For further information on this subject, and on the administration of partnership property and the separate property of the partners in bankruptcy, see article on BANKRUPTCY; Lindley on Partnership, pp. 684 et seq.; Pollock's Digest of the Law of Partnership, p. 147; and the standard text-books on Bankruptcy.

B. LIMITED PARTNERSHIPS.

Limited partnerships are the creation of the Limited Partnership Act, 1907, but, subject to the provisions of that Act, they are governed by the Partnership Act, 1890, and the rules of equity and common law now applicable to partnerships (Limited Part. Act, 1907, s. 7). That Act and those rules have been discussed in the former part of this article. This part is therefore confined to the law peculiar to limited partnerships.

Though the main idea of the Limited Partnership Act, viz., to allow a man to become a partner without incurring any liability beyond the capital he chooses to risk in the business, is clearly expressed, the application and construction of some of its provisions raise many points of difficulty. Only the more important of these are here indicated; owing to the exigencies of space and the absence of all authority on the construction of the Act, they cannot be discussed or worked out in detail.

(1) Constitution of a Limited Partnership.-Limited partnerships may be formed in the manner and subject to the conditions provided by the Limited Partnership Act, 1907 (s. 4 (1)).

A limited partnership must not consist of inore than ten persons if carrying on the business of banking, or of more than twenty if carrying on any other business (s. 4 (2), and see the Companies Act, 1862, s. 4, ante, p. 417).

Such a partnership must consist of one or more general partners and one or more limited partners; the former, like members of an ordinary partnership, are liable for all the debts and obligations of the firm; the latter are a new creation and are defined to be "persons who shall at the time of entering into such partnership contribute thereto a sum or sums as capital or property valued at a stated amount, and who shall not be liable for the debts or obligations of the firm beyond the amount so contributed" (Limited Part. Act, s. 4 (2), and infra).

A body corporate may be a limited partner (s. 4 (4)), but whether any particular corporation may be one must depend on its own corporate powers.

A limited partnership must be registered in accordance with the provisions of the Act; if not so registered it is deemed to be a general partnership, and every limited partner a general partner (ss. 5 and 8). The statement to be registered must be signed by the partners and contain, inter alia, the names of the partners, a statement that the partnership is limited, the description of every limited partner as such, and the sum contributed by each limited partner, and whether paid in cash or how otherwise (s. 8). The registered statements are open to inspection. A certificate of registration is to be sent to the firm (s. 13), and is admissible in evidence in all cases (s. 16 (2)).

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(2) Name. The firm name and any change of it must be registered (ss. 8 and 9), but the name need not disclose the fact that the partnership is limited.

(3) Authority of the Partners to bind the Firm. The implied authority of a general partner to bind his firm is the same as in the case of ordinary partnerships (s. 7, and ante, pp. 421 et seq.). It is conceived that the general partners cannot extend their powers beyond this limit without the consent of the limited partners (see infra, p. 458).

A limited partner has no power to bind his firm (s. 6 (1)). This will not prevent a limited partner being employed to act for the firm, and if the general partners authorise him to act on behalf of the firm, or so conduct themselves as to be estopped from denying his authority to do so, the firm will doubtless be bound by his acts. If what the limited partner does in pursuance of such authority amounts to taking part in the management of the partnership business, he will himself be liable for all the debts and obligations of the firm incurred while he is so doing (s. 6 (1)).

(4) Liability of Partners for Debts and Obligations of their Firm.(a) General Partners.-General partners are liable for all the debts and obligations of their firm in the same manner as partners in an ordinary firm (ss. 4 (1) and 7, and ante, pp. 427 et seq.).

The Limited Partnership Act, however, contemplates that a general partner may during the continuance of the partnership become a limited partner (ss. 9 (1) and 10). This can only be by an agreement between the partners, to which it is conceived all the partners, both general and limited, must concur. Such an agreement cannot limit the liability of the general partner to third parties in respect of the past debts and obligations of the firm, nor will it limit his liability for the future unless and until the arrangement under which his liability is changed is duly advertised in the Gazette (s. 10); the change must also be registered (s. 9).

As there must be at least one general partner in a limited partnership (s. 4 (2)), it is not competent for all the general partners to become limited partners.

(b) Limited Partners.-The liability of a limited partner is, with certain exceptions about to be mentioned, limited to the amount of his contribution, which must consist either of a sum of money or of property valued at a stated amount (s. 4 (2)).

The amount originally contributed may be increased during the continuance of the partnership (see ss. 9 and 11), but a limited partner may not during the continuance of the partnership either directly or indirectly draw out or receive back any part of his contribution (s. 4 (3)).

