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Ordinary Partnership

TITLE II. ORDINARY PARTNERSHIP

Chapter 1. General Provisions

Art. 227. – Definition.

    A ‘partnership is an ordinary partnership within the meaning of this Title where it does not have characteristics which make it a business organisation covered by another Title of this Code.

Art. 228. – Joint ownership.

1.    The provisions of’ this Title shall not apply to joint ownership, where property is held by several persons for reasons outside their control.
2.    Joint owners may agree to create a partnership for the management of the property jointly owned.

Chapter 2. Contributions

Art. 229. – Nature and amount.
1.    Each partner shall make a contribution, which may be in money, debts, other property or skill.
2.    Property or the use of property may form a contribution.
3.    Unless otherwise agreed, contributions shall be equal and of the nature and extent required for carrying out the purposes of the partnership.

Art. 230. – Guarantee.

1.    Where property is contributed, the contributing partner shall carry out the duties of a seller.
2.    Where the use of property is contributed, the contributing partner shall carry out the duties of a lessor.
3.    Where a partner contributes a debt, he guarantees only the existence of the debt and not the solvency of the debtor, unless otherwise agreed.

Art. 231. – Risks.

1.    Where property is contributed, the risks shall pass to the partnership in accordance with the provisions relating to sale.
2.    Where the use of property is contributed, the risks shall remain with the contributing partner.

Art. 232. – Interest.

    Where money is contributed, the contributing partner shall be liable to the partnership for interest thereon where payment is made after the due date.
Chapter 3. Management of the Partnership

Art. 233. – Modification of the agreement.

1.    The partnership agreement may be varied only with the consent the partners.
2.    The partnership agreement may contain a clause providing for the variation of n particular clause with the consent of the majority of the partners.

Art. 234. – Majority.

1.    Where the law or the partnership agreement provides that a decision may be taken by a majority of the partners, the majority means a majority of the individual partners.
2.    The partnership agreement may provide that the majority shall be calculated on a majority holding, in the partnership.

Art. 235. – Special acts.

    The consent of all the partners shall be required for the appointment of an attorney or the carrying out of any act which goes beyond normal partnership practice.

Art. 236. – Appointment of managers.

    All the partners shall have a right to act as managers, unless the partnership agreement or a decision of the partnership has appointed one or more of the partners or a third party to be the manager.

Art. 237. – More than one manager.

1.    Where several persons have been appointed managers and their duties have not been specified or where it has not been specified that they act jointly, they may each carry out acts of management.
2.    Each manager may object to dealings contemplated by other managers.
3.    The objection shall be decided on by a majority vote of all the partners.

Art. 238. – Joint management.

1.    Where joint managers have been appointed, decisions shall be taken jointly.
2.    Where an act of management is of an urgent nature and the other joint managers cannot be consulted, one joint manager may act alone.

Art. 239. – Manager appointed under partnership agreement.

    A partner appointed as manager under the partnership agreement may carry out all acts of management in disagreement with the other partners in the absence of fraud.

Art. 240. – Revocation of the statutory manager.

1.    The appointment of a manager appointed under Art. 239 may not be revoked or his powers restricted by the other partners, save for good cause.
2.    Where there is good cause, the appointment may be revoked notwithstanding any provision to the contrary in the partnership agreement.
3.    Gross breach of duty or unfitness to exercise powers of management shall constitute good cause under this Article.

Art. 241. – Rights and duties of ma1lagers.

1.    The provisions relating to agency shall apply to the rights and duties of managers.
2.    Managers shall be jointly and severally liable to the partners for failure to carry out their duties according to law or under the partnership agreement.
3.    Where liability has been incurred and such liability is not due to the fault of a manager, the manager shall have a right of action against the person through whose fault the liability was occasioned.

Art. 242. – Unauthorised agency.

    Where a person holds himself out to be a manager of a partnership or where a manager exceeds his powers, the rules relating to unauthorized agency shall apply.

