as enacted by SM 1987-88, c. 9 on July 17, 1987.
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R.S.M. 1987, c. P30
The Partnership Act
HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:
In this Act,
"business" includes every trade, occupation or profession; ("entreprise")
"partnership" includes a limited partnership; ("société en nom collectif")
"person" includes a sole proprietorship, partnership, unincorporated association, syndicate or organization, a trust, and a natural person in his capacity as trustee, executor, administrator or other legal representative. ("person")
The provisions of this Part, so far as they are not inconsistent with the provisions of Part II, apply to every partnership including a limited partnership.
Saving for rules of equity and common law.
The rules of equity and of common law applicable to partnership continue in force, except so far as they are inconsistent with the express provisions of this Act.
Partnership is the relation which subsists between persons carrying on a business in common, with a view of profit; but the relationship between members of an incorporated company or association is not a partnership within the meaning of this Act.
Rules for determining existence of partnership.
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 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;
(c) the receipt by a person of a share of the profits of a business is prima facie proof 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 the 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,
(ii) 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 surviving spouse or a 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 that 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, if the contract is in writing, and signed by or on behalf of all the parties thereto,
(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 lender or seller in case of insolvency.
Where a person to whom money has been advanced by way of loan upon such a contract as is mentioned in section 4, or a buyer of goodwill in consideration of a share of the profits of the business, is adjudged a bankrupt or insolvent, enters into an arrangement to pay his creditors less than one hundred cents on the dollar, or dies in insolvent circumstances, the lender of the loan is not entitled to recover anything in respect of his 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 of money's worth have been satisfied.
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 firm name.
A firm may be, and shall be conclusively deemed always to have had the capacity to be, a party to a partnership agreement and thereby to become a partner in a separate partnership relationship.
Power of partner to bind the firm.
Every partner is an agent of the firm and his other partners for the purpose of the business of the partnership; and the acts of every partner who does any act for carrying on, in the usual way, business of the kind carried on by the firm of which he is a member bind the firm and his partners, unless the partner so acting has, in fact, no authority to act for the firm in the particular matter, and the person with whom he is dealing either knows that he has no authority or does not know or believe him to be a partner.
Partners bound by acts on behalf of firm.
An act or instrument relating to the business of the firm and done or executed in the firm name, or in any other manner showing an intention to bind the firm, by any person thereto authorized, whether a partner or not, is binding on the firm and all the partners; but this section does not affect any general rule of law relating to the execution of deeds or negotiable instruments.
Partner using credit of firm for private purposes.
Where one partner pledges the credit of the firm for a purpose apparently not connected with the firm's ordinary course of business, the firm is not bound, unless he is in fact specially authorized by the other partners; but this section does not affect any personal liability incurred by an individual partner.
Effect of notice that firm will not be bound by acts of partner.
Where it is agreed between the partners to restrict the power of any one or more of them to bind the firm, no act done in contravention of the agreement is binding on the firm with respect to persons having notice of the agreement.
Every partner of a firm is liable jointly and severally with the other partners, for all debts and obligations of the firm incurred while he is a partner; and after his death his estate is also severally liable in a due course of administration for the debts and obligations, so far as they remain unsatisfied, but subject to the prior payment of his separate.
Liability of the firm for wrongs.
Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of the firm, or with the authority of his co-partners, loss or injury is caused to any person not being a partner in the firm, or any penalty is incurred, the firm is liable therefor to the same extent as the partner so acting or omitting to act.
(a) one partner acting within the scope of his apparent authority receives money or property of a third person and misapplies it; or
(b) a firm in the course of its business receives money or property of a third person and the money or property so received is misapplied by one or more of the partners while it is in the custody of the firm;
the firm is liable to make good the loss.
Liability for wrongs, joint and several.
Every partner is liable jointly and severally with is co-partners, for everything for which the firm, while he is a partner thereof, becomes liable under section 13 or 14.
Improper employment of trust property.