A limited partner will be liable beyond the amount of his contribution in the following circumstances, viz. :

(i.) If the partnership is not registered in accordance with the provisions of the Act, a limited partner is deemed to be a general partner (s. 5), and his liability will consequently be unlimited.

(ii.) If he takes part in the management of the partnership business he is liable for all debts and obligations of the firm incurred while he does so, as though he were a general partner (s. 6 (1)).

(iii.) If during the continuance of the partnership he either directly or indirectly draws out, or receives back, any part of his contribution, he is liable for the debts and obligations of the firm up to the amount so drawn out or received back (s. 4 (3)).

As the Limited Partnership Act has, apart from these exceptional

cases, limited the liability of a limited partner to the amount which he has contributed (see s. 4 (2)), one would expect to find some provision expressly protecting him and his separate property from execution or other proceedings for enforcing payment of a partnership debt. The Act not only does not contain any such provisions, but it does not expressly modify either sec. 9 or sec. 12 of the Partnership Act, 1890 (see ante, p. 427). Moreover, as a contribution to the partnership is not a payment to the debtor, and the amount so contributed still belongs in part to the limited partner as a member of the firm, a provision limiting the partner's liability to the amount so contributed does not appear to be inconsistent (see Limited Part. Act, s. 7) with the retention of his personal liability, up to that amount, to the creditors of the firm with its attendant consequences, e.g. liability of his separate property to execution (ante, p. 427) of himself to be made bankrupt or of his estate to be administered after his death (ante, p. 455).

(5) Conduct of Partnership Business.-The principal place and general nature of the partnership business and any change therein must appear on the registered statement (ss. 8 and 9). The conduct of the partnership business is in the hands of the general partners, and subject to any agreement between the partners, any difference arising as to ordinary matters connected with that business may be decided by a majority of the general partners (see Limited Part. Act, ss. 6 (1) and 5 (a), and ante, p. 434). A limited partner may not take part in the management of the business (s. 6 (1), and ante, p. 457), but he may, either by himself or his agent, inspect the books of the firm and examine into the state and prospects of the partnership business, and may advise with the partners thereon (s. 6 (1)).

It is conceived, however, that the general rule that no change may be made in the partnership business without the consent of all the partners (Part. Act, 1890, s. 24 (8), and ante, p. 427) applies to limited partnerships, and that the general partners have no authority without the consent of the limited partners either to change the nature of the partnership business, or to do any act or use any of the partnership property for purposes not connected with that business; the limited partners do not contribute their capital for any such such purposes (Const v. Harris, 1824, Turn. & R. 525; 24 R. R. 108; Lindley on Partnership, pp. 356, 357).

In the event of a dissolution the affairs of the partnership are to be wound up by the general partners, unless the Court otherwise directs (Limited Part. Act, s. 6 (3)).

(6) Introduction of New Partners.-Subject to any agreement between the partners, the general partners may introduce a new partner without the consent of the limited partners (s. 6 (5) (d)), but the consent of all the general partners is necessary (see Part. Act, 1890, s. 24 (7), and Limited Part. Act, s. 7); notice of this change must be registered (s. 9).

(7) Shares in Limited Partnerships and their Assignment.-The Limited Partnership Act, 1907, contains no provisions as to the manner in which the profits of the partnership are to be divided or the losses to be borne between the partners. In ordinary partnerships there is a presumption of equality (Part. Act, 1890, s. 24 (1), and ante, p. 437), but such a division in limited partnerships will, seldom if ever, be in accordance with the intention of the partners. This matter should be expressly provided for by the partnership agreement.

Having regard to the liability of a limited partner, who, during the

continuance of the partnership, either directly or indirectly draws out or receives back any portion of his contribution (see ante, p. 457), great care must be exercised not to distribute as profits what is really part of the capital of the firm. Many difficult questions have arisen on this subject in connection with the payment of dividends by limited companies, and the reader is referred for information on this point to the article COMPANY and the authorities there cited.

The assignment of a share in a limited partnership by a general partner is governed by the law applicable to ordinary partnerships (see ante, p. 438), except that the assignee may become a partner without the consent of the limited partners (s. 6 (5) (d) supra).

A limited partner may assign his share with the assent of the general partners (Limited Part. Act, s. 6 (5) (b)). Notice of this assignment must be advertised in the Gazette (s. 10). The assignment will not be operative, at all events as against third parties, until it has been advertised (quære the true construction of s. 6 (5) (b) and s. 10). After the assignment (and quære advertisement in the Gazette) the assignee becomes a limited partner with all the rights of his assignor; this change must be registered (s. 9). To such an assignment sec. 31 of the Part. Act, 1890, would not apply; it is apprehended, however, that a limited partner might assign his share without the consent of the general partners, and thereby confer upon his assignee the rights mentioned in that section. (As to that section, see ante, p. 439.)

