Partnership Law Act 2019

1: Title
This Act is the Partnership Law Act 2019.
2: Commencement
This Act comes into force immediately after the expiry of the 6-month period that starts on the date of Royal assent.
1: Purpose, overview, and other preliminary provisions
3: Purpose of this Act
The purpose of this Act is to re-enact the Partnership Act 1908
4: Revision Act
1: This is a revision Act for the purposes of section 35
2: Schedule 2 section 31(2)﻿(i)
3: Schedule 3 Partnership Act 1908
5: Overview
1: In this Act,—
a: this Part contains the purpose and overview of this Act:
b: Part 2
c: subpart 1
i: the power of partners to bind the partnership; and
ii: the liability of partners for the debts and obligations of the partnership; and
iii: the liability of the partnership for a partner’s wrongful acts or omissions; and
iv: the liability of persons who represent themselves as partners; and
v: the liability of incoming and outgoing partners; and
vi: the rights of third persons against persons who appear to be partners:
d: subpart 2
i: the variation of rights and duties by consent; and
ii: how partnership property must be held and applied; and
iii: the interests, rights, and duties of partners in relation to partnership property; and
iv: the payment of a partner’s separate debts out of partnership property; and
v: the right of every partner to take part in the management of the partnership business; and
vi: the duty of partners to provide accounts and full information about the partnership; and
vii: the duty of partners to account for private profits or the profits of a competing business:
e: Part 4
2: This section is only a guide to the general scheme and effect of this Act.
6: Transitional, savings, and related provisions
The transitional, savings, and related provisions set out in Schedule 1
7: Interpretation
1: In this Act, unless the context otherwise requires,— business court firm firm name section 10 partnership sections 8 9 partnership property section 36(2) personal representative
2: In this Act, unless the context otherwise requires, a partner ( A leaves
a: retires from the firm (whether voluntarily or under a duty to retire imposed under the partnership agreement); or
b: is expelled from the partnership ( see section 53 1908 No 139 s 2
2: Nature of partnership
Meaning of partnership and firm name
8: Definition of partnership
1: Partnership
2: This section is subject to section 9 1908 No 139 s 4(1)
9: Relationships that are not partnerships
The relationship between the shareholders or members of any of the following is not a partnership within the meaning of this Act:
a: a company registered under the Companies Act 1993
b: a limited partnership that is registered under the Limited Partnerships Act 2008
c: an association registered as a body corporate under any Act:
d: a body corporate or other association formed or incorporated by or under any Act, letters patent, or Royal Charter. 1908 No 139 s 4(2)
10: Meaning of firm and firm name
In this Act,—
a: persons who have entered into partnership with one another are collectively called a firm
b: the name under which their business is carried on is the firm name 1908 No 139 s 7 Determining whether partnership exists
11: Determining whether partnership exists
In determining whether a partnership exists, regard must be had to sections 12 to 15 1908 No 139 s 5
12: Co-ownership of property
1: If 2 or more persons own or hold property as joint tenants, tenants in common, or joint or part owners, the ownership or holding of the property does not by itself create a partnership in relation to the property.
2: This section applies whether or not the tenants or owners share any profits made by the use of the property. 1908 No 139 s 5(a)
13: Sharing gross returns
1: Sharing gross returns does not by itself create a partnership.
2: This section applies whether or not the persons sharing the returns have a joint or common right or interest in a property from which, or from the use of which, the returns are derived. 1908 No 139 s 5(b)
14: Effect of receiving share of profits
1: If a person receives a share of the profits of a business it is presumed, in the absence of evidence to the contrary, that the person is a partner in the business.
2: However, neither of the following by itself makes a person a partner in a business:
a: the receipt by the person of a share of the profits of the business:
b: the receipt by the person of a payment that is contingent on, or varies with, the profits of the business.
3: See section 15 1908 No 139 s 5(c)
15: Where receiving profits or payments does not make person partner or liable as partner
1: None of the following by itself makes a person ( A
a: A receives a payment of a debt or any other liquidated amount, by instalments or otherwise, out of the accruing profits of the business:
b: A is an employee or agent of a person who is engaged in the business and A has a contract for remuneration by a share of the profits of the business:
c: A is a relative of a deceased partner and receives by way of an annuity a share of the profits of the business in which the deceased person was a partner:
d: A is a lender who advances money in the circumstances specified in subsection (3)
e: A receives a share of the profits of the business by way of an annuity or otherwise in consideration of the sale by A of the goodwill of the business.
