The Partnership Act 1895 (Western Australia)

The Partnership Act 1895 (WA) sets out a statutory framework for unincorporated partnerships in Western Australia. It defines what partnership is (s 7) and supplies default rules governing formation, internal governance, property, liabilities to third parties, and dissolution. The Act preserves existing equitable and common law except where expressly modified by statute (s 6). It excludes registered companies and other incorporated bodies from its operation (s 4(1)), but applies to limited partnerships and incorporated limited partnerships only to the extent and with the modifications in the Limited Partnerships Act 2016 (s 4(2)-(3); definitions in s 3).

Mechanically the Act does the following things, among others:

Defines the core concept of partnership as persons carrying on a business in common with a view of profit, and directs courts to decide partnership status by looking to the true contract and whole facts (s 7(1)-(2); see also the statutory list of non‑partner relationships in s 8).
Prescribes who counts as a firm and the firm‑name concept (ss 10-12), including a 20‑person cap on members of a firm unless Corporations Act regulations apply (s 11).
Allocates external legal effects: partners bind the firm by authorised acts (s 13); the firm is liable for wrongful acts of partners in the ordinary course of business (s 17); and anyone representing themselves as a partner is liable by “holding out” to third parties who give credit on that faith (s 21).
Fixes internal rules and default governance where partners have not agreed otherwise: equal sharing of capital and profits and equal liability for losses (s 34(1)); partner participation in management and no remuneration for doing so (s 34(5)); majority decision‑making for ordinary course matters with a statutory good‑faith requirement (s 34(7), (7A), (7B)).

CrestWestern Australia

Partnership Act 1895

Western Australia

Partnership Act 1895

Contents

Part IA — Preliminary

Short title 2
Commencement 2
Terms used in this Act 2
Application of Act 2
Present law to continue except as modified 3

Part I — Nature of partnership

Meaning of “partnership” 4
Rules to apply in determining partnership 4
Seller of business to be deferred to other creditors for value 5
Meanings of “firm” and “firm-name” 6
Number of persons in firm 6
Choice of firm‑name 6

Part II — Relations of partners to persons dealing with them

Partners bound by acts of firm 7
Partner using credit of firm for private purposes 7
Effect of notice that firm will not be bound by act of partner 7
Liability of partners 7
Liability of firm for wrongs 8
Misapplication of money or property 8
Liability for wrongs, joint and several 9
Improper employment of trust property 9
Persons liable by “holding out” 9
Admissions and representations by partners 10
Notice to acting partner to be notice to firm 10
Liabilities of incoming and outgoing partners 10
Revocation of continuing guaranty 11
Special powers of partners 11
Special powers of partners in certain firms 11
Enforcing judgments against partners and partnerships 12

Part III — Relations of partners to one another

Terms of partnership may be varied by consent 13
Meaning of “partnership property” 13
Property bought with partnership money 13
Conversion of real into personal estate 14
Meaning of “partner’s share” 14
Rules as to interests, rights and duties of partners 14
Expulsion of partner 15
Retirement of partner where fixed term 16
Retirement from partnership at will 16
Where partnership continued after expiration of term 16
Partners to render accounts 16
Partners must account for all benefits derived 17
Partner must not compete with firm 17
Effect of assignment of partner’s share 17

Part IV — Dissolution of partnership and its consequences

Dissolution by expiration of notice 18
Dissolution by death, bankruptcy, assignment or charge 18
Dissolution by illegality of partnership 19
Dissolution by court 19
Rights of creditors against apparent members of firm 20
Partner may notify of dissolution 20
Authority for purposes of winding up 20
Application of partnership property 21
Sale of goodwill on dissolution 21
Use of firm-name may be restrained 21
Provision where premium paid 22
Lien on assets where partnership dissolved for fraud 22
Right of outgoing partner in certain cases to share profits made after dissolution 23
Retaining of deceased partner’s share to be a debt 23
Rules for distribution of assets on final settlement of accounts 24

Notes

Compilation table 25

Defined terms

Western Australia

Partnership Act 1895

An Act to consolidate and amend the law of partnership.

Part IA — Preliminary

[Heading inserted: No. 19 of 2010 s. 44(2).]

1. Short title

This Act may be cited as the Partnership Act 1895 1.

[Section 1 inserted: No. 74 of 2003 s. 144(1).]

2. Commencement

This Act shall commence and come into force on 1 October 1895.

3. Terms used in this Act

In this Act the following words and expressions are used in the following senses, unless a different intention appears from the context —

business includes any trade, occupation, or profession;

court includes every court and judge having jurisdiction in the case;

incorporated limited partnership has the meaning given in the Limited Partnerships Act 2016 section 3;

land includes hereditaments, corporeal and incorporeal, of any tenure;

limited partnership has the meaning given in the Limited Partnerships Act 2016 section 3;

person includes any body of persons corporate or unincorporated;

writing includes print, and written includes printed.

[Section 3 amended: No. 54 of 2016 s. 122(2).]

4. Application of Act

(1) Subject to subsections (2) and (3), this Act shall not apply to any company or association which is —

(a) registered as a company under the Corporations Act 2001 of the Commonwealth or any other Act of Parliament for the time being in force and relating to the registration of joint stock companies; or

(b) formed or incorporated by or in pursuance of any other local or foreign Act of Parliament, or Letters Patent, or Royal Charter.

(2) This Act applies to a limited partnership to the extent and with the modifications set out in the Limited Partnerships Act 2016 section 6.

(3) This Act applies to an incorporated limited partnership to the extent and with the modifications set out in the Limited Partnerships Act 2016 sections 8 and 9.

[Section 4 amended: No. 10 of 2001 s. 192; No. 54 of 2016 s. 122(3) and (4).]

[5. Omitted under the Reprints Act 1984 s. 7(4)(f).]

6. Present law to continue except as modified

The rules of equity and common law applicable to partnership shall continue in force, except so far as they are inconsistent with the express provisions of this Act.

Part I — Nature of partnership

7. Meaning of “partnership”

(1) Subject to subsection (3), partnership is the relation which subsists between persons carrying on a business in common with a view of profit.

(2) In deciding whether a partnership does or does not exist in any particular case, the court shall have regard to the true contract and intention of the partners as appearing from the whole facts of the case.

(3) Partnership does not include the relation which subsists between —

(a) the partners in an incorporated limited partnership; or

(b) an incorporated limited partnership and its partners.

[Section 7 amended: No. 54 of 2016 s. 122(5) and (6).]

8. Rules to apply in determining partnership

(1A) In determining whether a partnership does or does not exist regard shall be had to the rules set out in subsections (1) to (8).

