and of common law applicable to partnership shall continue in force except so far as they are inconsistent with the express provisions of this Act.
History of this document
01 October 2010