2: In subsection (1)﻿(c) relative
3: For the purposes of subsection (1)﻿(d)
a: the money is or will be advanced as a loan under a contract to a person who is engaged or about to engage in the business; and
b: under the contract, A will receive—
i: a share of the profits arising from carrying on the business; or
ii: a rate of interest that varies with those profits.
4: For the purposes of subsection (1)﻿(d) subsection (3) 1908 No 139 s 5(c)
16: What happens if borrower or buyer is insolvent
1: This section applies if a borrower under a contract referred to in section 15(3)
a: is adjudged bankrupt; or
b: enters into an arrangement to pay the borrower’s or buyer’s creditors less than the full amount that is owed to those creditors; or
c: dies in insolvent circumstances.
2: The lender under the contract referred to in section 15(3)
3: The seller of the goodwill is not entitled to recover anything in respect of the share of profits contracted for until the claims of the buyer’s other creditors have been satisfied.
4: In this section, creditors 1908 No 139 s 6
3: Relationship of partners to third persons and to each other
1: Relationship of partners to third persons
17: Partner is agent of firm and other partners
Every partner ( A 1908 No 139 s 8
18: Power of partner to bind firm
1: An act of a partner ( A
2: However, this section does not apply if—
a: A has no authority to act for the firm in the particular matter; and
b: the person with whom A is dealing—
i: knows that A has no authority; or
ii: does not know or believe A to be a partner. 1908 No 139 s 8
19: Effect of notice that firm will not be bound by acts of partner
1: This section applies if—
a: the partners agree that the power of 1 or more of them to bind the firm is restricted; and
b: an act contravenes the agreement.
2: The act is not binding on the firm with respect to any person who has notice of the agreement. 1908 No 139 s 11
20: Partners bound by acts done or instruments executed on behalf of firm
1: An act or instrument relating to the business of the firm is binding on the firm and all the partners if it is done or executed—
a: in the firm’s name or in any other manner that shows an intention to bind the firm; and
b: by a person who is authorised to do the act or execute the instrument (whether or not the person is a partner).
2: However, this section does not affect any general rule of law about the execution of deeds or negotiable instruments. 1908 No 139 s 9
21: Partner using credit of firm for private purposes
1: This section applies if a partner ( A
2: The firm is not bound unless A is specially authorised by the other partners.
3: This section does not affect any personal liability incurred by a particular partner. 1908 No 139 s 10
22: Liability of partners for firm’s debts and obligations
1: Every partner ( A
2: After A’s death, A’s estate is also severally liable in a due course of administration for those debts and obligations to the extent that they remain unsatisfied.
3: However, subsection (2) 1908 No 139 s 12
23: Liability of firm for partner’s wrongful acts or omissions
1: This section applies if—
a: a partner ( A
i: in the ordinary course of the business of the firm; or
ii: with the authority of A’s partners; and
b: the wrongful act or omission—
i: causes loss or injury to any person (other than a partner in the firm); or
ii: results in a penalty being incurred.
2: The firm is liable for the loss, injury, or penalty to the same extent as A. 1908 No 139 s 13
24: Misapplication of money or property received for or in custody of firm
A firm is liable for a loss if—
a: a partner—
i: receives the money or property of a third person while acting within the scope of the partner’s apparent authority; and
ii: misapplies the money or property; or
b: the firm, in the course of its business, receives the money or property of a third person and the money or property is misapplied by 1 or more of the partners while it is in the custody of the firm. 1908 No 139 s 14
25: Liability for wrongful acts or omissions is joint and several
Each partner ( A section 23 24 1908 No 139 s 15
26: Improper use of trust property for partnership purposes
1: If a partner who is a trustee improperly uses trust property in the partnership business or for the partnership, no other partner is liable for the trust property to the persons beneficially interested in the trust property.
2: However, this section does not—
a: affect any liability incurred by a partner because the partner has notice of a breach of trust; or
b: prevent trust property from being followed and recovered from the firm if it is still in the firm’s possession or under its control. 1908 No 139 s 16
27: Person liable if they represent themselves as partner
1: This section applies to a person ( A
a: represents themselves as a partner in a firm (whether the representation is made orally, in writing, or by the person’s conduct); or
b: knowingly allows themselves to be represented as a partner in a firm.