(1) 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.

(2) 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.

(3) 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 the receipt of such a share, or of a payment contingent upon or varying with the profits of a business, does not of itself make him a partner in the business.

(4) 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.

(5) A contract for the remuneration of a servant or agent of any 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, or give him the rights of a partner.

(6) A person who, immediately before the death of a deceased partner, was the spouse or de facto partner of the partner, or who is the 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.

(7) 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 at the time of the advance entered into in writing and signed by or on behalf of all the parties thereto.

(8) 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.

[Section 8 amended: No. 28 of 2003 s. 154; No. 19 of 2010 s. 51.]

9. Seller of business to be deferred to other creditors for value

In the event of any person to whom money has been advanced by way of loan upon such a contract as is mentioned in the last foregoing section, whether in writing or otherwise, or of any buyer of a goodwill in consideration of a share of the profits of the business, being adjudged a bankrupt, entering into a personal insolvency agreement under Part X of the Bankruptcy Act 1966 (Commonwealth) as a debtor, or dying in insolvent circumstances, 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 the other creditors of the borrower or buyer for valuable consideration in money or money’s worth have been satisfied.

[Section 9 amended: No. 18 of 2009 s. 63.]

10. Meanings 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 firm‑name.

11. Number of persons in firm

A firm may consist of any number of persons not exceeding 20 (except if regulations under section 115(2) of the Corporations Act 2001 of the Commonwealth apply to the firm).

[Section 11 amended: No. 48 of 1988 s. 30; No. 10 of 2001 s. 193.]

12. Choice of firm‑name

Subject to all statutory and other rules of law for the protection of trade marks, trade names, and rights incident to the goodwill of any business, partners may carry on their business under any firm‑name they think proper.

Part II — Relations of partners to persons dealing with them

13. Partners bound by acts of firm

(1) An act or instrument relating to the business of the firm, done or executed in the firm‑name, or in any other manner showing an intention to bind the firm by any person thereto authorised, whether a partner or not, is binding on the firm and all the partners.

(2) This section shall not affect any general rule of law relating to the execution of deeds or negotiable instruments.

[Section 13 amended: No. 19 of 2010 s. 51.]

14. 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 authorised by the other partners; but this section does not affect any personal liability which may arise against any other partner who has so conducted himself as to give reasonable ground to the party dealing with the partner first mentioned for believing him to be so authorised.

15. Effect of notice that firm will not be bound by act of partner

If it has been agreed between the partners that any restriction shall be placed on 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.

16. Liability of partners

Every partner in a firm is liable, jointly 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 such debts and obligations so far as they remain unsatisfied, but subject to the prior payment of his separate debts.

17. Liability of firm for wrongs

(1) 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 copartners, 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.

(2) For the purposes of subsection (1), a partner who commits a wrongful act or omission as a director of a corporation, as defined in section 9 of the Corporations Act 2001 of the Commonwealth, is not to be taken to be acting in the ordinary course of the business of the firm or with the authority of the partner’s copartners only because of any one or more of the following —

(a) the partner obtained the agreement or authority of the partner’s copartners, or some of them, to be appointed or to act as a director of the corporation;

(b) remuneration that the partner receives for acting as a director of the corporation forms part of the income of the firm;

(d) the firm acts for the corporation.

[Section 17 amended: No. 3 of 2005 s. 3.]

18. Misapplication of money or property

(1) Where any money or property of a third person is received by one partner, acting within the scope of his real or apparent authority in the partnership affairs, and is misapplied by that partner, and where any money or property of a third person, being as such in the custody of the firm, is misapplied by any partner, the firm shall be liable to make good the loss.

(2) For the purposes of this section, money shall be deemed to be in the custody of the firm when it has been paid to any agent of the firm, or paid or credited to the account of the firm with any person in the ordinary course of business.

19. Liability for wrongs, joint and several

Every partner is liable jointly with his copartners, and also severally, for everything for which the firm while he is a partner therein become liable under either of the 2 last preceding sections.

20. Improper employment of trust property

If a partner, being a trustee, improperly employs trust property in the business, or on account of the partnership, no other partner shall be liable for the trust property to the persons beneficially interested therein, unless he knew of the breach of trust. Nothing in this section shall prevent trust money from being followed and recovered from the firm if still in its possession or under its control.

21. Persons liable by “holding out”

(1) Everyone 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.

(2) Provided that 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 shall not of itself make his executors’ or administrators’ estate or effects liable for any partnership debts contracted after his death.

22. Admissions and representations by partners

(1) An admission made by any partner concerning the partnership affairs and in the ordinary course of its business is evidence against the firm, and a representation made by any partner to any person concerning the partnership affairs and in the ordinary course of its business shall have the same effect as against the firm, and so far as concerns the civil rights and liabilities of the partners as if it had been made by all the partners.

(2) This section shall not apply to a representation made by one partner as to the extent of his own authority to bind the firm.

[Section 22 amended: No. 19 of 2010 s. 51.]

23. Notice to acting partner to be notice to firm

Notice to any 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.

24. Liabilities of incoming and outgoing partners

(1) 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 or omitted before he became a partner.

(2) A partner who retires from a firm does not thereby cease to be liable for partnership debts or obligations incurred before his retirement.

(3) A retiring partner may be discharged from any existing liabilities, and an incoming partner may become subject thereto by an agreement to that effect between himself and the members of the firm as newly constituted and the creditors, and such agreement may be either express or inferred as a fact from the course of dealing between the creditors and the firm as newly constituted.

25. Revocation of continuing guaranty

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 an 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.

26. Special powers of partners

Subject to the provisions of this Act, the acts of every partner who does any act necessary for or usually done in carrying on business of the kind carried on by the firm of which he is a member shall bind his partners to the same extent as if he were their agent duly appointed for that purpose; 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 —

(a) knows that he has no authority; or

(b) does not know or believe him to be a partner.

27. Special powers of partners in certain firms

Subject to the provisions of the last foregoing section, every member of a partnership carrying on business of a kind in which any of the following acts is usually done, may bind the firm by the same respectively:

(a) He may draw, accept, indorse, make, and issue bills and negotiable instruments in the name of the firm.

(b) He may borrow money on the credit of the firm.

(c) He may, for the purpose of such borrowing, or of securing an existing debt, pledge any goods or personal chattels belonging to the firm.

(d) He may, for the like purposes, make an equitable mortgage by deposit of deeds or otherwise of real estate or chattels real belonging to the firm.

28. Enforcing judgments against partners and partnerships

The enforcement of a judgment against a partner or against a partnership is subject to the Civil Judgments Enforcement Act 2004.