Chapter 4. Rights and Duties of Partners

Art. 243. – Duties of the partners.
1.    Every partner shall in conducting partnership business, use the diligence end skill which he uses in conducting his private affairs.
2.     Every partner shall be liable to the other partners in respect of any damage which he has caused by his default. Any benefit which he has procured for the partnership in handling other business may not be set off against such damage.

Art. 244. – Duty to obtain.

    No partner may handle, either for his own benefit or for a third person, any business which would be contrary or prejudicial to the partnership.

Art. 245. – Use of partnership property.

1.    Property, debts and rights brought into or acquired by the partner-ship shall belong to the partners in common under the terms of the partnership agreement.
2.    Every partner may use partnership property in accordance with usual partnership practice.
3.    No partner may use partnership property against the interests of the partnership or so as to prevent his co-partners from using such property in accordance with their rights.

Art. 246. – Necessary expenses.

    Every partner may require his partners to share such expenses as may be necessary to preserve the partnership property.

Art. 247. – Advances or loans.

1.    A partner who makes an advance of funds to the partnership shall be entitled to interest.
2.    A partner who borrows funds from the partnership shall pay interest.
3.     He may, where appropriate, be liable to pay damages in addition to interest.

Art. 248. – Right to check books and papers.

    Every partner shall, notwithstanding any provision to the contrary in the partnership agreement, have the right to check the state of the firm’s business, to consult the books and papers of the partnership and to draw up a statement of the financial position.

Art. 249. – Reports.

1.    Where a partnership continues for more than one year, the partners may require a report on the management to be prepared at the end of each year.
2.    Any provision in a partnership agreement for reports to be submitted at intervals exceeding twelve months shall be of no effect.

Art. 250. – Association with third parties.

1.    No partner may introduce a third party as a partner without the consent of the other partners.
2.    Where a partner gives an interest in his partnership share to a third party or assigns his share to him, the third party does not become a partner and has no right under Art. 248.

Art. 251. – Profit sharing.

1.    The partners shall share all profits which, by their nature, are partnership profits.
2.    Unless otherwise agreed, every partner may be distributed immediately after approval of require that the profits the management report.

Art. 252. – Manner of distributing profits and losses.

1.    Unless otherwise agreed, every partner shall have an equal share in the profits and losses, irrespective of his contribution.
2.     If the agreement specifies either the share in the profits or the share in the losses, this provision shall apply equally to the share of profits and losses.

Art. 253. – Distribution by a third party.

1.    Where the partners agree to refer the distribution of profits to one of them or to a third party, such distribution may only be challenged as being inequitable.
2.    No claim shall be entertained where the partner who considers himself to be aggrived by the distribution has not challenged such distribution within three months of his becoming aware thereof, or where such partner has initiated the execution of the distribution.

Art. 254. – Contribution of skill.

    Notwithstanding the provisions of Art. 215, provisions may be made to the effect that a partner who contributes skill only shall share in the profits and not in the losses.

Chapter 5. Relations of the partnership with third parties

Art. 255. – Creditors of the partnership.

1.    The creditors of the partnership may claim against partnership assets.
2.    They may also claim against the personal property of the partners who shall, unless otherwise agreed, be jointly and severally liable to them for the obligations of the partnership. A partner who is sued on his personal property may require, as though he were a guarantor, that the creditor first distrain the property of the partnership.
3.    Any provision relieving the partners or some of them of joint and several liability may not be set up against third parties unless it is shown that such parties were aware of such provision. Notwithstanding provision to the contrary, the partners who acted in the name of the partnership shall always be jointly and severally liable.

Art. 256. – Personal creditor.

1.    Personal creditors of the partners may attach the share in the profits due to their debtor.
2.    They may take all steps necessary to protect the share due to their debtor upon the winding-up of the partnership.
3.    If the personal property of their debtor is not sufficient to indemnify them, they may require that, within three months from the date of their demand, the debtor’s share in the partnership be disposed of.

Art. 257. – Set-off.