2: A is liable as a partner of the firm to any person ( B
3: This section applies whether or not the representation has been made or communicated to B by A or with A’s knowledge.
4: This section is subject to section 28 1908 No 139 s 17(1)
28: Continued use of firm name when partner dies
1: This section applies if, after the death of a partner ( A
2: The continued use of the old firm name, or of A’s name as part of that firm name, does not by itself make A’s estate liable for any partnership debts that are contracted after A’s death. 1908 No 139 s 17(2)
29: Admissions and representations of partners
An admission or a representation made by a partner is evidence against the firm if the admission or representation—
a: concerns the partnership affairs; and
b: is made in the ordinary course of the partnership business. 1908 No 139 s 18
30: Notice to acting partner is notice to firm
1: Notice to a partner operates as notice to the firm if—
a: the partner habitually acts in the partnership business; and
b: the notice is about any matter that relates to partnership affairs.
2: This section does not apply in the case of fraud committed against the firm by, or with the consent of, the partner. 1908 No 139 s 19
31: Liability of incoming partner
If a person ( A 1908 No 139 s 20(1)
32: Liability of partner who leaves firm
1: A partner ( A
2: A may be discharged from an existing liability by an agreement to that effect between—
a: A; and
b: the members of the firm as newly composed; and
c: the creditor.
3: The agreement may—
a: be an express agreement; or
b: be inferred as a fact from the course of dealing between the creditor and the firm as newly composed. 1908 No 139 s 20(2), (3)
33: Rights of persons dealing with firm against apparent members of firm
1: If a person deals with a firm after a change in its composition, the person may treat all apparent members of the old firm as still being members of the firm until the person has notice of the change.
2: An advertisement in the Gazette
3: However,—
a: the estate of a partner who dies or who becomes bankrupt is not liable for partnership debts contracted after the date of the death or bankruptcy:
b: a partner who leaves a firm is not liable for partnership debts contracted after the date of leaving if the person dealing with the firm did not know that the partner had been a partner of the firm. 1908 No 139 s 39
34: Continuing guarantee revoked by change in firm
1: The following are revoked in relation to future transactions by any change in the composition of a firm:
a: a continuing guarantee given to the firm in respect of the firm’s transactions:
b: a continuing guarantee given to a third person in respect of the firm’s transactions.
2: This section does not apply if there is an agreement to the contrary. 1908 No 139 s 21
34A: COVID-19 business debt hibernation may apply
2022-06-01 Partnership Law Act 2019 Section 34A is repealed on the close of 31 May 2022. Section 34A repealed 31 May 2022 section 34A(2)
2: Relationship of partners to one another
35: Partners’ rights and duties may be varied by consent
1: The mutual rights and duties of partners may be varied by the consent of all the partners.
2: Subsection (1)
3: The consent may either be express or be inferred from a course of dealing. 1908 No 139 s 22
36: Partnership property
1: Partnership property must be held and applied by the partners—
a: exclusively for the purposes of the partnership; and
b: in accordance with the partnership agreement.
2: In this Act, partnership property
a: originally brought into the partnership stock; or
b: acquired (whether by purchase or otherwise)—
i: for the firm; or
ii: for the purposes, and in the course, of the partnership business. 1908 No 139 s 23(1)
37: Partnership land
Despite section 36 section 38 1908 No 139 s 23(2)
38: Co-owners of land who purchase other land out of profits
1: This section applies if—
a: co-owners of an estate or interest in any land (the original property
b: the original property is not itself partnership property; and
c: those co-owners purchase another estate or interest in land (the second property
2: The second property belongs to the persons referred to in subsection (1)
3: This section does not apply if there is an agreement to the contrary. 1908 No 139 s 23(3)
39: Property bought with partnership money
1: Property bought with money belonging to the firm must be treated as having been bought for the firm.
2: This section applies unless the contrary intention appears. 1908 No 139 s 24
40: Partnership land treated as personal property as between partners
1: Land that has become partnership property must be treated as between the partners as personal property and not real property.