[Section 28 inserted: No. 59 of 2004 s. 141.]

Part III — Relations of partners to one another

29. Terms of partnership may be varied by consent

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 such consent may be either express or inferred from a course of dealing.

30. Meaning of “partnership property”

(1) 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.

(2) Provided that the legal estate or interest in any land which is partnership property 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.

(3) Where the co‑owners of an estate or interest in any land, not being itself partnership property, are partners as to profits made by the use of that land or estate, and purchase other land or estate out of the profits to be used in like manner, 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.

31. 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.

32. Conversion of real into personal estate

Where land has become partnership property, it shall, unless the contrary intention appears, be treated as between the partners (including the representatives of a deceased partner), and also as between the heirs of a deceased partner and his executors or administrators, as personal and not real estate.

33. Meaning of “partner’s share”

The share of a partner in the partnership property at any time is the proportion of the then existing partnership assets to which he would be entitled if the whole were realised and converted into money, and after all the then existing debts and liabilities of the firm had been discharged.

34. Rules as to interests, rights and duties of partners

(1A) 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 rules set out in subsections (1) to (9).

(1) 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.

(2) The firm must indemnify every partner in respect of payments made and personal liabilities incurred by him —

(a) in the ordinary and proper conduct of the business of the firm; or

(b) in or about anything necessarily done for the preservation of the business or property of the firm.

(3) 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 the rate of 6% per annum from the date of the payment or advance.

(4) A partner is not entitled, before the ascertainment of profits, to interest on the capital subscribed by him.

(5) Every partner may take part in the management of the partnership business, and shall attend diligently to the partnership business, and shall not be entitled to any remuneration for acting in the partnership business.

(6) No person may be introduced as a partner, without the consent of all existing partners.

(7) Any difference arising as to matters connected with the ordinary course of the partnership business may be decided by a majority of the partners.

(7A) A decision for the purposes of subsection (7) must be arrived at in good faith for the interest of the firm as a whole, and every partner must have an opportunity of being heard in the matter.

(7B) Subsection (7A) extends to powers conferred by a majority of the partners by express agreement.

(8) 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 inspect and copy any of them.

(9) No change may be made in the conduct or regulation of the partnership affairs without the consent or authority of a majority of the partners, and no change may be made in the nature of the partnership business, or the place where it is carried on, without the consent of all existing partners.

[Section 34 amended: No. 19 of 2010 s. 51.]

35. Expulsion of partner

(1) No majority of the partners can expel any partner unless a power to do so has been conferred by written agreement between the partners.

(2) Where such power is conferred, it may be exercised only in good faith with a view to the benefit of the firm, and the partner whom it is sought to expel must have an opportunity of being heard.

36. Retirement of partner where fixed term

Where a partnership has been entered into for a fixed term, no partner can retire from it during that term except with the consent of all the partners, or in the exercise of an option previously conferred by written agreement.

37. Retirement from partnership at will

(1) 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 in writing of his intention so to do to all the other partners.

(2) Where the partnership has originally been constituted by a deed, a notice in writing, signed by the partner giving it, shall be sufficient for this purpose.

38. Where partnership continued after expiration of term

(1) 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 a partnership at will.

(2) A continuance of the business by the partners, or such of them as habitually acted therein during the term without any settlement or liquidation of the partnership affairs, is presumed to be a continuance of the partnership.

39. Partners to render accounts

Partners are bound to render true accounts and full information of all things affecting the partnership to any partner or his legal representatives.

40. Partners must account for all benefits derived

(1) 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.

(2) 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.

41. Partner must not compete with firm

If 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.

42. Effect of assignment of partner’s share

(1) An assignment by any partner of his share in the partnership, either absolute or by way of mortgage, 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.

(2) 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.

Part IV — Dissolution of partnership and its consequences

[Heading inserted: No. 19 of 2010 s. 44(2).]

43. Dissolution by expiration of 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;

(b) if entered into for a single adventure or undertaking, by the termination of that adventure or undertaking;

(c) if entered into for an undefined time, by any partner giving notice in writing 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 so mentioned, as from the date of the communication of the notice.

44. Dissolution by death, bankruptcy, assignment or charge

(1) Subject to any agreement between the partners every partnership is also dissolved by the death or bankruptcy of any partner.

(2) A partnership may, at the option of the other partners or any of them, by written notice, be dissolved if any partner assigns his share of the partnership property or suffers such share to be charged under this Act for his separate debt.

(3) The dissolution shall take effect from the date of the death, bankruptcy, or notice as the case may be.

(4) Such notice shall be given within 28 days after the partner or partners giving the same has or have notice of the assignment or charge.

45. Dissolution by illegality of partnership

A partnership is in every case dissolved by the happening of any event which 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.

46. Dissolution by court

On application by a partner the court may decree a dissolution of the partnership in any of the following cases —

(a) when a partner is found lunatic by inquisition, or is shown to the satisfaction of the court to be of unsound mind, in either of which cases the application may be made as well on behalf of that partner by his committee or next friend or person having title to intervene, as by any other partner;

(b) when a partner other than the partner suing, becomes in any other way permanently incapable of performing his part of the partnership contract;

(c) when 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 to prejudicially affect the carrying on of the business;

(d) when 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;

(e) when a partner, other than the partner suing, encumbers his interest in the property or profits of the firm;

(f) when the business of the partnership can only be carried on at a loss;

(g) whenever in any case whatever circumstances have arisen which, in the opinion of the court, render it just and equitable that the partnership be dissolved.

47. Rights of creditors against apparent members of firm

(1) Where a person deals with a firm after a change in its constitution, he is entitled to treat all apparent members of the old firm as still being members of the firm, until he has notice of the change.

(2) An advertisement in the ‘Government Gazette’ and in a Perth or local newspaper (if any) as to a firm whose principal place of business is in Western Australia shall be notice as to persons who had not dealings with the firm before the date of the dissolution or change so advertised.

(3) The estate of a partner who dies or becomes bankrupt, or of 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.

48. Partner may notify of dissolution

On the dissolution of a partnership, or retirement of a partner, any partner may publicly notify the same, and may require the other partner or partners to concur for that purpose in all necessary or proper acts, if any, which cannot be so done without his or their concurrence.

49. Authority for purposes of winding up

(1) 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.

(2) Despite subsection (1), the firm is in no case bound by the acts of a partner who has become bankrupt.

(3) Subsection (2) 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.

[Section 49 amended: No. 19 of 2010 s. 51.]

50. 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 such 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.

51. Sale of goodwill on dissolution

On the dissolution of a partnership every partner shall be entitled, in the absence of any agreement to the contrary, to have the goodwill of the business sold for the common benefit of all the partners.