Where, a partner, being a trustee, improperly employs trust property in the business or on the account of the partnership, no other partner is liable for the trust property to the persons beneficially interested therein; but
(a) this section does not affect any liability incurred by any partner by reason of his having notice of a breach of trust; and
(b) nothing in this section prevents trust money from being followed and recovered from the firm if still in its possession or under its control.
Persons liable by "holding out".
Every one who by words spoken or written, or by conduct, represents himself, or who knowingly suffers himself to be represented, as a partner in a particular firm, is liable as a partner to any one who has on the faith of any such representation given credit to the firm, whether the representation has or has not been made or communicated to the person so giving credit by or with the knowledge of the apparent partner making the representation or suffering it to be made.
Continuing business after death of partner.
Where, after a partner's death, the partnership business is continued in the old firm name, the continued use of that name or of the deceased partner's name as part thereof does not of itself make his executor or administrator or his estate or effects liable for any partnership debts contracted after his death.
Admissions and representations of partners.
An admission or representation made by a partner concerning the partnership affairs, and in the ordinary course of its business, is evidence against the firm.
Notice to acting partners to be notice to the firm.
Notice to a partner who habitually acts in the partnership business of any matter relating to partnership affairs operates as notice to the firm, except in the case of a fraud on the firm committed by or with the consent of that partner.
Liabilities of incoming and outgoing partners.
A person who is admitted as a partner into an existing firm does not thereby become liable to the creditors of the firm for anything done before he became a partner.
A partner who retires from a firm does not thereby cease to be liable for partnership debts or obligations incurred before his retirement.
A retiring partner may be discharged from any existing liabilities, by an agreement to that effect between himself and the members of the firm as newly constituted and the creditors; and the agreement may be either express or inferred as a fact from the course of dealing between the creditors and the firm as newly constituted.
Revocation of continuing guaranty by change in firm.
A continuing guaranty given either to a firm or to a third person in respect of the transactions of a firm is, in the absence of agreement to the contrary, revoked as to future transactions by any change in the constitution of the firm to which, or of the firm in respect of the transactions of which, the guaranty was given.
Variation by consent of terms of partnership.
The mutual rights and duties of partners, whether ascertained by agreement or defined by this Act, may be varied by the consent of all the partners, and the consent may be either express or inferred from a course of dealing.
All property and rights and interests in property originally brought into the partnership stock or acquired, whether by purchase or otherwise, on account of the firm, or for the purposes and in the course of the partnership business, are called in this Act "partnership property", and must be held and applied by the partners exclusively for the purposes of the partnership, and in accordance with the partnership agreement.
Land belonging to partnership.
The legal estate or interest in any land, that belongs to the partnership, shall devolve according to the nature and tenure thereof and the general rules of law thereto applicable, but in trust so far as necessary, for the persons beneficially interested in the land under this section.
Land not belonging to partnership.
Where co-owners of an estate or interest in land that is not partnership property, are partners as to profits made by the use of that land, and the co-owners from profits made by the use of that land purchase other land for the purpose of sharing the profits from the use thereof, the land so purchased belongs to them in the absence of an agreement to the contrary, not as partners, but as co-owners for the same respective estates and interests as are held by them in the land first mentioned at the date of the purchase.
Property bought with partnership money.
Unless the contrary intention appears, property bought with money belonging to the firm is deemed to have been bought on account of the firm.
Conversion into personal estate of land held as partnership property.
Where land or any interest therein becomes partnership property, it shall, unless the contrary intention appears, be treated as between the partners, including the representative of a deceased partner, and also between the persons beneficially entitled to his estate, as personal or movable and not as real estate.
Procedure against partnership property for separate judgment.
The Court of Queen's Bench may, on the application of any judgment creditor of a partner, make an order charging that partner's interest in the partnership property and profits with payment of the amount of the judgment debt and interest thereon, and may by the same or subsequent order appoint a receiver of that partner's share of profits, whether already declared or accruing, and of any other money that may become due to him in respect of the partnership, and direct all accounts and inquiries, and give all other orders and directions, that might have been directed or given if the charge had been made in favour of the judgment creditor by the partner, or which the circumstances of the case may require.