2: If a partner is deceased,—
a: the reference to the partners in subsection (1)
b: subsection (1)
3: This section applies unless the contrary intention appears. 1908 No 139 s 25
41: Writ of execution against partnership property
A writ of execution must not be issued against any partnership property except on a judgment against the firm. 1908 No 139 s 26(1)
42: Court may charge partner’s interest for their separate judgment debt
1: The High Court may,—
a: on the application of a judgment creditor of a partner ( A
b: appoint a receiver of—
i: A’s share of the partnership profits (whether already declared or accruing); and
ii: any other money that would otherwise be payable to A in respect of the partnership; and
c: direct all accounts and inquiries, and give all other orders and directions,—
i: that might have been directed or given if A had given the charge in favour of the judgment creditor; or
ii: that the circumstances of the case require.
2: The High Court may act under subsection (1)﻿(b) or (c)
a: when making an order under subsection (1)﻿(a)
b: by making a subsequent order or direction.
3: The District Court may make any order, or give any directions, that may be made or given by the High Court under this section if—
a: a judgment creditor has obtained in, or removed into, the District Court a judgment, order, or decree for the payment of a sum of money; and
b: the judgment creditor applies for an order or a direction under this section. 1908 No 139 s 26(2), (2A)
43: Other partners may redeem or purchase interest
If a partner’s interest is charged under section 42
a: redeem the interest; or
b: purchase the interest if the court directs a sale of the interest. 1908 No 139 s 26(3)
44: Rules about interests and duties of partners
1: The rules in sections 45 to 52
a: the interests of partners in the partnership property; and
b: their rights and duties in relation to the partnership.
2: However, this section and those sections are subject to any agreement (express or implied) between the partners. 1908 No 139 s 27
45: Partners share equally in capital and profits and contribute equally to losses
1: All the partners are entitled to share equally in the capital and profits of the partnership business.
2: All the partners must contribute equally towards the losses of the firm (whether the losses are of capital or otherwise). 1908 No 139 s 27(a)
46: Firm must indemnify partner for payments made, and personal liabilities incurred, for firm
The firm must indemnify a partner for payments made, and personal liabilities incurred, by the partner—
a: in the ordinary and proper conduct of the partnership business; or
b: in or relating to doing any thing that is necessary to preserve the business or property of the firm. 1908 No 139 s 27(b)
47: Entitlement to interest
1: If a partner makes, for the purpose of the partnership, an actual payment or an advance that is more than the capital that the partner has agreed to provide, the partner is entitled to interest at the rate of 5% per year from the date of the payment or advance.
2: A partner is not entitled, before the profits are ascertained, to interest on the capital provided by the partner. 1908 No 139 s 27(c), (d)
48: Partner may manage business
Every partner may take part in the management of the partnership business. 1908 No 139 s 27(e)
49: Partner not entitled to remuneration
No partner is entitled to remuneration for acting in the partnership business. 1908 No 139 s 27(f)
50: No new partner without consent
No person may be introduced as a partner without the consent of all existing partners. 1908 No 139 s 27(g)
51: Most decisions may be made by majority
1: Any difference about ordinary matters connected with the partnership business may be decided by a majority of the partners.
2: However, no change may be made to the nature of the partnership business without the consent of all existing partners. 1908 No 139 s 27(h)
52: Access to partnership’s records
1: The partnership’s records must be reasonably available at the place of business of the partnership (or at the principal place of business if there is more than 1).
2: Every partner may, when the partner thinks fit, have access to, inspect, and copy any of the partnership’s records. 1908 No 139 s 27(i)
53: Expulsion of partner
A majority of the partners cannot expel a partner unless a power to do so has been given by express agreement between the partners. 1908 No 139 s 28
54: Duty of partners to provide accounts and full information on things affecting partnership
Partners must provide true accounts and full information of all things that affect the partnership to any partner or any partner’s legal representatives. 1908 No 139 s 31
55: Accountability of partners for private benefit
1: Every partner must account to the firm for a benefit that the partner obtains, without the consent of the other partners, from—
a: any transaction concerning the partnership; or
b: the partner’s use of the partnership property, name, or business connections.
2: This section also applies to transactions undertaken after a partnership has been dissolved because of the death of a partner and before the affairs of the partnership have been completely wound up (where the transactions are undertaken either by a surviving partner or by the personal representatives of the deceased partner). 1908 No 139 s 32
56: Duty to account for profits of competing business
Every partner must account for and pay over to the firm all profits made by the partner in a business if—
a: the partner carries on the business without the consent of the other partners; and
b: the business is of the same nature as, and competes with, the business of the firm. 1908 No 139 s 33
57: Rights of assignee of share in partnership
1: This section applies if a partner assigns the partner’s share in the partnership (either absolutely or by way of mortgage).