52. Use of firm-name may be restrained

After a dissolution every partner in the dissolved firm, or his representatives, may, in the absence of any agreement to the contrary, restrain any other partner, or his representative, from carrying on the same business under the firm‑name until the affairs of the firm have been wound up, and the partnership property disposed of.

53. Provision where premium paid

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, 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.

54. Lien on assets where partnership dissolved for fraud

Where a partnership contract 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 the 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, and is

(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.

55. Right of outgoing partner in certain cases to share profits made after dissolution

(1) Where any member of a firm has died or otherwise ceased 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 settlements 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 6% per annum on the amount of his share of the partnership assets.

(2) Provided that where by the partnership contract 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.

(3) In determining how far the profits made since the dissolution are attributable to the outgoing partner’s capital, the court shall have regard to the nature of the business, the amount of capital from time to time employed in it, the skill and industry of each partner taking part in it, and the conduct of the parties generally. And the court may allow to any such continuing partners such remuneration as to the court seems meet for carrying on the partnership business.

56. Retaining of deceased partner’s share to be a 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.

57. Rules for distribution of assets on final settlement of accounts

(1) In settling accounts between the partners after a dissolution of partnership, the rules set out in subsections (2) and (3) shall, subject to any agreement, be observed.

(2) 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.

(3) 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 —

(a) in paying the debts and liabilities of the firm to persons who are not partners therein;

(b) in paying to each partner rateably what is due from the firm to him for advances as distinguished from capital;

(d) the ultimate residue, if any, shall be divided among the partners in the proportion in which profits are divisible.

[Section 57 amended: No. 19 of 2010 s. 51.]

[Schedule omitted under the Reprints Act 1984 s. 7(4)(f).]

Notes

1 This is a compilation of the Partnership Act 1895 and includes the amendments made by the other written laws referred to in the following table. The table also contains information about any reprint.

Compilation table

Short title	Number and year	Assent	Commencement
The Partnership Act 1895 2	1895 (59 Vict. No. 23)	2 Oct 1895	1 Oct 1895 (see s. 2)
*Reprint of The Partnership Act 1895* authorised 23 Jul 1956**
*Reprint of The Partnership Act 1895* authorised 1 Sep 1981**
*Reprint of The Partnership Act 1895* as at 26 Jul 1985**
Companies and Securities Legislation (Miscellaneous Amendments) Act 1988 Pt. 10	48 of 1988	1 Dec 1988	9 Dec 1988 (see s. 2 and Gazette 9 Dec 1988 p. 4817)
Corporations (Consequential Amendments) Act 2001 Pt. 51	10 of 2001	28 Jun 2001	15 Jul 2001 (see s. 2 and Gazette 29 Jun 2001 p. 3257 and Cwlth Gazette 13 Jul 2001 No. S285)
Acts Amendment (Equality of Status) Act 2003 Pt. 47	28 of 2003	22 May 2003	1 Jul 2003 (see s. 2 and Gazette 30 Jun 2003 p. 2579)
*Reprint 4: The Partnership Act 1895* as at 3 Oct 2003** (includes amendments listed above)
Statutes (Repeals and Minor Amendments) Act 2003 s. 144(1)	74 of 2003	15 Dec 2003	15 Dec 2003 (see s. 2)
Courts Legislation Amendment and Repeal Act 2004 s. 141	59 of 2004	23 Nov 2004	1 May 2005 (see s. 2 and Gazette 31 Dec 2004 p. 7128)
Partnership Amendment Act 2005	3 of 2005	1 Jun 2005	29 Jun 2005
*Reprint 5: The Partnership Act 1895* as at 9 Feb 2007** (includes amendments listed above)
Acts Amendment (Bankruptcy) Act 2009 s. 63	18 of 2009	16 Sep 2009	17 Sep 2009 (see s. 2(b))
Standardisation of Formatting Act 2010 s. 44(2) and 51	19 of 2010	28 Jun 2010	11 Sep 2010 (see s. 2(b) and Gazette 10 Sep 2010 p. 4341)
Limited Partnerships Act 2016 s. 122	54 of 2016	29 Nov 2016	1 Feb 2017 (see s. 2(b) and Gazette 31 Jan 2017 p. 1093)

Defined terms

[This is a list of terms defined and the provisions where they are defined. The list is not part of the law.]

Defined term Provision(s)

business 3

court 3

incorporated limited partnership 3

land 3

limited partnership 3

person 3

writing 3

written 3

Western Australia

Partnership Act 1895

Western Australia

Partnership Act 1895

Contents

Part IA — Preliminary

Short title 2
Commencement 2
Terms used in this Act 2
Application of Act 2
Present law to continue except as modified 3

Part I — Nature of partnership

Meaning of “partnership” 4
Rules to apply in determining partnership 4
Seller of business to be deferred to other creditors for value 5
Meanings of “firm” and “firm-name” 6
Number of persons in firm 6
Choice of firm‑name 6

Part II — Relations of partners to persons dealing with them

Partners bound by acts of firm 7
Partner using credit of firm for private purposes 7
Effect of notice that firm will not be bound by act of partner 7
Liability of partners 7
Liability of firm for wrongs 8
Misapplication of money or property 8
Liability for wrongs, joint and several 9
Improper employment of trust property 9
Persons liable by “holding out” 9
Admissions and representations by partners 10
Notice to acting partner to be notice to firm 10
Liabilities of incoming and outgoing partners 10
Revocation of continuing guaranty 11
Special powers of partners 11
Special powers of partners in certain firms 11
Enforcing judgments against partners and partnerships 12

Part III — Relations of partners to one another

Terms of partnership may be varied by consent 13

The Act organises a small set of legal concepts and default rules that structure commercial relationships among unincorporated co‑owners of business ventures.

