Partnerships Ordinance [New Version], 5735-1975

"business" means any occupation that is lawfully carried on;

"partnership relations" means the relations between persons carrying on a business together with a view to profit, excluding the relations between members of a corporation incorporated under any other law;

"partnership" means a body of persons who have entered into partnership relations;

"partner" means any person who has entered into partnership relations with another;

"limited partner" means a person who has contributed to the partnership, at the time of entering into the relations, capital in money or in property valued at a specified sum, on the condition that the person shall not be liable for the obligations of the partnership beyond the sum so contributed;

"general partner" means a partner who is not a limited partner;

"firm name" means the name under which a partnership carries on its business;

"court" means the court competent to order the winding up of a partnership;

"Registrar" means the person fulfilling, under this Ordinance, the functions of the Registrar of Partnerships.

In determining whether partnership relations exist or not, regard shall be had to the following rules:

The number of general partners in a partnership shall not exceed twenty.

Notwithstanding the provisions of section 3 –

A partnership formed for the purpose of carrying on a business is required to be registered in accordance with the provisions of this Ordinance within one month from the day on which it was formed; except for a partnership between farmers for the purpose of a joint venture in connection with the cultivation of land.

A partnership that is not required to be registered may be registered as a partnership under this Ordinance if its partners so request, and if it is so registered, this Ordinance shall apply to it.

Where a partnership that is required to be registered has not been duly registered, each partner shall be liable to a fine of 15 liras for every day during which the offence continues; however, failure to register a partnership shall not affect consideration of whether the partnership exists or not.

Registration of a partnership shall be effected by sending a notice to the Registrar, signed by the partners and containing the following particulars:

The Registrar shall ensure that the notice, or an abstract thereof, is published in Reshumot (Official Gazette) at the expense of the partnership.

If the Registrar is of the opinion that a partnership is seeking to assume a name for an improper purpose or for a purpose of fraud, the Registrar may refuse to register it under that name.

A partnership claiming that a person, partnership, association or company has assumed its name, or a name so similar thereto as to be misleading, and any person, partnership, association or company claiming that a particular partnership has assumed their name or a name so similar thereto as to be misleading, may apply to the court to restrain the use of the name, and the court may do so, unless the person required to refrain from the use proves that the right to use the name in question is prior to that of the applicant.

Every partner is an agent of the partnership and of the other partners for every matter relating to the business of the partnership; and the acts of every partner in carrying on in the usual way business of the kind carried on by the partnership of which that person is a member bind the partnership and the partners, unless in fact the partner has no authority to act on behalf of the partnership in the particular matter, and the person with whom the partner is dealing either knows that the partner has no authority, or does not know or believe that person to be a partner.

An act or instrument relating to the business of the partnership, done or executed by a person authorised therefor, in the name of the partnership or in any other manner showing an intention to bind the partnership, whether that person is a partner or not, shall bind the partnership and all the partners; nothing in this provision derogates from any general provision of law relating to the execution of negotiable instruments or the execution of instruments before a notary public.

Where a partner pledges the credit of the partnership, or purports to bind it in any other manner, for a purpose apparently having no connection with the ordinary business of the partnership, that act does not bind the partnership unless the other partners have specially authorised it; nothing in this provision derogates from any personal liability to which the partner as an individual may be subject.

Where it is agreed between the partners to restrict the authority of a partner to bind the partnership, any act done contrary to the agreement shall not bind the partnership as against any person having knowledge of the agreement.

Where a partner acting in the ordinary course of the business of the partnership, or with the authority of the partners, causes, by any wrongful act or omission, loss or injury to any person not being a partner, the partnership shall be liable therefor to the same extent as the partner.

Where a partner has misapplied money or property received within the scope of the partner's apparent authority from a person who is not a partner, or money or property received by the partnership in the course of its business from a person who is not a partner and still in its custody, the partnership shall be liable to make good the loss.

The partnership and every partner therein shall not be entitled to claim, in the bankruptcy of a partner, except after the creditors of the partnership, and a partner shall not be entitled to claim, in the bankruptcy of the partnership, except after the creditors of the partnership; however –

Where one of the partners has been appointed trustee and has misapplied trust property in the business or for the purposes of the partnership, no other partner shall be liable in respect of the trust property towards a person having a beneficial interest in that property; however, this provision does not derogate from the liability of a partner who had knowledge of the breach of trust, and does not prevent the tracing and recovery of trust moneys from the partnership if they are still in its possession or under its control.

An admission or representation made by a partner concerning the affairs of the partnership, made in the ordinary course of its business, shall be evidence against the partnership.

Notice of a matter relating to the business of the partnership, given to a partner who habitually acts in its business, shall be effective as notice to the partnership, except in the case of a fraud committed by or with the consent of that partner.

A person admitted as a partner into an existing partnership shall not thereby become liable to the creditors of the partnership for anything done before that person became a partner.

A partner who retires from a partnership shall not thereby cease to be liable for obligations incurred before retirement, except by an express or implied agreement between that partner and the creditors and the partnership in its new composition.

A continuing guarantee given to a partnership or to a third party in respect of the transactions of a partnership, where a change occurs in the composition of the guaranteed partnership or of the partnership whose transactions are guaranteed, shall be revoked as to any transaction subsequent to the said change, unless there is an agreement to the contrary.