This question associated with law of partnership, covered by the Partnership Act 1985 (WA), which is particularly applied to internal liabilities and cessation of partnership as well.
Although a broad variety of characters of liabilities owned by partners, those specific characters related to the case.
In the term of PA s7 states “Partnership is the relation which subsists between persons carrying on a business in common with a view of profit”.
The most important characteristic of partnership is not to be recognised as a separate legal individual. Moreover, the partnership should be treated as a whole, that is, none of the partners should be separated from the whole entities (Maltas, 2011). The case of Cov v Hickman (1869) 8 H.L.E.R. 431 shows that each partner has the right to get paid and sufficient severally liable for the debts.
Moreover, PA s34 (5) expresses that all partners have the legal rights of an active role in control and management of a partnership. According to Maltas, “this right takes due notice of the unlimited liability aspect of partners towards the debts of their partnership” (2011).
A partner, acting in the scope of their partnership as a partner has to follow a wide range of contractual liabilities under Partnership Act.
PA s26 claims that partners are agents acting the best interest of other partners in the company, which is proved by Baird’s Case- partner is equal to the “buffer” or go between the other partners and the third- party. As a result, the partnership is also a fiduciary relationship and each partner should act honestly with good faith and purpose the best interest for the whole company.
The second part of liabilities of partnership is emphasised in the internal liabilities under the Partnership Act.
PA s34 consisted of rules as to interest, rights and duties of partners in term of internal liabilities which are mainly contributed by honesty relationship. All partners will share equally capital and profits of business and also share equal losses. However, the different level of share in capital and profits between partners could be applied in specific agreement.
In the case of dissolution in Kelly v Tucker (1907) 5 C.L.R. 1, the common law held that partner who provided capital for business would be paid his capital first, and then the share of profit would be imposed under the agreement. In contrast, under the win of Partnership Act, Cf Kilpatrick v McKay (1878) 4 VLR 28 shows that a partner was entitled to half of the profits on dissolution of the partnership, even if the contribution to capital was unequal in term of no specific rule in agreement.
According to Maltas (2011), silent partners also join and severally liable although they do not attempt to day to day management roles.
As far as the partnership cessation concerned, PA s37 shows that the partnership could be dissolved...