Partnership and firm. Partnership is a relationship of persons carrying on a business in common with a view to profit (s 7). Persons who are partners are collectively a firm, and the business is carried on under a firm‑name (s 10). The court must look to “true contract and intention” from the whole facts in deciding whether a partnership exists (s 7(2)). The Act also lists relationships that do not of themselves create a partnership, for example joint tenancy, receiving a share of gross returns, employment where remuneration is profit‑linked, lenders with profit‑linked returns (subject to a written contract), and the sale of goodwill payable by profit sharing (s 8(1)-(8)).
Authority and agency. Partners who act in the ordinary course of the partnership business bind the firm to third parties (s 13, s 26). The Act specifies acts commonly allowed in certain kinds of firms , drawing and negotiating bills, borrowing on credit of the firm, pledging goods, and making equitable mortgages , as being within a partner’s apparent power where those acts are usual in the kind of business (s 27). It displaces firm liability where a partner acts outside agreed restrictions known to the third party (s 15), and makes notice to a partner who habitually acts in the business notice to the firm, save where that partner commits a fraud on the firm (s 23).
Liability. Partners are jointly liable for firm debts and obligations incurred while they are partners; the estate of a deceased partner remains severally liable in administration for unsatisfied debts subject to payment of the partner’s separate debts (s 16). The firm is liable for wrongful acts or omissions by a partner acting in the ordinary course of business or with authority (s 17). Partners are jointly and severally liable for wrongful acts and for misapplication of third party property received in the scope of partnership authority (ss 18-19). “Holding out” creates partner liability to persons who gave credit on the faith of representations (s 21).
Internal property and shares. Partnership property is defined broadly to include assets brought in or acquired for the partnership’s purposes (s 30). Property bought with partnership money is presumed to be partnership property (s 31). A partner’s share equals the proportion of partnership assets to which he or she would be entitled on a hypothetical realisation after satisfying debts (s 33).
Default governance. In the absence of an agreement the Act imposes default rules: equal sharing of capital, profits and losses (s 34(1)); partners may participate in management and are not entitled to remuneration (s 34(5)); ordinary business decisions can be made by majority subject to a good‑faith test and opportunity to be heard (s 34(7), (7A)). No person may be introduced as partner without the consent of all existing partners (s 34(6)). Expulsion of a partner requires a written power to do so and must be exercised in good faith (s 35).
Dissolution and winding up. The Act defines dissolution events (expiration, death, bankruptcy, assignment or charge, illegality, court order) and sets out who may bind the firm while winding up (ss 43-49). On dissolution partners may seek court winding up and distribution of partnership property first to creditors then to partners for advances and capital (ss 50-57).
Interplay with other regimes. The Act excludes companies and incorporated entities from its operation (s 4(1)), but applies to limited partnerships and incorporated limited partnerships only to the extent set in the Limited Partnerships Act 2016 (s 4(2)-(3)). It cross‑references the Corporations Act 2001 and Bankruptcy Act 1966 in specific contexts (s 4(1), s 17(2), s 9).

These concepts operate as default legal scaffolding. Parties remain free to contract around many of the statutory defaults, subject to express limits in the Act, for example genuine written agreements modifying internal rules, expulsion powers, premium arrangements on entry (ss 29, 35, 53).

The Act has a defined set of stakeholders and vectors of impact. Named categories in the statute and direct effect include:

Partners and prospective partners. Individuals or bodies who carry on business together fall within the statutory concept of partners where the relationship meets s 7. The Act governs their rights, duties and liabilities (Parts II-IV). Partners are the primary decision‑makers under default rules (s 34).
Firms and firm members. The collective entity concept of a firm is statutory for operation of many rules (ss 10-13, 30). The Act also places a statutory limit of 20 persons in a firm unless Corporations Act regulations permit otherwise (s 11).
Third party creditors and contracting counterparties. Persons who deal with a firm are affected by partner authority and firm liability provisions (ss 13, 16-19, 21-23, 47). Persons extending credit on the faith of a representation that a person is a partner may recover from that represented partner under s 21.
Borrowers, lenders and guarantors. Specific rules address lenders who receive a profit‑contingent return (s 8(7)), the ranking of such lenders and buyers of goodwill who are paid by a share of profits in the insolvent estate (s 9), and revocation of continuing guarantees on a change in firm constitution (s 25).
Executors, administrators and estates. Estates of deceased partners are separately addressed. The estate remains severally liable after death for partnership debts in the course of administration (s 16). Continued use of a deceased partner’s name is not by itself evidence making the estate liable for post‑death debts (s 21(2)), but other provisions treat the outgoing/deceased partner’s claim and winding up rights (ss 55-56).
Trustees and beneficiaries. A partner who is a trustee and improperly employs trust property affects trust beneficiaries, but other partners are not liable for trust property losses unless they knew of the breach (s 20). Trust monies, if still in firm possession, can be followed and recovered.
Courts, enforcement officials and regulators. Courts have the power to decree dissolution in specified circumstances (s 46), to wind up firms and settle accounts (ss 49, 50, 57), and enforcement is subject to the Civil Judgments Enforcement Act 2004 for execution of judgments (s 28). The Act also interacts with federal regimes such as the Bankruptcy Act 1966 and the Corporations Act 2001 by explicit references (ss 4, 9, 17(2), 28).
Limited partnership participants. The Act applies to limited partnerships and incorporated limited partnerships only to the extent and with the modifications specified in the Limited Partnerships Act 2016 (s 4(2)-(3); definitions in s 3). That means participants in those forms must consult both statutes to understand rights and liabilities.

The Act affects behaviour by making certain consequences automatic in the absence of contractual agreement. For example, where there is no agreement partners share equally in capital and profits (s 34(1)). That design shifts the onus to partners who wish different arrangements to contract explicitly. The statute also creates exposure for actions taken in the ordinary course of business (s 17) and for representations of partnership status (s 21), which influences how parties advertise or present ownership and how creditors assess credit risk.

The Act establishes a network of obligations between partners and rights vis‑à‑vis third parties. Key duties and rights include the following, with statutory references.

Duty to act for partnership purposes and fiduciary obligations. Partnership property must be held and applied exclusively for partnership purposes and in accordance with the partnership agreement (s 30(1)). Partners must render true accounts and full information to other partners or their legal representatives (s 39) and must account to the firm for any benefit derived from partnership transactions or use of partnership name, property or connections (s 40). Partners must not compete with the firm without consent and must account for profits made in competition (s 41).
Default profit, capital and loss sharing. Absent agreement partners share equally in capital and profits and contribute equally to losses (s 34(1)). Partners do not receive remuneration for acting in the partnership business by default (s 34(5)). A partner advancing money beyond subscribed capital is entitled to interest at 6% per annum from the date of advance (s 34(3)).
Management and decision‑making rights. Every partner may take part in management (s 34(5)). Decisions connected with the ordinary course of partnership business may be made by a majority of partners (s 34(7)), provided the decision is arrived at in good faith for the interest of the firm as a whole and every partner has opportunity to be heard (s 34(7A), (7B)). No change in the nature of the business or the place it is carried on may be made without unanimous consent (s 34(9)).
Authority to bind the firm. Acts done in the firm name or otherwise manifesting intention to bind the firm, by persons authorised, bind the firm and all partners (s 13). A partner doing acts necessary or usual in that kind of business binds the partners unless the person with whom he deals knows the partner has no authority or does not know or believe him to be a partner (s 26). Special powers for usual financial acts are set out in s 27.
Liability for debts and wrongs. Each partner is jointly liable with other partners for all debts and obligations incurred while a partner (s 16). The firm is liable for wrongful acts or omissions by a partner acting in the ordinary course of the business or with authority (s 17(1)). Partners are jointly and severally liable for liabilities imposed under ss 17-18 (s 19).
Rights on changes of membership. An incoming partner is not liable for prior debts (s 24(1)). A retiring partner remains liable for obligations incurred before retirement (s 24(2)). Continuing guarantees given to a firm are, absent agreement, revoked as to future transactions by a change in the firm constitution (s 25).
Property and distribution rights. Property bought with firm money is presumed partnership property (s 31). On dissolution partnership assets must be applied to pay firm debts then advances and capital, with residue divided according to profit shares (ss 50, 57). On dissolution partners are entitled, absent agreement, to have the goodwill sold for common benefit (s 51).
Rights of representation and estoppel. Persons who represent themselves or knowingly allow themselves to be represented as partners are liable as partners to those who give credit relying on such representations (s 21(1)). Notice to a partner who habitually acts in the business is notice to the firm (s 23), and notice of a change in constitution may be given by Gazette and newspaper advertisement for those without prior dealings (s 47(2)).