The other partner or partners are at liberty at any time to redeem the interest charged or, in case of a sale being directed, to purchase it.
Rules as to interests and duties of partners.
The interests of partners in the partnership property and their rights and duties in relation to the partnership shall be determined, subject to any agreement, express or implied, between the partners, by the following rules:
(a) All the partners are entitled to share equally in the capital and profits of the business, and must contribute equally towards the losses, whether of capital or otherwise, sustained by the firm.
(b) The firm must indemnify every partner in respect of payments made and personal liabilities incurred by him,
(i) in the ordinary and proper conduct of the business of the firm; or
(ii) in or about anything necessarily done for the preservation of the business or property of the firm.
(c) A partner making, for the purpose of the partnership, any actual payment or advance beyond the amount of capital which he has agreed to subscribe, is entitled to interest at a rate of 5 % per annum from the date of the payment or advance.
(d) A partner is not entitled, before the ascertainment of profits, to interest on the capital subscribed by him.
(e) Every partner may take part in the management of the partnership business.
(f) No partner shall be entitled to remuneration for acting in the partnership business.
(g) No person may be introduced as a partner without the consent of all existing partners.
(h) Any difference arising as to ordinary matters connected with the partnership business may be decided by a majority of the partners, but no change may be made in the nature of the partnership business without the consent of all existing partners.
(i) The partnership books are to be kept at the place of business of the partnership, or the principal place, if there is more than one: and every partner may, when he thinks fit, have access to and inspect and copy any of them.
No majority of the partners can expel any partner, unless a power to do so has been conferred by express agreement between the partners.
Retiring from partnership at will.
Where no fixed term has been agreed upon for the duration of the partnership, any partner may determine the partnership at any time on giving notice of his intention so to do to all the other partners.
For the purpose of subsection (1) where the partnership was originally constituted by deed, a notice in writing, signed by the partner giving it, is sufficient.
Presumption where partnership for term is continued over.
Where a partnership entered into for a fixed term is continued after the term has expired, and without any express new agreement, the rights and duties of the partners remain the same as they were at the expiration of the term, so far as is consistent with the incidents of the partnership at will.
Presumption as to continuance.
A continuance of the business by the partners or such of them as habitually acted therein during the term, without any settlements or liquidation of the partnership affairs, is presumed to be a continuance of the partnership.
Duties of partners to render accounts, etc.
Partners are bound to render true accounts and full information of all things affecting the partnership to any partner or his legal representatives.
Accountability of partners for private profits.
Every partner must account to the firm for any benefit derived by him without the consent of the other partners from any transaction concerning the partnership, or from any use by him of the partnership property, name, or business connection.
Further application of section.
This section applies also to transactions undertaken after a partnership has been dissolved by the death of a partner, and before the affairs thereof have been completely wound up, either by any surviving partner or by the representatives of the deceased partner.
Duty of partner not to compete with firm.
Where a partner, without the consent of the other partners, carries on any business of the same nature as, and competing with, that of the firm, he must account for and pay over to the firm all profits made by him in that business.
Rights of assignee of share in partnership.
An assignment by any partner of his share in the partnership, either absolute or by way of mortgage or redeemable charge, does not, as against the other partners, entitle the assignee, during the continuance of the partnership to interfere in the management or administration of the partnership business or affairs, or to require any accounts of the partnership transactions, or to inspect the partnership books, but entitles the assignee only to receive the share of profits to which the assigning partner would otherwise be entitled, and the assignee must accept the account of profits agreed to by the partners.
In case of a dissolution of the partnership, whether as respects all the partners or as respects the assigning partner, the assignee is entitled to receive the share of the partnership assets to which the assigning partner is entitled as between himself and the other partners and, for the purpose of ascertaining that share, to an account as from the date of the dissolution.
Dissolution by expiration or notice.
