Explanatory Material: Part 3—Nature of drafting changes
Request for submissions»
Introduction»
Part 1—The revision process»
Part 2—The exposure draft Bill»
Part 3—Nature of drafting changes
Part 4—Issues noted for possible future reform»
This Part records where the provisions of each Act can be found in the Bill and the general nature of the drafting change that has been made in each case.
The provisions with minor amendments to legal effect are also identified (see Part 2 for further information).
| New provision | Title of new provision | Old provision | General nature of change |
|---|---|---|---|
| 1 | Title | Short Title | Partnership changed to Partnership Law. This change will clarify the meaning of the Title as the Bill predominantly describes the legal rights and obligations that a partner of a partnership has vis-a-vis their partner(s) and third parties. Second, it would be consistent with other Acts that have similar purposes, eg the Commercial and Contract Law Act 2017 and the Property Law Act 2007. Revision power: section 31(2)(b) |
| 2 | Commencement | n/a | 6 months after the date of Royal assent. Reflects approach taken in the first revision Bill (Contract and Commercial Law Act 2017).This was seen as giving a good lead-in time. Revision power: section 31(2)(e) |
| 3 | Purpose of this Act | Long Title | Standard element in current drafting practice. Revision power: section 31(2)(f) |
| 4 | Revision Act | n/a | Standard element in current drafting practice. Revision power: section 31(2)(e) and (f) |
| 5 | Overview | 1(4) | Standard element in current drafting practice. Revision power: section 31(2)(f) |
| 6 | Transitional, savings, and related provisions | n/a | Standard element in current drafting practice. Revision power: section 31(2)(m) See question 8 in Part 2: How should the Bill approach transitional arrangements? |
| 7 | Status of examples | n/a | Standard element in current drafting practice. Revision power: section 31(2)(f) See question 5 in Part 2: Would more examples make the Bill more accessible and readable? |
| 8 | Interpretation | 2 | Small changes to some defined terms. |
| (1) | business | 2 | No change |
| (1) | court | 2 | Minor grammatical change Revision power: section 31(2)(e) |
| (1) | firm and firm name see clause 12 | ||
| (1) | partnership see clauses 10 and 11 | ||
| (1) | partnership property see clause 38(2) | ||
| (1) | personal representative see clauses 42(2)(a), 59(2), 81(2), and 83 | ||
| (2) | leaves firm see clause 55 | ||
| 9 | Act binds the Crown | n/a | The Act explicitly binds the Crown. Standard element in current drafting practice. Revision power: section 31(2)(e), (i) See questions 6 and 7 in Part 2: Can an intention to bind the Crown be implied because the terms of the 1908 Act make it apparent that the Act’s purpose must be wholly frustrated unless the Crown were bound? Would expressly providing for the Partnership Act to bind the Crown be a minor amendment within the powers of section 31(2)(i) of the Legislation Act 2012? |
| 10 | Definition of partnership | 4(1) | Plain language:
|
| 11 | Relationships that are not partnerships | 4(2) | Plain language:
|
| 12 | Meaning of firm and firm name | 7 | Plain language: section 7 has been restructured as 2 paragraphs. Revision power: section 31(2)(e) |
| 13 | Determining whether partnership exists | 5 | Plain language: section 5 has been restructured as 5 clauses (clauses 13 to 17). Revision power: section 31(2)(e) |
| 14 | Co-ownership of property | 5(a) | Plain language: minor grammatical changes reflect current drafting style. Revision power: section 31(2)(e) |
| 15 | Sharing gross returns | 5(b) | Plain language: minor grammatical changes reflect current drafting style. Revision power: section 31(2)(e) |
| 16 | Effect of receiving share of profits | 5(c) | Plain language:
|
| 17 | Where receiving profits or payments does not make person partner or liable as partner | 5(c) | Plain language:
The proviso to section 5(c)(iv) has been rewritten as clause 17(4) because modern Acts do not include provisos like this. The note in the Bill explains the change and invites feedback on whether subclause (4) preserves the legal effect of the proviso. Revision power: section 31(2)(e)) |
| 18 | What happens if borrower or buyer is insolvent | 6 | Plain language:
We invite feedback on 2 minor amendments in this clause that we have made to clarify Parliament’s intent:
|
