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The Partnership Act, 1996

PART II

Nature of Partnership

3. (1) Partnership is the relation of which subsists between persons carrying on a 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 or incorporated as a company under the International Business Companies Act; or

(b) formed or incorporated by or in pursuance of any other Act, letters patent or Royal Charter, is not a partnership within the meaning of this Act.

4. In determining whether a partnership does or does not exist, regard shall be had to the following rules:

(a) all circumstances surrounding the contract are to be considered and the true intent of the parties is to be ascertained from their agreement, words and conduct;

(b) 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;

(c) the sharing of gross returns does not of itself create a partnership, whether the persons sharing such 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; and

(d) the receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but 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;

(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 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 in writing with that person, signed by or on behalf of all the parties thereto, that the lender shall receive a rate of interest varying with 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; and

(v) a person receiving by way of annuity or otherwise a portion of the profits of a business in considera-tion 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.

5. (1) Where a person to whom money has been advanced by way of loan upon a contract as is mentioned in section 4 (d) (iv) is adjudged bankrupt, enters into an arrangement to pay his creditors less than one hundred cents in the dollar or dies insolvent, the lender shall not be entitled to revoke anything in respect of the loan until the claims of the borrower’s other creditors for valuable consideration in money or money’s worth have been satisfied.

(2) Where a person who, in consideration of a share of the profits of a business, has bought of its goodwill, is adjudged bankrupt, enters into an arrangement to pay his creditors less than one hundred cents in the dollar or dies insolvent, 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 the buyer's other creditors for valuable consideration in money or money's worth are satisfied.

(3) Nothing in this section shall operate so as to prevent a secured creditor from retaining or realising his security.

6. A partner's interest in a partnership within the meaning of this Act is personal property situate in the Territory.