Subject to any agreement between the partners, a partnership is dissolved,
(a) if entered into for a fixed term, by the expiration of that term; or
(b) if entered into for a single adventure or undertaking by the termination of that adventure or undertaking; or
(c) if entered into for an undefined time, by any partner giving notice to the other or others of his intention to dissolve the partnership.
In the last mentioned case, the partnership is dissolved as from the date mentioned in the notice as the date of dissolution, or, if no date is mentioned, as from the date of the communication of the notice.
Dissolution by bankruptcy, death or charge.
Subject to any agreement between the partners, every partnership is dissolved as regards all the partners by the death or bankruptcy or insolvency of any partner.
Dissolution for debt of partner.
A partnership may, at the option of the other partners, be dissolved if any partner suffers his share of the partnership property to be charged under this Act for his separate debt.
Dissolution by illegality of partnership.
A partnership is dissolved by the happening of any event that makes it unlawful for the business of the firm to be carried on, or for the members of the firm to carry it on in partnership.
On application by any partner to the Court of Queen's Bench, the court may adjudge a dissolution of the partnership,
(a) where a partner is shown to the satisfaction of the court to be of permanently unsound mind, in which case the application may be made on behalf of that partner by his committee or next friend or person having title to intervene: or
(b) where a partner, other than the partner suing, becomes in any other way permanently incapable of performing his part of the partnership contract: or
(c) where a partner, other than the partner suing, has been guilty of such conduct as, in the opinion of the court, regard being had to the nature of the business, is calculated prejudicially to affect the carrying on of the business; or
(d) where a partner, other than the partner suing, wilfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable for the other partner or partners to carry on the business in partnership with him; or
(e) where the business of the partnership can only be carried on at a loss; or
(f) where in any case circumstances have arisen that, in the opinion of the court, render it just and equitable that the partnership be dissolved.
Rights of persons dealing with firm changing membership.
Where a person dealt with a firm which subsequently undergoes a change in membership, and continues to deal with the firm after the change in membership, he is entitled to treat all the apparent members of the old firm as still being partners of the firm until he has notice of the change.
The registration under The Business Names Registration Act of a declaration of a dissolution or a change in the membership of a partnership is notice to persons who had no dealings with the partnership before the date of the registration but is not notice to persons who had dealings with the partnership before the date of registration until notice of the registration is published in the Manitoba Gazette.
Liability of estate of deceased partner.
The estate of a partner who dies, or who becomes bankrupt, or a partner who, not having been known to the person dealing with the firm to be a partner, retires from the firm, is not liable for partnership debts contracted after the date of the death, bankruptcy, or retirement respectively.
Rights of partners to notify dissolution.
Where a partnership has been dissolved or a partner has retired, and where, if applicable, a declaration of the dissolution has been registered under The Business Names Registration Act, any partner may publicly give notice of the dissolution or retirement, and may require the other partner or partners to concur for that purpose in all necessary or proper acts, if any, that cannot be done without his or their concurrence.
Continuing authority of partners for purposes of winding-up.
Subject to subsection (2), after the dissolution of a partnership the authority of each partner to bind the firm, and the other rights and obligations of the partners, continue, notwithstanding the dissolution, so far as may be necessary to wind up the affairs of the partnership, and to complete transactions begun but unfinished at the time of the dissolution, but not otherwise.
Bankrupt partner without authority.
The firm is not bound by the acts of a partner who has become bankrupt; but this subsection does not affect the liability of any person who has after the bankruptcy represented himself or knowingly suffered himself to be represented as a partner of the bankrupt.
Rights of partners as to application of partnership property.
On the dissolution of a partnership, every partner is entitled, as against the other partners in the firm, and all persons claiming through them in respect of their interests as partners, to have the property of the partnership applied in payment of the debts and liabilities of the firm, and to have the surplus assets after that payment applied in payment of what may be due to the partners respectively, after deducting what may be due from them as partners to the firm; and for that purpose any partner or his representatives may, on the termination of the partnership, apply to the court to wind up the business and affairs of the firm.
