Definition of partnership
(1) Partnership is the relation which subsists between persons carrying on business in common with a view of profit.
(2) The relation between members of any company or association which is—
(a) registered as a company under the Companies Act 1965 [Act 125] or as a co-operative society under any written law relating to co-operative societies; or
(b) formed or incorporated by or in pursuance of—
(i) any other law having effect in Malaysia or any part thereof; or
(ii) any letters patent, Royal Charter or Act of the Parliament of the United Kingdom, is not a partnership within the meaning of this Act. Certain circumstances not prima facie partnerships
In determining whether a partnership does or does not exist, regard shall be had to the following rules:
(a) joint tenancy, tenancy in common, joint property, common property, or part ownership does not of itself create a partnership as to anything so held or owned, whether the tenants or owners do or do not share any profits made by the use thereof;
(b) the sharing of gross returns does not of itself create a partnership, whether the persons sharing such returns odi a60J 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;
(c) the receipt by a person of a share of the profits of business is prima facie evidence that he is a partner in the business, but the receipt of such a share, or of a payment contingent on or varying with the profits of a business, does not of itself make him a partner in the business; and in particular—
(i) 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 him a partner in the business or liable as such;
(11) a contract for the remuneration of a servant or agent of a person engaged in a business by a share of the profits of the business does not of itself make the servant or agent a partner in the business or liable as such;
(iii) a person being the widow 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, is not, by reason only of such receipt, a partner in the business or liable as such;
(IV) the advance of money by way of loan to a person engaged or about to engage in any business on a contract with that person that the lender shall receive a rate of interest varying with the profits, or shall 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 such: Provided that the contract is in writing and signed by or on behalf of all the parties thereto; and
(v) a person receiving, by way of annuity or otherwise, a portion of the profits of a business in consideration of the sale by him of the goodwill of the business is not, by reason only of such receipt, a partner in the business or liable as such. Postponement of rights of person lending or selling in consideration of share of profits in case of bankruptcy
In the event of the bankruptcy of any person to whom money has been advanced by way of loan upon such a contract as is mentioned in subparagraph 4(c)(iv), or of any buyer of a goodwill in consideration of a share of the profits of the business, 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 other creditors of the borrower or buyer for valuable consideration in money or money's worth have been satisfied.
Meaning of firm and firm-name
Persons 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 firmname.
