Third Parties, Types of Partners & Dissolution — KSLU Contract 2 Notes

Third Parties, Types of Partners & Dissolution

Every partner is an agent of the firm (S.18) and his implied authority (S.19) binds the firm for acts done in the usual course of business. A partner’s liability is joint and several and unlimited (S.25). Types of partners include active, sleeping/dormant, nominal, partner in profits only, sub-partner, and a partner by holding out / estoppel (S.28) who, having represented himself as a partner, is liable to one who gave credit on that faith. The firm’s constitution changes by admission (S.31), retirement (S.32), expulsion (S.33), insolvency (S.34) or death (S.35) of a partner, with a continuing liability until public notice is given.

Dissolution may be: of the firm by agreement (S.40); compulsory on insolvency or illegality (S.41); on the happening of contingencies (S.42); by notice in a partnership at will (S.43); or by the court on grounds such as a partner’s insanity, permanent incapacity, misconduct or persistent breach (S.44).

⚠️ Effect of Non-Registration (S.69): registration is optional but crucial. An unregistered firm cannot sue a third party, and a partner of an unregistered firm cannot sue the firm or co-partners, to enforce a contractual right. Exceptions: a suit for dissolution, for accounts of a dissolved firm, or to realise the property of a dissolved firm, and a third party’s suit against the firm, are not barred.