2: While the partnership continues, the assignment entitles the assignee only to receive the share of the profits to which the assigning partner would otherwise be entitled.
3: For the purposes of subsection (2)
4: The assignment does not, as against the other partners, entitle the assignee, while the partnership continues, to—
a: interfere in the management or administration of the partnership business or affairs; or
b: require an account of the partnership transactions; or
c: inspect the partnership’s records.
5: If the partnership is dissolved (whether with respect to all the partners or with respect to the assigning partner), the assignee is entitled—
a: to receive the share of the partnership assets to which the assigning partner is entitled as between the assigning partner and the other partners; and
b: to an account as from the date on which the partnership is dissolved (for the purpose of ascertaining that share). 1908 No 139 s 34
4: Financial reporting, dissolution of partnership, and other miscellaneous provisions
1: Financial reporting for large partnerships
58: Definitions of terms used in this subpart
1: In this subpart, accounting period applicable auditing and assurance standard applicable financial reporting standard section 5(1)
2: In this subpart,— balance date section 41 financial statements section 6 generally accepted accounting practice section 8 large partnership section 45 qualified auditor section 35 1908 No 139 s 34D
59: Accounting records
1: The partners of a large partnership must ensure that, at all times, accounting records are kept that—
a: correctly record the transactions of the partnership; and
b: will enable the partnership to ensure that the financial statements of the partnership comply with generally accepted accounting practice; and
c: will enable the partnership’s financial statements to be readily and properly audited (if those statements are required to be audited).
2: The partners of a large partnership must establish and maintain a satisfactory system of control of its accounting records.
3: The accounting records must be kept—
a: in written form in English; or
b: in a form or manner in which they are easily accessible and convertible into written form in English. 1908 No 139 s 34B
60: Financial statements must be prepared
The partners of a large partnership must ensure that, within 5 months after the balance date of the partnership, financial statements that comply with generally accepted accounting practice are—
a: completed for the partnership and that balance date; and
b: dated and signed on behalf of the partners by 2 partners. 1908 No 139 s 34C
61: Financial statements must be audited
1: The partners of a large partnership must ensure that the financial statements of the partnership are audited by a qualified auditor.
2: This section does not apply to a partnership if the partnership opts out of this section under section 64
3: See sections 37 to 39 1908 No 139 s 34E
62: Audit must comply with auditing and assurance standards
1: An auditor must, in carrying out an audit for the purposes of section 61
2: The auditor's report must comply with the requirements of all applicable auditing and assurance standards. 1908 No 139 s 34F
63: Financial reporting offences
1: Every partner of a partnership commits an offence and is liable on conviction to a fine not exceeding $50,000 if—
a: the partners fail to comply with section 59
b: the partners are required to comply with section 60
i: are not completed and signed within the time specified in that section; or
ii: fail to comply with an applicable financial reporting standard; or
c: the partners fail to comply with section 61
2: It is a defence for a partner charged with an offence under this section in respect of a requirement if the partner proves that—
a: the partnership took all reasonable and proper steps to ensure that the requirement would be complied with; or
b: the partner took all reasonable steps to ensure that the requirement would be complied with; or
c: in the circumstances, the partner could not reasonably have been expected to take steps to ensure that the requirement would be complied with. 1908 No 139 s 34G
64: Partnerships may opt out of audit requirement
1: This section applies to a large partnership unless the partnership agreement expressly provides that this section does not apply.
2: The partnership may, within 6 months from the start of an accounting period, opt out of compliance with section 61
3: The partnership opts out by a resolution that is passed or signed by partners who together are entitled to share in at least 95% of the capital of the firm.
4: If the partnership opts out in relation to an accounting period, section 61 1908 No 139 s 34H
65: Duties do not apply if alternative financial reporting duties under Financial Markets Conduct Act 2013
Sections 60 to 64 subpart 3 1908 No 139 s 34A
2: End of partnership
How partnership may end
66: Partnership dissolved at end of term, by end of venture or undertaking, or by notice
1: A partnership is dissolved,—
a: if entered into for a fixed term, at the end of the term:
b: if entered into for a single venture or undertaking, by the end of the venture or undertaking:
c: if entered into for an undefined time, by any partner giving notice to all the other partners of the partner’s intention to dissolve the partnership.