(8) Dissolution and Winding-Up.-(a) Causes of Dissolution.-The causes of the dissolution of a limited partnership as regards events happening to the general partners are the same as in the case of an ordinary partnership, the Limited Partnership Act containing no provisions on this subject relating to them (see ante, p. 443, and s. 7); but as regards limited partners that Act contains certain provisions to which it is necessary to refer.

(i.) Notice (ante, p. 443).—Subject to any agreement between the partners a limited partner is not entitled to dissolve the partnership by notice (s. 6 (5) (e)).

(ii.) Death and Bankruptcy (ante, p. 443).-Section 6 (2) of the Act enacts that "a limited partnership shall not be dissolved by the death or bankruptcy of a limited partner." The meaning of this is not clear. The words are general-the partnership is not dissolved. A limited partner has no right to withdraw his contribution during the continuance of the partnership, nor, in the absence of agreement, has he any right to dissolve the partnership by notice. If, then, a limited partner dies or becomes bankrupt, have the surviving partners a right to retain his contribution in the business until the expiration of the partnership term, if there be one, or until the partnership is otherwise dissolved? It is apprehended that they have this right although the words at the end of the sub-section referring to a lunatic's share (see infra) seem to point to a different conclusion.

(iii.) Charging Order on a Partner's Share (ante, p. 444).—Subject to any agreement between the partners, if a limited partner suffers his share to be charged for his separate debt (ante, pp. 438, 444), the other partners are not entitled to dissolve the partnership (s. 6 (5) (c)). If a general partner suffers his share to be so charged a limited partner would seem to be entitled to exercise, or join in the exercise of, the option of dissolving the partnership conferred upon the other partners by sec. 33 (2) of the Partnership Act, 1890. The exercise of

such an option can hardly be considered part of the management of the partnership business in which the limited partners may not take part, nor, it is apprehended, would the exercise of the option in favour of a dissolution, be a dissolution by notice within the meaning of sec. 6 (5) (e) of the Limited Partnership Act, 1907.

(iv.) Lunacy (ante, p. 444).-The lunacy of a limited partner is not a ground for the dissolution of the partnership by the Court, unless the lunatic's share cannot be otherwise ascertained or realised (s. 6 (2)). If, however, the partnership is not dissolved, what right has the lunatic to withdraw his contribution? (see s. 4 (3) and supra).

(b) Conduct of Winding-Up.-In the event of the dissolution of a limited partnership its affairs shall be wound up by the general partners, unless the Court otherwise directs (s. 6 (2)). The general partners will for this purpose have the powers mentioned in sec. 38 of the Partnership Act, 1890, and it is apprehended that the proviso in that section will also apply to a general partner who is bankrupt (see ante, p. 448).

(c) Winding-Up by the Court.-The Limited Partnership Act, 1907, s. 6 (4) provides as follows:

Applications to the Court to wind up a limited partnership shall be by petition under the Companies Acts, 1862 to 1900, and the provisions of those Acts relating to the winding up of companies by the Court and of the rules made thereunder (including provisions as to fees) shall, subject to such modifications (if any) as the Lord Chancellor, with the concurrence of the President of the Board of Trade, may by rules provide, apply to the winding up by the Court of limited partnerships with the substitution of general partners for directors."

This enactment appears to be compulsory in all cases to which it applies, but it is by no means clear to what cases it does apply. Does it apply to all proceedings in which the Court is asked to dissolve the partnership and, as a consequence, wind its affairs up; or is it limited to applications to wind up the affairs of a partnership which has already been dissolved? The Partnership Act, 1890, recognises this distinction (compare ss. 35 and 39); on the other hand, in the Companies Acts the expression "winding-up" clearly includes the dissolution of an unregistered partnership as well as this winding up of its affairs (see Comp. Act, 1862, s. 199). Moreover, a dissolution always involves the winding up of the partnership, so that there appears to be no adequate reason to confine the section to a winding-up after a dissolution.

The section therefore appears to include applications for a dissolution: does it therefore exclude bankruptcy proceedings being taken against a firm? If it does, much difficulty may arise if separate adjudications are obtained against one or more of the partners.

The section, whatever its application, seems to give rise to many difficulties, which cannot be here discussed.

Up to the time of writing this article no rules have been made under this section, and the reader is therefore referred to the article COMPANY and the text-books on that subject for the law relating to the winding up of companies.

(9) Registration Fees and Stamps.-The Registrar of Joint-Stock Companies is the registrar of limited partnerships (Limited Part. Act, s. 15). The chief provisions relating to the registration of limited partnerships and matters connected therewith have been already noticed; for the details of the subject, the penalties for non-observance of the statutory provisions, or for making false returns, and the fees to