Dissolution of Partnership in Malaysia

1. DISSOLUTION OF PARTNERSHIP

2. The matters regarding dissolution of the
partnership and its consequences are
governed in the Part V of our
Partnership Act 1961.
 There are about eight (8), distinct
conditions that can cause the particular
partnership to be dissolved:


3. Partners are at liberty to fix the
duration of the partnership. Where no
fixed term has been agreed upon for the
duration of partnership, any partners
may terminate the partnership at any
time given on giving notice of his
intention to do so to all the other
partners-Section 28 (1).
2. By operation of law.
 Expiration. Section 34 (1) (a), 34 (1) (b)
 Notice. Section 34 (1) (c), 34 (2)
1.

4. 3. The partnership can be dissolve by the
existing agreement made between them
beforehand. The partnership can be
terminated on the expiry of the period
stipulated or they also can dissolve the
partnership at any time even before the
expiry period, provided that the partners are
mutually agree on that.

5. Death or bankruptcy. Partnership is
dissolve upon the death or bankrupt of
any partners. Refer yourself to Section
35 of Partnership Act.
5. In section 35 (2), the other partners have
the option to dissolve the partnership
when a partners suffers his share of the
partnership property to be charged with
payment of his personal debt.
4.

6. 6. Section 36. If an event occurs which
make sit unlawful for the business of the
firm to be carried on or for the members
of the firm to carry on in partnership.
7. The partnership also can be dissolve by
the order of the court. However, this
method can only be resorted by the
partners in 6 situations:

7. Sec 37 (a), partners mental incapacity. The mental capacity
must be permanent and the that particular partner must
incapable to manage his property and affairs.
 Sec 37 (b), partner’s physical incapacity. Case: Whitwell v
Arthur. In this case, the partner has suffered a condition of
paralyzed for some months. However, by the time the case
arrived at the Court, the partner has healed from that
condition. The Court reject the application to dissolve the
partnership.
 Sec 37 (c), partners found guilty of misconduct. The
misconduct must affected the conduct of the business. Moral
misconduct, however usually cannot be a strong ground
unless it can be seen as affected the business. Case: Snow v
Milford. In this case, the partner has involved into a massive
adultery in the area of Exeter. The court held that, the
ground is insufficient to grant the order of dissolution under
this Section.


8. Sec 37 (d), breach of the agreement. This section can only be
invoked by virtue of the words ‘virtually’ and ‘willfully’ under
this section which means that the breach must be a serious
one and resulted to the damages to the business or the firm
itself. If a breach is a minor one and does not resulted to the
damage to either business or the firm, the Court is reluctant
to grant the order of the dissolvent.
 Sec 37 (e), if the business can only be carried on at loss, the
firm can petitioned of dissolvent of the partnership to the CT.
This can be traced back by the objective of the partnership is
being established under the section 5(1) of PA 1961.
 Sec 37 (f), the court can order for the dissolvent of the
partnership if it just and equitable to do so. Case: Yenidje
Tobacco Ltd 2 Ch 426. The deadlock between the partners of
the firm in regards to the status of their company makes the
Court ordered the firm to be dissolved. Based on my opinion,
the Court has fully discretion on this section to grant the
order of dissolvent under the notion of justice and equity.


9. References:
 http://graguraman1.blogspot.com/2010/0
7/partnership-law-346.html