2: However, see section 68
3: Subsection (1)
4: In the case of subsection (1)﻿(c)
a: the date stated in the notice as the date of dissolution; or
b: if no date is stated, the date on which the notice is received by the other partner or partners. 1908 No 139 s 35
67: Ending partnership at will
1: If the partners have not agreed on a fixed term for the duration of the partnership, any partner may dissolve the partnership at any time by giving notice to all the other partners of the partner’s intention to dissolve the partnership.
2: If the partnership was originally constituted by deed, a notice in writing, signed by the partner giving the notice, is sufficient for the purpose of subsection (1) 1908 No 139 s 29
68: Partnership that continues after end of fixed term
1: This section applies if a partnership that was entered into for a fixed term is continued—
a: after the term has ended; and
b: without any new express agreement.
2: The rights and duties of the partners remain the same as they were at the end of the fixed term (to the extent that those rights and duties are consistent with the features of a partnership at will).
3: A partnership is presumed to be continued if the business is continued—
a: by the partners or by those partners who habitually acted in the business during the fixed term; and
b: without any settlement or liquidation of the partnership’s affairs. 1908 No 139 s 30
69: Partnership dissolved by death or bankruptcy
1: A partnership is dissolved with respect to all the partners by the death or bankruptcy of any partner.
2: This section is subject to any agreement between the partners. 1908 No 139 s 36(1)
70: Partnership may be dissolved if partner’s interest in property is charged
1: If a partner allows their interest in the partnership property to be charged under this Act for the partner’s separate debt ( see section 42
2: The decision of the other partners to dissolve the partnership must be unanimous. 1908 No 139 s 36(2)
71: Partnership dissolved if unlawful
A partnership is dissolved if an event occurs that makes it unlawful for—
a: the partnership business to be carried on; or
b: the partners to carry on the business in partnership. 1908 No 139 s 37
72: Court may dissolve partnership
The court may, on an application under section 73
a: a partner is a mentally impaired person who, in the opinion of the court, permanently lacks wholly or partly the competence to manage their own affairs; or
b: a partner is in any other way permanently incapable of performing the partner’s part of the partnership agreement; or
c: a partner is guilty of conduct that, in the opinion of the court after having regard to the nature of the business, is calculated to prejudicially affect the carrying on of the business; or
d: a partner—
i: wilfully or persistently breaches the partnership agreement; or
ii: otherwise acts in matters relating to the partnership business in such a manner that it is not reasonably practicable for the other partner or partners to carry on the business in partnership with the partner; or
e: the partnership business can be carried on only at a loss; or
f: circumstances have arisen that, in the opinion of the court, make it just and equitable to dissolve the partnership. 1908 No 139 s 38
73: Application to court
1: An application, in the case of section 72(a)
a: may be made by any partner; or
b: may be made on behalf of the partner referred to in that paragraph by—
i: the partner’s manager appointed under the Protection of Personal and Property Rights Act 1988
ii: the partner’s next friend; or
iii: a person who is entitled to intervene.
2: An application, in the case of paragraph (b), (c), or (d) section 72
3: An application, in the case of section 72(e) or (f) 1908 No 139 s 38 Dissolving a partnership
74: Right to notify dissolution
When a partnership is dissolved or when a partner leaves the firm, any partner may—
a: publicly notify that fact; and
b: for the purpose of that notification, require the other partners to consent to, or otherwise co-operate in the performance of, all necessary or proper acts (if any) that cannot be done without the other partners’ consent or co-operation. 1908 No 139 s 40
75: Continuing authority of partners for purposes of winding up and completing transactions
1: This section applies after a partnership is dissolved.
2: The authority of each partner to bind the firm, and the other rights and obligations of the partners, continue (despite the dissolution) to the extent that is necessary—
a: to wind up the affairs of the partnership; and
b: to complete transactions begun before, but unfinished at, the time that the partnership is dissolved.
3: The authority and the rights and obligations do not otherwise continue.
4: Despite subsection (2)
5: Subsection (4)
a: represented themselves as a partner of the bankrupt; or
b: knowingly allowed themselves to be represented as a partner of the bankrupt. 1908 No 139 s 41
76: Application of partnership property
1: When a partnership is dissolved, every partner is entitled as against the other partners, and all persons who claim through them in respect of their interests as partners, to have—
a: the partnership property applied in payment of the debts and liabilities of the firm; and
b: the surplus assets (after the payment of those debts and liabilities) applied in payment of what may be due to each of the partners (after deducting what may be due from them as partners).
