PARTNERSHIP ACT 1891 - SECT 2
PARTNERSHIP ACT 1891 - SECT 2
2—Rules for determining existence of partnership
(1) In determining
whether a partnership does or does not exist, regard must 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 of the property so held;
(b) the
sharing of gross returns does not of itself create a partnership, whether the
persons sharing such returns have or do not have 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
evidence that the person is a partner in the business; but the receipt of such
a share, or of a payment contingent on or varying with the profits of a
business, does not of itself make the person 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 the person 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 spouse, domestic partner or child of a
deceased partner, and receiving by way of annuity a portion of the profits
made in the business in which the deceased person was a partner, is not by
reason only of such receipt a partner in the business or liable as such;
(iv)
the advance of money by way of loan to a person engaged
or about to engage in any business, on a contract with that person that the
lender will receive a rate of interest varying with the profits, or will
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 is signed by or
on behalf of all the parties to the contract;
(v)
a person receiving, by way of annuity or otherwise, a
portion of the profits of a business in consideration of the sale by the
person of the goodwill of the business, is not by reason only of such receipt
a partner in the business or liable as such.
(2) This section does
not apply to or in respect of an incorporated limited partnership.