These duties create both internal fiduciary‑type obligations and outward liabilities which can be material to credit and risk allocation. Many of the obligations are default rules that parties may displace by agreement, subject to certain formalities (for example, expulsion power must be in writing to be effective, s 35(1)).

The Act mainly provides civil remedies, allocation of liability and procedural routes rather than criminal penalties. Enforcement mechanisms and sanctions include:

Civil liability for debts and wrongs. The Act imposes joint and several liability on partners for firm debts and for wrongful acts of partners acting in the ordinary course of business (ss 16, 17, 19). These provisions create personal exposure for partners which third parties can enforce in court.
Remedies for misapplication and breaches of fiduciary duties. The firm must make good loss caused by misapplication of third party money or property received by a partner acting within the scope of authority; trust money may be followed into firm possession (s 18; s 20). Partners must account for benefits and profits taken in breach of duties (ss 39-41). Relief in such contexts will be equitable accountings and monetary compensation.
Court ordered dissolution and equitable relief. The court may decree dissolution in enumerated circumstances such as insanity, incapacity, misconduct affecting the business, or where it is just and equitable (s 46). The court can wind up partnership affairs and make orders for repayment of premiums paid on entry where justice requires (s 53). The court also has jurisdiction to order distribution of partnership property and to resolve outstanding accounts (ss 49-57).
Enforcement of judgments. The Act defers to the Civil Judgments Enforcement Act 2004 for enforcement of judgments against partners and partnerships (s 28). That Act supplies mechanisms for charging orders, seizure, sale and other execution processes.
Holding out and estoppel. Persons who represent themselves as partners or knowingly allow such representations are liable as partners to persons who give credit in reliance (s 21). That creates an estoppel‑style sanction which creditors can enforce.

Notably, the Act does not set out criminal penalties, regulatory fines or administrative sanctions for breaches of partnership-specific duties. Enforcement is through ordinary civil proceedings, accountings and execution. The Act creates statutory presumptions and priorities that affect creditor recovery; for example, lenders whose return is profit‑contingent and buyers of goodwill paid by profit share are subordinated to other creditors on the borrower’s bankruptcy or insolvency (s 9). The Act also provides specific equitable remedies in cases of rescission for fraud including liens and indemnities (s 54).

Practical enforcement risks and considerations follow from these features. Because liability is joint and several (s 16; s 19), solvent partners may be pursued for full satisfaction of firm debts even though contribution rights exist against co‑partners. Winding up and distribution priorities (s 57) affect recoverability and timing for creditors. The lack of a public registration requirement in the Act for partnerships means third parties must rely on due diligence and protections such as seeking guarantees or registering security interests elsewhere.

The Act contains several express cross‑references and exclusions which determine its interface with corporate, insolvency and limited partnership regimes, and with enforcement law.

Exclusion of companies and incorporated bodies. The Act does not apply to entities registered under the Commonwealth Corporations Act 2001 or other Acts relating to joint stock company registration, and excludes bodies formed under Letters Patent or Royal Charter (s 4(1)). That exclusion signals that registered companies operate under separate corporate law, and that the Partnership Act governs only unincorporated associations fitting the statutory test of partnership (s 7).
Interaction with the Corporations Act 2001. The Act references the Corporations Act for definitions and regulatory overlap. The 20‑person cap on firm membership can be displaced if Corporations Act s 115(2) regulations apply (s 11). Section 17(2) specifically addresses when a partner acts as a director of a corporation and establishes that a director’s wrongful act is not to be taken as acting in the ordinary course of the firm merely because of certain overlaps between the firm and the corporation; this creates a limiting rule to avoid automatic firm liability for corporate directorship conduct in specified circumstances.
Limited Partnerships Act 2016. The Act explicitly applies to limited partnerships and incorporated limited partnerships only with the modifications specified in the Limited Partnerships Act 2016 (s 4(2)-(3)). The Act also defines “limited partnership” and “incorporated limited partnership” by reference to the Limited Partnerships Act (s 3). Practitioners dealing with limited partnerships must consult both statutes to know which provisions of the Partnership Act apply and where modifications alter default rules.
Bankruptcy and insolvency. The Act interacts with the Commonwealth Bankruptcy Act 1966 in at least one specific context: lenders whose return varies with profits and buyers of goodwill paid by a share of profits rank after other creditors in the event of bankruptcy, Part X personal insolvency agreement or insolvency death (s 9). That provision modifies claimant priority and imposes risk on lenders and sellers who accept profit‑contingent returns instead of fixed money.
Civil judgments enforcement. Enforcement of judgments against partners and partnerships is expressly made subject to the Civil Judgments Enforcement Act 2004 (s 28). That Act provides the procedural machinery for execution, seizure and other recovery processes.
Reprints and statutory amendments. The Compilation table lists multiple amending Acts that affect the Partnership Act’s structure and language, including Companies and Securities Legislation (Miscellaneous Amendments) Act 1988, Corporations (Consequential Amendments) Act 2001, Partnership Amendment Act 2005, Acts Amendment (Bankruptcy) Act 2009, Standardisation of Formatting Act 2010, and the Limited Partnerships Act 2016. Those amending instruments have altered definitions, inserted sections and updated cross‑references. The Act preserves the rules of equity and common law where not inconsistent with express provisions (s 6).
Procedural and public notice rules. The Act recognises public notice mechanisms for changes in firm constitution: advertisement in the Government Gazette and in a Perth or local newspaper is statutory notice for persons who had no prior dealings with the firm (s 47(2)). That interacts with commercial practice on notifying third parties of changes in membership or dissolution.

