Partnership Act 1997

This Act may be cited as the Partnership Act 1997.

This Act comes into operation on the date fixed by the Administrator by notice in the Gazette.

In this Act, unless the contrary intention appears:

AFOF has the same meaning as in the Venture Capital

Act 2002 (Cth).

approved form means a form approved under section 98.

associate has the meaning in section 68.

business includes a trade, occupation or profession.

Commissioner means the Commissioner for Consumer

Affairs.

corresponding law has the meaning in section 73.

external partnership means a partnership or legal entity (however described) in the nature of a partnership, formed under a law of a State, another Territory or another jurisdiction (including a foreign country), whether or not:

the liability of any of its partners for its liabilities is limited; and

it is incorporated or is otherwise a separate legal entity from its partners.

firm has the meaning in section 8.

firm name has the meaning in section 8.

general partner, for an incorporated limited partnership, means an entity that, in accordance with the partnership agreement:

is admitted as a partner in the partnership; and

is not designated as a limited partner in the partnership.

incorporated limited partnership means an incorporated limited partnership formed under Part 3.

liability includes any debt or obligation.

limited partner, for an incorporated limited partnership, means an entity that, in accordance with the partnership agreement:

is admitted as a partner in the partnership; and

is designated as a limited partner in the partnership.

partner, for an incorporated limited partnership, means a general partner or limited partner in the partnership.

partnership has the meaning in section 5.

partnership agreement, for an incorporated limited partnership, has the meaning in section 54.

partnership property has the meaning in section 24.

register means the register of incorporated limited partnerships established by section 58.

registered information has the meaning in section

57(2).

registered name, for an incorporated limited partnership, means the name of the partnership recorded in the register.

registered office, of an incorporated limited partnership, means the address of the principal office of the partnership recorded in the register.

registration means the registration of an incorporated limited partnership under Part 3.

special resolution, for an incorporated limited partnership, means a resolution passed by at least 75% of the limited partners in the partnership.

VCLP has the same meaning as in the Venture Capital

Act 2002 (Cth).

VCMP means a venture capital management partnership within the meaning of the Income Tax Assessment Act 1936 (Cth).

The rules of equity and common law for partnerships continue in force except to the extent to which they are inconsistent with this

Act.

However, except as provided by this or another Act, those rules do not apply to an incorporated limited partnership, its partners and the relationship between the partnership and its partners.

Part 2 Partnerships generally

Division 1 Nature of

Partnerships

A partnership is the relation between people carrying on a business in common with a view of profit, and includes an external partnership and incorporated limited partnership.

However, the relation between members of an association or incorporated body (other than an incorporated limited partnership) is not a partnership.

For this section, a reference to an association includes a reference to an association formed under a law in force in the

Territory.

In determining whether a partnership (other than an incorporated limited partnership) exists regard is to be had to the following rules:

joint tenancy, tenancy in common, joint property, common property, or part ownership, does not of itself create a partnership as to anything held or owned, whether the tenants or owners do or do not share any profits made by the use of any thing held or owned;

the sharing of gross returns does not of itself create a partnership, whether the persons sharing the returns have or have not a joint or common right or interest in any property from which, or from the use of which, the returns are derived;

the receipt by a person of a share of the profits of a business is prima facie evidence that the person is a partner in the business, but the receipt of a share of the profits of a business or of a payment contingent on or varying with the profits of a business does not of itself make the person a partner in the business, and in particular:

the receipt by a person of a debt or other liquidated amount by instalments or otherwise out of the accruing profits of a business does not of itself make the person a partner in the business or liable as a partner;

a contract for the remuneration of an employee or agent of a person engaged in a business by a share of the profits of the business does not of itself make the employee or agent a partner in the business or liable as a partner;

a person being a spouse, de facto partner or child of a deceased partner and receiving by way of annuity a portion of the profits made in the business in which the deceased person was a partner does not of itself make the person a partner in the business or liable as a partner;

the advance of money by way of loan to a person engaged, or about to engage, in a business on a contract with the person that the lender will receive a rate of interest varying with the profits or will receive a share of the profits arising from carrying on the business does not of itself make the lender a partner with the person or persons carrying on the business or liable as a partner;

a person receiving by way of annuity or otherwise a portion of the profits of a business in consideration of the sale by that person of the goodwill of the business is not by reason only of such receipt a partner in the business or liable as such.

A contract referred to in subsection (1)(c)(iv) must be in writing and signed by or on behalf of all the parties for that subparagraph to apply.

Where:

a person to whom money has been advanced by way of loan on a contract referred in section 6; or

a buyer of goodwill in consideration of a share of the profits of a business,

becomes bankrupt, enters into an arrangement to pay his or her creditors less than 100 cents in the dollar or dies insolvent,

the lender of the loan is not entitled to recover anything in respect of the loan; and

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 other creditors of the borrower or buyer for valuable consideration in money or money's worth have been satisfied.

The partners in a partnership other than an incorporated limited partnership are collectively called a firm and its firm name is:

for an external partnership – the name under which its business is carried on under the law of the place where it is formed; or

otherwise – the name under which its business is carried on in the Territory.

An incorporated limited partnership is a firm and its firm name is its registered name.

Division 2 Relationship of partners to persons dealing with them

A partner in a firm other than an incorporated limited partnership is, for the firm's business, an agent of the firm and of the firm's other partners.

An act of the partner in carrying on in the usual way business of the kind carried on by the firm binds the firm and all its partners, unless:

the partner had no authority to act in the matter; and

the person with whom the partner is dealing:

knew the partner did not have that authority; or

did not know or believe the partner was a partner in the firm.

A general partner in an incorporated limited partnership is, for the firm's business, an agent of the firm and of the firm's other general partners.

An act of the general partner in carrying on in the usual way business of the kind carried on by the partnership binds the partnership and all its other general partners, unless:

the general partner had no authority to act in the matter; and

the person with whom the general partner is dealing:

knew the general partner did not have that authority; or

did not know or believe the general partner was a general partner in the partnership.

An act of a person relating to the business of a firm other than an incorporated limited partnership binds the firm and all its partners if the person is authorised by the firm to carry out the act:

in the firm name; or

in any other way showing an intention to bind the firm.

Subject to section 13(4), an act of a person relating to the business of an incorporated limited partnership binds the partnership and all its general partners if the person is authorised by the partnership to carry out the act:

in the partnership's firm name; or

in any other way showing an intention to bind the partnership.

To avoid doubt:

a reference to a person authorised by a firm to carry out an act includes a reference to a partner in the firm so authorised; and

this section does not affect any rule of law about the execution of deeds or negotiable instruments.

The use of the credit of a firm other than an incorporated limited partnership by one of its partners for a purpose not apparently related to its ordinary business does not bind it unless the partner is specially authorised by the other partners to do so.

The use of an incorporated limited partnership's credit by one of its general partners for a purpose not apparently related to its ordinary business does not bind it unless the general partner is specially authorised by it to do so.

To avoid doubt, this section does not affect any personal liability of a partner in a partnership.

If an act contravenes an agreement restricting the power of a partner to bind a firm, the act does not bind the firm in relation to a person who has notice of the agreement.