Apportionment of premium where partnership prematurely dissolved.
Where one partner has paid a premium to another on entering into a partnership for a fixed term, and the partnership is dissolved before the expiration of that term otherwise than by the death of a partner, upon application to a court, the court may order the repayment of the premium, or of such part thereof as it thinks just, having regard to the terms of the partnership contract and to the length of time during which the partnership has continued; unless,
(a) the dissolution is, in the judgment of the court, wholly or chiefly due to the misconduct of the partner who paid the premium; or
(b) the partnership has been dissolved by an agreement containing no provision for a return of any part of the premium.
Rights where partnership dissolved for fraud or misrepresentation.
Where a contract creating a partnership is rescinded on the ground of the fraud or misrepresentation of one of the parties thereto, the party entitled to rescind is, without prejudice to any other right, entitled,
(a) to a lien on, or right of retention of, the surplus of partnership assets, after satisfying the partnership liabilities, for any sum of money paid by him for the purchase of a share in the partnership and for any capital contributed by him;
(b) to stand in the place of the creditors of the firm for any payments made by him in respect of the partnership liabilities; and
(c) to be indemnified, by the person guilty of the fraud or making the representation, against all the debts and liabilities of the firm.
Rights of outgoing partner in certain cases.
Where any member of a firm dies or otherwise ceases to be a partner, and 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 the outgoing partner or his estate, then, in the absence of any agreement to the contrary the outgoing partner or his estate is entitled, at the option of himself or his representatives, to such share of the profits made since the dissolution as the court may find to be attributable to the use of his share of the partnership assets, or to interest at the rate of 5 % per annum on the amount of his share of the partnership assets.
Where, by a contract creating a partnership an option is given to surviving or continuing partners to purchase the interest of a deceased or outgoing partner, and that option is duly exercised, the estate of the deceased partner, or the outgoing partner or his estate, as the case may be, is not entitled to any further or other share of profits; but if any partner, assuming to act in exercise of the option, does not in all material respects comply with the terms thereof, he is liable to account under the foregoing provisions of this section.
Retiring or deceased partner's share to be debt.
Subject to any agreement between the partners, the amount due from surviving or continuing partners to an outgoing partner or the 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.
Rule for distribution of assets on final settlement of accounts.
In settling accounts between the partners after a dissolution of partnership, the following rules shall, subject to any agreement, be observed:
(a) Losses, including losses and deficiencies of capital, shall be paid first out of profits, next out of capital, and lastly, if necessary, by the partners individually in the proportion in which they were entitled to share profits.
(b) The assets of the firm including the sums, if any, contributed by the partners to make up losses or deficiencies of capital, shall be applied in the following manner and order:
(i) In paying the debts and liabilities of the firm to persons who are not partners therein.
(ii) In paying to each partner rateably what is due from the firm to him for advances as distinguished from capital.
(iii) In paying to each partner rateably what is due from the firm to him in respect of capital.
(iv) The ultimate residue, if any, shall be divided among the partners in the proportion in which profits are divisible.
Allegations not controvertible against any party signing.
The allegations made in a declaration under The Business Names Registration Act are not controvertible, as against any party, by any person who has signed it, or as against any party, not being a member of the partnership, by any person who has signed the declaration or who was in fact a member of the partnership therein mentioned at the time the declaration was made.
If declaration not filed, action may be brought.
Subject to subsection (2), where any persons are, or have been, associated as partners for the purpose of carrying on business and so have carried on business in the province, and no declaration has been filed as aforesaid with regard to partnership, any action that might be brought against all the members of the partnership may also be brought against any one or more of them as carrying on, or as having carried on, business jointly with others in the province, without naming the others in the writ or pleading, under the name and style of their partnership, or firm; and, if judgment is recovered against him or them, any other partner or partners may be sued jointly or severally on the original cause of action on which the judgment has been recovered.
Action on instrument naming partners.