Overall, the Act is intended to operate alongside other statutes, with explicit carve‑outs and cross‑references to avoid overlap with corporate and insolvency regimes. Practitioners must therefore treat the Partnership Act as part of a multi‑statute landscape: unincorporated partnerships are governed by this Act plus equity and common law (s 6), limited and incorporated limited partnerships require consulting the Limited Partnerships Act 2016 (s 4), and creditors and enforcement actions intersect with federal bankruptcy and corporations law.

The Act as compiled in the provided text is a long‑standing statute, originally assented to in 1895, that has been reprinted and amended multiple times. The compilation table in the Act sets out the major amendments and reprints. Key items from that table are:

Original enactment. The Partnership Act 1895 (59 Vict. No. 23) received assent 2 October 1895 and commenced 1 October 1895 (compilation table first entry).
Reprints. The Act has been reprinted repeatedly: authorised reprints in 1956, 1981, and 1985 are recorded, with a reprint as at 3 October 2003 and a reprint as at 9 February 2007 incorporating various amendments.
Company‑related amendments. The Companies and Securities Legislation (Miscellaneous Amendments) Act 1988 (No. 48 of 1988) and later the Corporations (Consequential Amendments) Act 2001 (No. 10 of 2001) made consequential changes to reflect Commonwealth corporate law developments. Those amendments are recorded in the compilation table and are reflected in provisions like the exclusion of companies under s 4(1) and the 20‑person cap subject to Corporations Act regulations in s 11.
Equality and formatting amendments. The Acts Amendment (Equality of Status) Act 2003 (No. 28 of 2003) and the Standardisation of Formatting Act 2010 (No. 19 of 2010) made stylistic and substantive insertions, including the short title update (s 1, inserted by No. 74 of 2003 s 144(1)) and standardisation of headings (2010 amendments noted in compilation table).
Specific functional amendments. The Partnership Amendment Act 2005 (No. 3 of 2005) inserted s 17(2) and other modernising changes; the Courts Legislation Amendment and Repeal Act 2004 inserted s 28 to make enforcement of judgments subject to the Civil Judgments Enforcement Act 2004. The Acts Amendment (Bankruptcy) Act 2009 (No. 18 of 2009) amended s 9 to affect ranking of profit‑contingent lenders and buyers of goodwill.
Limited partnerships integration. The Limited Partnerships Act 2016 (No. 54 of 2016) added definitions for limited partnership and incorporated limited partnership in s 3, and set out that the Partnership Act applies to limited partnerships to the extent and with the modifications in that 2016 Act (s 4(2)-(3)). The Limited Partnerships Act commenced 1 February 2017 for these amendments.
Omissions and reprint housekeeping. Section 5 has been omitted under the Reprints Act 1984 (noted in the text). Schedules omitted under the Reprints Act are also mentioned.

The compilation table provides formal provenance for amendments and demonstrates the statute has been periodically updated to maintain compatibility with federal legislation and to modernise drafting. Where the Act has been modified, the text reflects insertions and amendments by reference to the amending Acts, for example s 3 amended by No. 54 of 2016 s 122(2), s 4 amended by No. 10 of 2001 s 192 and No. 54 of 2016 s 122(3)-(4), and s 17 amended by No. 3 of 2005 s 3. When advising on current rights and obligations, practitioners should consult the statutory compilation and verify no subsequent amending instruments beyond those listed have been made.

The text supplied contains no reported cases or litigation citations. The Act itself does not catalogue case law; rather it supplies statutory standards that courts apply. Given the provisions of the Act, areas likely to generate litigation include:

Whether a partnership exists. Section 7 requires courts to regard the true contract and intention of the parties from the whole facts. Disputes over partnership status typically require factual inquiry into sharing of profits, contribution of capital, control, representations to third parties and written documentation. Section 8 lists factors that do not of themselves create a partnership, which courts will weigh in such disputes.
Authority and ostensible agency. Cases could arise about whether acts purportedly done in the firm name were authorised, whether a partner exceeded apparent authority, and whether third parties had notice of restrictions on partner authority (ss 13, 15, 26). The Act’s special powers in s 27 and the notice rules in ss 15 and 23 provide statutory criteria that courts will apply.
Liability for wrongful acts and misapplication. Section 17 imposes firm liability for wrongful acts or omissions of partners acting in the ordinary course of business. Litigation can arise over whether the act fell within the ordinary course, and s 17(2) carves out acts done by partners in their capacity as corporate directors from automatic firm liability in specified circumstances, which would be a focal point in disputes involving corporate and partnership overlap.
Accounting and fiduciary duties. Sections 39-41 create duties to render accounts, to account for benefits and to refrain from competition. Litigation over equitable accountings, tracing misapplied funds under s 18 and s 20, and recovery of benefits derived from breach of duty will involve the courts’ equitable jurisdiction.
Dissolution and distribution. Disputes frequently arise over dissolution triggers (ss 43-46), the correct date of dissolution for liability purposes, entitlement to profits made after dissolution (s 55), repayment of entry premiums where dissolution occurs before term expiry (s 53), and the ordering of distribution under ss 50 and 57.
Holding out and estoppel. Litigation under s 21 for persons who represented themselves as partners or permitted such representations may involve estoppel claims and recovery for creditors who relied on representation to extend credit.

Although the Act does not provide case law in the text, its provisions direct courts to apply both statutory tests and equitable doctrines. Practitioners should expect litigation to turn on nuanced factual findings and to involve both common law and equitable remedies, with enforcement routed through civil proceedings and execution under the Civil Judgments Enforcement Act 2004 (s 28). Where limited partnerships or incorporated limited partnerships are in issue, litigation will require reading the Limited Partnerships Act 2016 alongside the Partnership Act in the modified areas (s 4(2)-(3)).