| 19 | Partner is agent of firm and other partners | 8 | Section 8 has been restructured as 2 clauses. Clause 19 reflects the first element in clause 8 with very little change. Gender-neutral: removed “he or she” and “his or her” construction”. Revision power: section 31(2)(e) |
| 20 | Power of partner to bind firm | 8 | Plain language:
|
| 21 | Effect of notice that firm will not be bound by acts of partner | 11 | Minor grammatical changes to support change from a section to a clause with 2 subclauses and paragraphs. Clause moved to more logical placement. Revision power: section 31(2)(e) |
| 22 | Partners bound by acts done or instruments executed on behalf of firm | 9 | Plain language:
|
| 23 | Partner using credit of firm for private purposes | 10 | Plain language:
|
| 24 | Liability of partners for firm’s debts and obligations | 12 | Plain language:
|
| 25 | Liability of firm for partner’s wrongful acts or omissions | 13 | Plain language:
|
| 26 | Misapplication of money or property received for or in custody of firm | 14 | Plain language:
|
| 27 | Liability for wrongs is joint and several | 15 | Plain language:
|
| 28 | Improper use of trust property for partnership purposes | 16 | Plain language:
In the note in the Bill, we alert you to an amendment made to clarify Parliament’s intent. Section 16(b) of the 1908 Act refers to “trust money”, but the rest of the section refers to “trust property”. Clause 28(2)(b) refers to “trust property” for consistency. Revision power: section 31(2)(i) |
| 29 | Persons liable if they represent themselves as partner | 17(1) | Section 17 has been replaced by clauses 29 and 30. Plain language:
|
| 30 | Continued use of firm name when partner dies | 17(2) | Plain language:
Revision power: section 31(2)(e) |
| 31 | Admissions and representations of partners | 18 | Plain language:
|
| 32 | Notice of acting partner is notice to firm | 19 | Plain language:
|
| 33 | Liability of incoming partner | 20(1) | Section 20 has been replaced by clauses 33 and 34 to separate the liabilities of incoming partners from those of partners who leave a firm. Plain language: replaced “he or she” construction, and omitted archaic word “thereby”. Revision power: section 31(2)(e) |
| 34 | Liability of partner who leaves firm | 20(2), (3) | Plain language:
In the note in the Bill, we alert you to variations in the way section 20(2) and (3) of the 1908 Act refer to a partner who retires/a retiring partner. Terminology in other sections of the Act is also affected. We are seeking your feedback on whether to replace the reference to retirement with a reference to leaving the firm (combined with the definition in clause 8(2)) to clarify Parliament’s intent. Revision power: section 31(2)(i) |
| 35 | Rights of persons dealing with firm against apparent members of firm | 39 | Plain language:
We have added an example to:
|
| 36 | Continuing guarantee revoked by change in firm | 21 | Plain language:
|
| 37 | Partners’ rights and duties may be varied by consent | 22 | Plain language:
|
| 38 | Partnership property | 23(1) | Plain language:
|
| 39 | Partnership land | 23(2) | Plain language:
We have added an example to illustrate how any interest in partnership land belongs to the partnership under a partnership agreement. Revision power: section 31(2)(f) |
| 40 | Co-owners of land who purchase other land out of profits | 23(3) | Plain language:
Revision power: section 31(2)(e) |
| 41 | Property bought with partnership money | 24 | Plain language:
|
| 42 | Partnership land treated as personal property as between partners | 25 | Plain language:
|
| 43 | Writ of execution against partnership property | 26(1) | Plain language:
|
| 44 | Court may charge partner’s interest for their separate judgment debt | 26(2), (2A) | Plain language:
The note in the Bill draws your attention to inconsistent references to orders and directions in the 1908 Act. Subclause 26(2) refers to orders and directions, but subclause 26(2A) refers to orders. We have resolved this by extending subclause 44(3). We invite feedback on whether this minor amendment to clarify Parliament’s intent under section 31(2)(i) is justified. |
| 45 | Other partners may redeem or purchase interest | 26(3) | The words “the same” replaced with a clear reference to “the interest”. Plain language: replaced “shall be at liberty to” with “may”. Revision power: section 31(2)(e) |
| 46 | Rules about interests and duties of partners | 27 | Plain language:
A note in the Bill draws your attention to the fact that section 27 of the 1908 Act refers to “any agreement (express or implied) between the partners”, but section 20(3) (now clause 34(3)) refers to an agreement being either express or “inferred as a fact from the course of dealing”. Do you think we should align these provisions and specify that the agreement in clause 46(2) should be “inferred as a fact from the course of dealing”? Revision power: section 31(2)(e) |
| 47 | Partners share equally in capital and profits and contribute equally to losses | 27(a) | Plain language:
|
| 48 | Firm must indemnify partner for payments made, and personal liabilities incurred, for firm | 27(b) | Plain language:
|
| 49 | Entitlement to interest | 27(c), (d) | Plain language:
Revision power: section 31(2)(e) |
| 50 | Partner may manage business | 27(e) | No change. |
| 51 | Partner not entitled to remuneration | 27(f) | Plain language: replaced “shall be” with “is”. Revision power: section 31(2)(e) |
| 52 | No new partner without consent | 27(g) | No change. |
| 53 | Most decisions may be made by majority | 27(h) | Plain language:
|
| 54 | Access to [accounting?] records | 27(i) | Plain language:
A note in the Bill provides some background as to why we think “books” in section 27(i) of the 1908 should be updated to “records” or even “accounting records”. We welcome feedback on this. Revision power: section 31(2)(e) |
| 55 | Expulsion of partner | 28 | Plain language:
|
| 56 | Ending partnership at will | 29 | Plain language:
|
| 57 | Partnership that continues after end of fixed term | 30 | Plain language:
|
| 58 | Duty of partners to provide accounts and full information on things affecting partnership | 31 | Plain language:
|
| 59 | Accountability of partners for private profits | 32 | Plain language:
|
| 60 | Duty to account for profits of competing business | 33 | Plain language:
The note in the Bill explains that section 32 of the 1908 Act (now clause 59) required the partner to account to the firm. This section refers to accounting and paying over the profits. We are asking for feedback on the wording of this clause: should we, for example, simply omit the phrase “and pay to the firm” for consistency with other clauses? Revision power: section 31(2)(e) |
| 61 | Rights of assignee of share in partnership | 34 | Plain language:
|
| 62 | Definitions of terms used in this subpart | 34D | For accuracy, the reference to section 5 of the Financial Reporting Act 2013 has been changed to section 5(1). The definitions of terms were inserted in the 1908 Act on 1 April 2014 by section 110 of the Financial Reporting (Amendments to Other Enactments) Act 2013 and do not need to be amended. Revision power: section 31(2)(e) |
| 63 | Accounting records | 34B | No change as 1908 Act updated on 1 April 2014. |
| 64 | Financial statements must be prepared | 34C | No change as 1908 Act updated on 1 April 2014. |
| 65 | Financial statements must be audited | 34E | No change as 1908 Act updated on 1 April 2014. |
| 66 | Audit must comply with auditing and assurance standards | 34F | Plain language: heading revised to be shorter and clearer. No change as 1908 Act updated on 1 April 2014. Revision power: section 31(2)(e) |
| 67 | Financial reporting offences | 34G | Slight restructuring to merge subsections (1) and (2), and to reverse the order of subsections (1) and (2). Cross-references updated, and an unnecessary internal cross-reference deleted, but otherwise unchanged as 1908 Act was updated on 1 April 2014. Revision power: section 31(2)(e) |
| 68 | Partnerships may opt out of audit requirement | 34H | Plain language:
|
| 69 | Duties do not apply if alternative financial reporting duties under Financial Markets Conduct Act 2013 | 34A | Plain language:
|
| 70 | Partnership dissolved at end of term, by end of venture or undertaking, or by notice | 35 | Plain language:
Revision power: section 31(2)(e) |
| 71 | Partnership dissolved by death or bankruptcy | 36(1) | Plain language:
A note in the Bill questions whether this clause should be extended to include liquidation of a body corporate as a minor amendment to clarify Parliament’s intent. Revision power: section 31(2)(i) |
| 72 | Partnership may be dissolved if partner’s interest in property is charged | 36(2) | Plain language:
A note in the Bill explains how we have aligned references to the partner’s “share” in section 36(2) of the 1908 Act with charging the partner’s “interest” in section 26. In a note under subclause (2) we have explained that subject experts believe that it was intended that partners must all agree to dissolve their partnership. We have made this change to clarify Parliament’s intent under the revision power in section 31(2)(i). |
| 73 | Partnership dissolved if unlawful | 37 | Plain language:
|
| 74 | Court may dissolve partnership | 38 | Section 38 has been restructured as clauses 74 and 75. Revision power: section 31(2)(e) Notes in the Bill alert you to a number of the more significant changes and potential changes that go beyond applying plain language and current drafting style. We have:
|
| 75 | Application to court | 38(a) | Plain language: replaced “person having title to intervene” with “a person who is entitled to intervene”. Revision power: section 31(2)(e) A note in the Bill explains that we reviewed the references to a committee making an application to declare a partnership dissolved and now refer to the Protection of Personal and Property Rights Act 1988. We have made this change to clarify Parliament’s intent under the revision power in section 31(2)(i). |
| 76 | Right to notify dissolution | 40 | Plain language:
|
| 77 | Continuing authority of partners for purposes of winding up and completing transactions | 41 | Plain language:
In the note to subclause 5, we ask how “after the bankruptcy” is best interpreted (see also the note under clause 18). Revision power: section 31(2)(e) |
| 78 | Application of partnership property | 42 | Plain language:
|
| 79 | Court may order repayment of premium if partnership prematurely dissolved | 43 | Plain language:
|
| 80 | Rights where partnership dissolved for fraud or misrepresentation | 44 | Plain language:
A note in the Bill details the inconsistent references in the 1908 Act to debts and liabilities, eg “partnership liabilities’, “debts and liabilities of the firm”, (see also sections 12, 42, and 44). We ask for your feedback on whether you think the differences were intentional or whether it is better to align them. Note: Section 44 of the 1908 Act arguably does not align well with the Contractual Remedies Act 1979 (now in subpart 3 of Part 2 of the Contract and Commercial Law Act 2017). In the Bill, we ask for your views on whether we can deal with the difficulty in this revision Bill as a minor issue to clarify Parliament’s intent, or if it will need to be included in a future reform Bill. See Part 4: Issues noted for possible future reform |
| 81 | Right of outgoing partner or partner’s estate to share profits or obtain interest | 45(1) | Plain language:
Clause 81(2)(b) continues the interest rate at 5%. In the Bill, we explain that an interest rate is often linked to a movable rate. We have considered whether to amend the reference to apply a calculation under the Interest on Money Claims Act 2016. Let us know if you support this change and, if so, whether you think it is a minor amendment that can be dealt with as a revision power under section 31(2)(i) or if it is better to deal with it in a future reform Bill. See Part 4: Issues noted for possible future reform |
| 82 | Option to purchase share of outgoing or deceased partner | 45(2) | Plain language:
A note in the Bill asks for feedback ab whether we should retain the wording of section 45(2) and refer only to profits, or include interest (under section 45(1)) as a minor amendment to clarify Parliament’s intent under section 31(2)(i). |
| 83 | Retiring or deceased partner’s share is debt | 46 | Plain language: restructured section 46 as 2 subclauses. Revision power: section 31(2)(e) See note under clause 42 about the change from “representatives“ to “personal representatives”. |
| 84 | Rules for distributing assets on final settlement of accounts | 47 | Plain language: restructured section 47 as clauses 84 to 86. Revision power: section 31(2)(e) |
| 85 | Losses | 47(a) | Plain language:
|
| 86 | Application of assets | 47(b) | Plain language:
|
| 87 | Partnership Act 1908 repealed | n/a | |
| 88 | Amendments to other enactments | n/a | |
| Schedule 1 Clause 3 | Transitional, savings, and related provisions (clause 6) Schedule 1 clause 3 (Savings for rules of equity and common law) | 3 | Plain language: minor grammatical changes. Revision power: section 31(2)(e) |
| Schedule 2 | Intended changes to effect of law (clause 4(2)) | n/a | |
| Schedule 3 | Comparative table (clause 4(3)) | n/a | |
| Schedule 4 | Consequential amendments (clause 88) | n/a | |