Where any such action is founded on an obligation or instrument in writing in which all or any of the partners bound by it is named, all the partners named therein shall be made parties to the action.
Any judgment recovered under section 49 against any member of a partnership, for a partnership debt or liability, may be executed by process of execution against all partnership stock, property, assets and effects, in the same manner, and to the same extent, as if judgment had been recovered against all the members of the partnership in the usual way.
This Part applies only to limited partnerships.
Limited partnership may be formed.
A limited partnership for the transaction of business may be formed by two or more persons, upon the terms, with the rights and powers, and subject to the conditions and liabilities, hereinafter mentioned; but no such partnership shall be formed for the purpose of banking or effecting insurance.
Same person as general and limited partner.
A person may be a general partner and a limited partner at the same time in the same partnership.
A person who is at the same time a general partner and a limited partner in the same partnership has the rights and powers and is subject to the restrictions and liabilities of a general partner, but in respect of his contribution as a limited partner he has the same rights against the other partners as a limited partner.
Constitution of limited partnership.
A limited partnership may consist of one or more persons, who shall be called "general partners", and of one or more persons who contribute a specific or determinable amount, whether in cash, kind, specie, or money's worth or by any other means whatsoever, as capital of the partnership, who shall be called "limited partners".
General and limited partners, liability of.
Subject to section 63, general partners are jointly and severally responsible as general partners are by law; but limited partners are not liable for the debts of a limited partnership beyond the amounts by them respectively contributed to the capital of the limited partnership; except that where a limited partner has already paid into the capital of the limited partnership the amount of his contribution, he shall not be further liable for any of the debts of the partnership.
General partners only to transact business, etc.
The general partners only are authorized to bind the partnership; but where a limited partner, to the knowledge of the general partners, takes part in the management of the partnership business, he has power to bind the partnership.
The onus of proof as to knowledge under subsection (1) is on the general partners.
Partnership not formed until registered.
A limited partner is not entitled to the limited liability afforded by this Act until a declaration has been made and registered as required under The Business Names Registration Act; and where a false statement is made in the declaration which has been relied on by a person who suffers injury or loss by reason of the false statement, all of the partners are liable to that person as general partners, for the loss or injury suffered by that person.
Where the declaration mentioned in section 55 shows that the partnership is for a fixed duration, any continuance beyond that duration shall be registered and published as required for the original formation of the partnership; and every partnership otherwise continued shall be deemed a general partnership.
Where the registration of a limited partnership has expired and the partnership continues to carry on business without renewing its registration as required under The Business Names Registration Act, it shall, for so long as it fails to renew the registration, be deemed a general partnership.
Effect of change without registration.
A change or alteration in a limited partnership such as is mentioned in clause 4(1)(b) or (d) and in subsection 4(2) of The Business Names Registration Act has no effect until the registration requirements of that section are complied with.
The business of a limited partnership shall not be conducted under a name or firm in which the names of a limited partner, or some or one of them is used; and, if the name of any limited partner is used in such a name or firm with his privity, he shall be conclusively deemed to be a general partner.
Use of "Limited" in partnership name.
Notwithstanding anything to the contrary in any other Act of the Legislature, a limited partnership heretofore or hereafter registered under The Business Names Registration Act may carry on business under a firm name containing the words "Limited Partnership", and shall be deemed always to have had the right to include those words in its name.
Liability of general partners as such.
Actions or suits in relation to the limited partnership may be brought and conducted by and against the general partners in the same manner as if there were no limited partner.
Interest upon contribution of limited partner.
A limited partner may annually receive lawful interest on the sum contributed by him to the capital of the partnership, if the payment of that interest does not reduce the original amount of the capital; and if after the payment of that interest, any profits remain to be divided, he may also receive his portion of those profits.
A limited partner has the right to demand and receive the return of any part of his contribution,
(a) upon the dissolution of the limited partnership; or
(b) at the time, if any, specified in the partnership agreement for the return of the contribution; or
(c) after he has given six months notice in writing to all other partners, if no time is specified in the partnership agreement for the return of the contribution or for the dissolution of the limited partnership; or
(d) when all partners consent to the return of the contribution.