2: For the purpose of this section, a partner or the partner’s representatives may, on the dissolution of the partnership, apply to the court to wind up the business and affairs of the partnership. 1908 No 139 s 42
77: Court may order repayment of premium if partnership prematurely dissolved
1: This section applies if—
a: one partner has paid a premium to another on entering into a partnership for a fixed term; and
b: the partnership is dissolved before the end of that term (except if it is dissolved because of the death of a partner).
2: The court may order the repayment of the premium or of a part of the premium that it thinks just.
3: For the purposes of subsection (2)
a: the terms of the partnership agreement; and
b: the length of time that the partnership lasted.
4: However, subsection (2)
a: the dissolution of the partnership is, in the judgment of the court, entirely or mainly due to the misconduct of the partner who paid the premium; or
b: the partnership is dissolved by an agreement that contains no provision for a return of any part of the premium. 1908 No 139 s 43
78: Rights where partnership dissolved for fraud or misrepresentation
1: If a partnership agreement is rescinded on the ground of the fraud or misrepresentation of one of the parties to the agreement, the party who is entitled to rescind ( A
a: to a lien on, or right of retention of, the surplus of the partnership assets (after satisfying the partnership liabilities) for—
i: any sum of money paid by A for the purchase of a share in the partnership; and
ii: any capital contributed by A; and
b: to stand in the place of the creditors of the firm for any payments made by A in respect of the partnership liabilities; and
c: to be indemnified, by the person guilty of the fraud or of making the representation, against all the debts and liabilities of the firm.
2: The rights in subsection (1) 1908 No 139 s 44
79: Right of outgoing partner or partner’s estate to share profits or obtain interest
1: This section and section 80
a: a member of a firm ( A
b: 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 A or A’s estate.
2: A or A’s estate is entitled, at the option of A or A’s personal representative, to—
a: a share of the profits that are made after the dissolution of the partnership and that the court finds to be attributable to the use of A’s share of the partnership assets; or
b: interest at the rate of 5% per year on the amount of A’s share of the partnership assets.
3: Subsection (2) 1908 No 139 s 45(1)
80: Option to purchase share of outgoing or deceased partner
1: Despite section 79
a: under the partnership agreement, the surviving or continuing partners have an option to purchase the interest of a deceased or an outgoing partner; and
b: the surviving or continuing partners exercise that option.
2: However, if a partner who is purporting to exercise the option does not, in all material respects, comply with the terms of the option, the partner is liable to account under section 79 1908 No 139 s 45(2)
81: Retiring or deceased partner’s share is debt
1: The amount due from surviving or continuing partners to an outgoing partner or the personal 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.
2: This section is subject to any agreement between the partners. 1908 No 139 s 46
82: Rules for distributing assets on final settlement of accounts
1: Sections 83 84
2: This section and sections 83 84 1908 No 139 s 47
83: Losses
Losses (including losses and deficiencies of capital) must be paid—
a: first out of profits:
b: next out of capital:
c: lastly, if necessary, by the partners individually in the proportion in which they are entitled to share the profits. 1908 No 139 s 47(a)
84: Application of assets
The assets of the firm, including the sums (if any) contributed by the partners to make up losses or deficiencies of capital, must be applied in the following manner and order:
a: in paying the debts and liabilities of the firm to persons who are not partners in the firm:
b: in paying to each partner rateably what is due from the firm to the partner for advances (as distinguished from capital):
c: in paying to each partner rateably what is due from the firm to the partner in respect of capital:
d: in dividing the remainder (if any) among the partners in the proportion in which they are entitled to share the profits. 1908 No 139 s 47(b)
3: Repeal and consequential amendments
85: Partnership Act 1908 repealed
The Partnership Act 1908 2020-04-21 Partnership Act 1908
86: Amendments to other enactments
The enactments specified in Schedule 4 2020-04-21 Construction Contracts Act 2002 Electricity Industry Act 2010 Financial Markets Conduct Act 2013 Friendly Societies and Credit Unions Act 1982 Goods and Services Tax Act 1985 Income Tax Act 2007 Limited Partnerships Act 2008 Motor Vehicle Sales Act 2003 New Zealand Business Number Act 2016