The liability of partners for the debts and obligations of their firms arising ex contractu, is joint, and in Scotland several also; the estate of a deceased partner is also severally liable in a due course of administration, but subject, in England or Ireland, to the prior payment of his separate debts. The liability of partners for the obligations of their firm arising ex delicto, is joint and several. A partner who retires from a firm does not thereby cease to be liable for debts or obligations incurred before his retirement.
The mutual rights and duties of partners depend upon the agreement between them. Many of these rights and duties are stated in the Partner ship Act; but, whether stated in the Act or ascertained by agree ment, they may be varied by the consent of all the partners; such consent may be express or inferred from conduct. Subject to any agreement, partners share equally in the capital and profits of their business, and must contribute equally to losses, whether of capi tal or otherwise; they are entitled to be indemnified by their firm against liabilities incurred in the proper and ordinary conduct of the partnership business, and for anything necessarily done for its preservation; they are entitled to interest at 5% on their advances to the firm, but not on their capital. Every partner may take part in the management of the partnership business, but no partner is entitled to remuneration for so doing. The majority can bind the minority in ordinary matters connected with the partnership business, but cannot change its nature nor expel a partner, unless expressly authorized so to do. No partner may be introduced into the firm without the consent of all the partners. The partnership books must be kept at the principal place of business, and every partner may inspect and copy them. Partners must render to each other true accounts and full information of all things affecting the partnership. A partner may not make private use of anything belonging to his firm nor may he compete with it in business.
Partners may agree what shall and what shall not be partner ship property, and can by agreement convert partnership property into the separate property of the individual partners, and vice versa. Subject to any such agreement, all property originally brought into the partnership stock, or acquired on account of the firm or for the purposes and in the course of its business, is de clared by the Act to be partnership property. Property bought with money of the firm is prima facie bought on account of the firm. Partnership property must be applied exclusively for part nership purposes and in accordance with the partnership agree ment. The legal estate in partnership land devolves according to the general law, but in trust for the persons interested therein.
When no fixed term has been agreed upon for the duration of the partnership, it is at will, and may be determined by notice at any time by any partner. If a partnership for a fixed term is continued after the term has expired without any express new agreement, the rights and duties of the partners remain as before, so far as they are consistent with a partnership at will.
A partner may assign his share in the partnership either abso lutely or by way of mortgage. The assignee does not become a partner; during the continuance of the partnership he has the right to receive the share of profits to which his assignor would have been entitled, but he has no right to interfere in the partnership business, or to require any accounts of the partnership transactions, or to inspect the partnership books.
Since the Act came into operation no writ of execution may issue in England or Ireland against any partnership property, except on a judgment against the firm. If in either of these coun tries a judgment creditor of a partner wishes to enforce his judg ment against that partner's share in the partnership, he must obtain an order of court charging such share with payment of his debt and interest. The court may appoint a receiver of the part ner's share, and may order a sale of such share.
A partnership for a fixed term, or for a single adventure, is dissolved by the expiration of the term or the termination of the adventure. A partnership for an undefined time is dissolved by notice of dissolution, which may be given at any time by any partner. The death or bankruptcy of any partner dissolves the partnership as between all its mem bers. If a partner suffers his share in the partnership to be charged under the Act for his separate debts, his partners may dissolve the partnership. The foregoing rules are subject to any agreement there may be between the partners. A partnership is in every case dissolved by any event which makes the partnership or its business unlawful. The court may order a dissolution in any of the fol lowing cases, viz.: When a partner is found lunatic or is of permanently unsound mind, or otherwise permanently incapable of performing his duties as a partner; when a partner has been guilty of conduct calculated to injure the partnership business, or wilfully or persistently breaks the partnership agreement, or so conducts himself in partnership matters that it is not reasonably practicable for his partners to carry on business with him ; when the partnership can only be carried on at a loss; and lastly, when ever a dissolution appears to the court to be just and equitable. A dissolution usually is not complete as against persons who are not partners, until notice of it has been given; until then such persons may treat all apparent partners as still members of the firm. Notice is not necessary to protect the estate of a dead or bank rupt partner from partnership debts contracted after his death or bankruptcy; nor is notice necessary when a person not known to be a partner leaves a firm. Notice in the Gazette is sufficient as regards all persons who were not previously customers of the firm; notice in fact must be given to old customers.