Restrictions on return of contribution.
Notwithstanding subsection (2), a limited partner is not entitled to receive any part of his contribution out of the limited partnership assets or from a general partner until
(a) all liabilities of the limited partnership, except liabilities to general partners and to limited partners on account of their contributions, have been paid or there remain sufficient limited partnership assets to pay them;
(b) the partnership agreement is terminated or so amended, if necessary, to set forth the withdrawal or reduction of the contribution: and
(c) a declaration has been made and registered as required under The Business Names Registration Act.
Form of returned contribution.
A limited partner has, irrespective of the nature of his contribution, only the right to demand and receive money in return therefor, unless
(a) the partnership agreement provides otherwise; or
(b) all the partners consent to another form in which to return the contribution.
Dissolution of limited partnership.
A limited partner is entitled to have the limited partnership dissolved and its affairs wound up where
(a) the limited partner is entitled under this Act to the return of all or part of his contribution but, upon demand, the contribution is not returned to him; or
(b) the other liabilities of the limited partnership have not been paid or the limited partnership assets are insufficient for their payment as required under clause (3)(a), and the limited partner seeking dissolution would otherwise be entitled under this Act to the return of all or part of his contribution.
Where a limited partner has received the return of all or part of his contribution, he is nevertheless liable to the limited partnership or, where the limited partnership is dissolved, to its creditors, for any amount, not in excess of the amount returned with interest, necessary to discharge the liabilities of the limited partnership to all creditors who extended credit or whose claims otherwise arose before the return of the contribution.
Where by the payment of interests or profits to any limited partner, the original capital has been reduced, the partner receiving it shall restore it, or so much thereof as is necessary to make good his share of the deficit capital, with interest.
Privileges of limited partners.
A limited partner may, by himself or his agent inspect the books of the firm and examine into the state and progress of the partnership business, and may advise as to its management.
Loss of limited liability by a limited partner.
Where a limited partner takes an active part in the business of the partnership, he is liable as if he were a general partner, to any person with whom he deals on behalf of the partnership and who does not know that he is a limited partner for all debts of the partnership.
The liability of a limited partner to a person under subsection (1) extends only to liabilities incurred by the partnership to that person between the time that the limited partner first so dealt with the person and the time when the person first acquires actual knowledge that he was dealing with a limited partner.
Limited partnership not dissolved.
A limited partnership is not dissolved by the death or bankruptcy of a limited partner, and the lunacy of a limited partner is not a ground for dissolution of the partnership by a court unless the lunatic's share cannot be otherwise ascertained and realized.
In the event of the dissolution of a limited partnership, its affairs shall be wound up by the general partners unless a court otherwise orders.
Further characteristics of a limited partnership.
Subject to any agreement express or implied between the partners,
(a) any difference arising as to ordinary matters connected with the partnership business may be decided by a majority of the general partners;
(b) a limited partner may, with the consent of the general partners, assign his share in the partnership, and upon such an assignment, the assignee becomes a limited partner with all the rights of the assignor;
(c) the other partners are not entitled to dissolve the partnership by reason of any limited partner suffering his share to be charged for his separate debt;
(d) a person may be introduced as a partner without the consent of the existing limited partners;
(e) a limited partner is not entitled to dissolve the partnership by notice.
General partners liable to account
The general partners of a limited partnership are liable to account, both at law and in equity, to each other and to the limited partners for their management of the concern, in like manner as other partners are liable.
Creditors preferred to limited partners.
In case of the insolvency or bankruptcy of a limited partnership, no partner shall, under any circumstances, be allowed to claim as a creditor until the claims of all the other creditors of the limited partnership have been satisfied.
No premature dissolution without notice.
No dissolution of a limited partnership by the acts of the partners shall take place until a notice of the dissolution is registered and published as required under The Business Names Registration Act.