The Act contains numerous provisions that can catch parties unprepared if they rely on informal arrangements or assumptions. Key practical “gotchas” grounded in the statutory text:

Default equal sharing unless contracted otherwise. If partners do not have a written agreement, s 34(1) makes capital, profits and losses shared equally. Absent an explicit agreement to the contrary this can produce consequential tax, distribution, and control mismatches relative to contribution or expectation.
Joint and several liability. Partners are jointly and severally liable for firm debts incurred while partners (s 16) and for liabilities under ss 17-19 (s 19). A solvent partner can be pursued for the whole debt even if others are primarily responsible. Contribution rights exist between partners but do not protect third parties.
No statutory public registration yet binding third party effects via holding out. The Act does not create a mandatory public register for partnerships; nevertheless, representations that a person is a partner can create liability under s 21. Continued use of a deceased partner’s name does not of itself make executors liable for post‑death debts (s 21(2)), but “holding out” exposure can still arise if persons give credit on the faith of representations.
Incoming partners are not liable for antecedent debts; retiring partners remain liable. An incoming partner does not become liable for pre‑admission debts (s 24(1)), so creditors cannot generally pursue them for earlier obligations. Conversely retiring partners remain liable for debts incurred before retirement (s 24(2)), which can trap someone who leaves without adequate discharge arrangements.
Written power needed for expulsion. A majority cannot expel a partner unless a written agreement conferring the power exists (s 35(1)). Even where such a power exists it must be exercised in good faith and afford the partner opportunity to be heard (s 35(2)). Informal expulsions can be invalid and produce liability.
Assignment of share does not confer management rights. An assignee of a partner’s share is entitled only to the share of profits and not to interfere in management or inspect books during the partnership (s 42(1)). That limits remedies for creditors or assignees seeking control through assignment.
Premiums and premature dissolution. Where a partner paid a premium to enter a fixed‑term partnership and dissolution occurs before term expiry otherwise than by death, the court may order repayment of the premium in whole or part (s 53), but not if dissolution was due to the payer’s misconduct or an agreement precluding repayment. Parties who pay premiums should protect themselves contractually.
Firms may be limited to 20 persons. Section 11 caps the number of partners at 20, unless Corporations Act regulations apply. Parties who expand membership may inadvertently convert their venture into a form requiring different regulation.
Misapplication and trust property rules. If a partner, acting within authority, misapplies third party money or property, the firm must make good the loss (s 18). If a partner is a trustee, other partners are not liable for misuse of trust property unless they knew of the breach (s 20). That creates differential risk depending on knowledge and the trustee role.
Authority and notice mechanics. Restrictions on partner authority bind the firm as to persons with notice (s 15). Notice to a partner who habitually acts in the business is notice to the firm except in fraud cases (s 23). Parties dealing with firms should ensure they obtain clear written limitations and communicate them to relevant third parties.
Dissolution by death or bankruptcy immediate unless agreement provides otherwise. Partnership dissolves on death or bankruptcy of a partner subject to any agreement (s 44(1)). Parties expecting continuity must contract for survivorship or buy‑out options to avoid unintended dissolution.
Limited partnership modifications. Where the venture is structured as a limited partnership or an incorporated limited partnership, many statutory defaults in the Partnership Act may not apply or may be modified under the Limited Partnerships Act 2016 (s 4(2)-(3)). Failure to consult that Act risks misapplying partnership defaults.

These are not theoretical wrinkles; they are direct legal consequences under the statutory text. The practical effect is that informal understandings can produce legal outcomes materially different from parties’ expectations. The Act emphasises the value of written agreements for governance, management rights, expulsion powers and departure arrangements.

Compliance under this Act is largely contractual and procedural rather than administrative. The statute supplies default rules; compliance therefore often means documenting departures from defaults and taking specific steps to manage external exposure. Practical, source‑grounded steps include:

Create a written partnership agreement. Many default rules in s 34 (equal sharing, no remuneration, management rights), the expulsion power requirement (s 35(1)), premium arrangements (s 53) and the admission of new partners (s 34(6)) can be modified by agreement. A written agreement should set profit and loss shares, decision‑making rules, processes for admission and expulsion, buy‑out mechanics on death or retirement, and whether partners receive remuneration for management services.
Limit partner authority and give notice to third parties. If a partner’s authority is restricted, record the restriction in writing and provide notice to third parties. The Act makes a restricted act not binding on the firm as to persons having notice (s 15). Parties should ensure that agents, major customers and financiers are notified in writing of limits on individual partner authority.
Maintain partnership books at business premises and permit inspection. Section 34(8) requires partnership books to be kept at the principal place of business and gives each partner access to inspect and copy them. Establish recordkeeping practices that comply with this requirement and facilitate access.
Deal with firm name and representations carefully. Choose a firm‑name consistent with trade mark and goodwill protections (s 12). Avoid representations that could expose individuals to “holding out” liability under s 21. On a partner’s retirement or death, manage the continued use of the firm‑name carefully and publicise changes where necessary (s 47(2)).
Address incoming and outgoing partner liabilities contractually. Use deeds of admission and retirement to allocate antecedent liabilities and secure releases where intended. An incoming partner does not acquire liability for prior acts by default (s 24(1)), and a retiring partner remains liable for prior obligations unless discharged (s 24(2)-(3)). Consider whether continuing guarantees need to be varied or formally revoked (s 25).
Protect lenders and buyers of goodwill. If offering or taking profit‑contingent returns, be aware of s 8(7) and s 9 which limit status of such creditors on insolvency. Lenders should consider taking additional security or insisting on written contracts that clarify ranking and remedies.
Manage dissolution mechanics. On dissolution or retirement, follow the Act’s notice and winding up rules. Partners may apply to the court to wind up the business (s 50), and run the statutory application of assets hierarchy (s 57). Provide public notice of dissolution where necessary (s 47(2)) and consider agreement on buy‑outs to avoid court dissolution triggers.
Avoid conflicts of interest and competition. Partners must account for benefits derived from transactions concerning partnership business and cannot compete without consent (ss 40-41). Implement conflict checks, disclosure protocols and consent mechanisms to avoid equitable liability.
Consider structure against Corporations Act and Limited Partnerships Act. If the business is approaching statutory caps or requires limited liability for participants, consider alternative forms. The Act excludes registered companies (s 4(1)) and modifies application for limited partnerships under the Limited Partnerships Act 2016 (s 4(2)-(3)). Where multiple persons are to be involved (beyond the 20 person cap), examine whether corporate form is mandatory or advantageous.
Use clear documentation for financial advances. A partner advancing funds beyond agreed capital is entitled to 6% interest (s 34(3)). Document any loans to the firm, interest terms and classification as advances rather than capital to avoid disputes in winding up.
Seek legal advice on winding up, fraud and rescission scenarios. The Act provides equitable remedies for rescission on grounds of fraud (s 54) and allows courts to order repayment of premiums on early dissolution (s 53). These are fact sensitive and invite court scrutiny.

Operational compliance is therefore about aligning contractual documentation with statutory defaults, maintaining contemporaneous records, clearly communicating authority constraints to third parties, and structuring capital and exit arrangements to produce predictable legal outcomes. The Act supplies the legal defaults; parties comply best by deciding which defaults they wish to displace and recording those decisions in enforceable instruments.

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