    A person who is a debtor of the partnership may not set off a debt one of the partners.

Chapter 6. Dissolution and winding-up of partnership

Art. 258. – Partnership for an undefined period.

1.    Where a partnership is entered into for an undefined period or for the life of one of the partners, or where the power to, dissolve on notice is provided in the agreement, every partner may bring about its dissolution by giving six months notice.
2.    Notice to dissolve shall be given good faith and not be unseasonable.
3.    Notice to dissolve shall be deemed to be unseasonable where the situation is not determined and the dissolution of the partnership should he postponed.

Art. .259. – Withdrawal of a partner.

    Where a partner has given notice to dissolve under Art. 258, his partners may prevent dissolution by paying out his share, and the partnership shall continue as between the other partners:

Art. 260. – Death, incapacity or bankruptcy.

1.    A partnership shall be dissolved where one of the partners dies or is no longer able, under the law, to be partner.
2.    A partnership shall be dissolved where a partner is declared bankrupt or where one of his personal creditors causes his share to be disposed of under Art. 256 (3).
3.    The partnership may by agreement continue as between the remaining partners, or with the heirs or representatives of the deceased, incapable or bankrupt -partner.

Art. 261. Expulsion of a partner.

    The court may order the expulsion of a partner for good cause and the partnership shall continue as between the remaining partners.

Art. 262. – Paying out partner leaving.

1.    Where a partner leaves a partnership and the partnership continues as between the other partners, the rights of the partner who has left shall be settled in cash, on the basis of the value of his rights on the day when he leaves the partnership.
2.    A partner who leaves the partnership shall share in the profits and losses arising from dealings completed or outstanding on the day when he leaves.
3.    He shall be liable to third parties for all dealings made prior to his leaving.

Art. 263 – Powers of managers after dissolution.

1.    The managers shall retain on dissolution their powers until they have made arrangements for the dissolution.
2.    During dissolution, they may only exercise such powers as are necessary to complete the dissolution.

Art. 264. – Appointment of liquidators.

1.    After dissolution, the winding-up & shall be carried out by one or more liquidators, appointed under the partner agreement or by all the partners.
2.    Failing the agreement of the partners, the court shall appoint liquidators.

Art. 265. – Duties and responsibilities of liquidators.

1.    Unless otherwise provided in the partnership agreement or by law, the liquidators shall have the same duties and responsibilities as managers.
2.     The appointment of liquidators may be revoked by the decision all the partners, or by the court at the request of one partner.

Art. 266. – Inventory.

1.    The managers shall hand over to the liquidators the property of, and documents relating to, the partnership and render an account of their management upto the date of handing over.
2.    The liquidators shall draw up an inventory of the assets and liabilities of the partnership.

Art. 267. – Powers of the liquidators.

1.    The liquidators shall take all steps necessary to complete the winding-up of the partnership.
2.    The liquidators may sell the property of the partnership, represent the partnership in legal proceedings and may compromise or refer to arbitration any matters in issue.
3.    The liquidators may not undertake new business in the name of partnership but may complete business already started.
Art. 268. – Settlement with creditors.
1.    The liquidators shall pay the creditors of the partnership, where necessary calling upon the partners for contributions.
2.    They sha1l settle with the partners debts which they hold against the partnership and restore to partners property whose use only was contributed to the partnership.

Art. 269. – Restitution of contributions.

1.    A partner who has contributed property may not claim it back in kind.
2.    He shall have a claim to the value of his contribution as accepted in the partnership’s accounts.
3.    If the value has not been so fixed, restitution shall be made on the basis of the actual value at the time the contribution was made.

Art. 270. – Distribution of profits and losses.

1.    Where there is a surplus after all claims have been met and contributions returned, the surplus shall be distributed among the partners.
2.     Where the assets are insufficient to repay contributions after payment of debts, expenses and advances, the loss shall be distributed among the partners.
3.    The distribution of profits and losses is to be made among the partners in equal shares, where no other proportion has been specified in the partnership agreement.