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1.0 CONTENT 1
7.0 REFERENCES 23
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2.0 DEFINITION OF GOODS
In economics, goods are materials that satisfy human wants and provide utility,
distinction is made between goods that are tangible property, and services, which are
non-physical. A good is a consumable item that is useful to people but scarce in relation
to its demand, so that human effort is required to obtain it. In contrast, free goods, such
as air, are naturally in abundant supply and need no conscious effort to obtain them.
Commodities may be used as a synonym for economic goods but often refer to
Although in economic theory all goods are considered tangible, in reality certain
classes of goods, such as information, only take intangible forms. For example, among
other goods an apple is a tangible object, while news belongs to an intangible class of
goods and can be perceived only by means of an instrument such as print or television.
Goods may increase or decrease their utility directly or indirectly and may be
described as having marginal utility. Some things are useful, but not scarce enough to
have monetary value, such as the Earth's atmosphere, these are referred to as 'free
goods'.
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In economics, a bad is the opposite of a good. Ultimately, whether an object is a good or
a bad depends on each individual consumer and therefore, it is important to realize that
not all goods are good all the time and not all goods are goods to all people.
Goods may be classified into Existing goods, future goods; and contingent
goods.
Existing goods: At the time of sales if the goods are physically in existence and
are in possession of the seller the goods are called Existing Goods. Existing goods can
Specific goods. Goods identified and agreed upon at the time of the making of
the contract of sale are called specific goods [Sec. 2(14)]. It may be noted that in
actual practice the term ascertained goods is used in the same sense as specific
goods, For example, where A agrees to sell to B a particular radio bearing a distinctive
ascertained at the time of the making of the contract, are known as unascertained
goods. They are indicated or defined only by description. For example, if A agrees to
sell to B one bag of sugar out of the lot of one hundred bags lying in his godown; it is a
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soon as a particular bag is separated from the lot for delivery, it becomes ascertained or
specific goods.
important in connection with the rules regarding transfer of property from the seller to
the buyer.
be acquired by seller. There cannot be present sale in respect future goods because the
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3.0 CLASSIFICATION OF GOODS
If a product cannot be classified with the aid of the List of Classes, the
Explanatory Notes and the Alphabetical List, the following remarks set forth the criteria
to be applied:
If the function or purpose of a finished product is not mentioned in any class heading,
the finished product is classified by analogy with other comparable finished products,
indicated in the Alphabetical List. If none is found, other subsidiary criteria, such as that
of the material of which the product is made or its mode of operation, are applied.
incorporating radios) may be classified in all classes that correspond to any of its
functions or intended purposes. If those functions or purposes are not mentioned in any
class heading, other criteria, indicated under (a), above, are to be applied.
Goods intended to form part of another product are in principle classified in the
same class as that product only in cases where the same type of goods cannot normally
be used for another purpose. In all other cases, the criterion indicated under (a), above,
applies.
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When a product, whether finished or not, is classified according to the material
Cases adapted to the product they are intended to contain are in principle
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4.0 IMPLIED TERMS
Sometimes a contract dispute will end up in court. A court must examine and
interpret the contract. Often, a court will imply certain terms in order to clarify the
Implied Terms
Business contracts are often very lengthy. A contract drafter normally attempts to
cover all of the terms and provisions of the agreement. Implied terms are words or
provisions that a court assumes were intended to be included in a contract. This means
Generally, the drafter of the contract wants to avoid the use of implied terms.
Most parties don't want to rely on a court's interpretation of the contract terms.
However, it's usually not possible to cover every detail of an agreement. In these cases,
the court will assume that some terms are implied. This allows the court to enforce the
contract and follow through with the parties' intent. It also protects parties from fraud by
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The use of implied terms is fairly common, because there are several different
ways that courts use implied terms. Each of the uses is based on public policy. For
instance, sometimes a court will imply a term if the court decides that it's necessary in
order to enable the intentions of the contracting parties. Also, terms can be implied by
law when there is a statute that directly addresses the issue. This is true in several areas
For example, it's common for courts to imply terms in a sales contract. These are
contracts that involve the purchase of goods or services. Sales contracts include an
implied warranty of merchantability. This means that a court will imply usability. In
other words, there is an implied guarantee that the goods or services will serve the
or oral sales contract. Let's say that you come into my garden store and purchase a new
lawnmower. We don't have a written contract. You simply pick out the one you want,
pay me, and wheel it out the door. Once you get home, the lawnmower won't start. You
can't mow your lawn. You return to the store for a refund or replacement.
I refuse to refund your money or replace the lawnmower. I say that I never
guaranteed that the mower would work. We end up in court and the court orders me to
refund your money, or replace your mower with one that works. This is because of the
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implied warranty of merchantability. I never guaranteed the mower, but the guarantee is
implied.
Guarantees are not the only type of term to be commonly implied. Many
contract terms can be implied, but the practice of using implied terms is dependent on
the court's ability to give the proper and intended meaning to those terms. The court
often assumes that certain terms are common knowledge, and that both parties
understood the definition of those terms without defining the terms in detail.
For example, if I said the mower was four-wheeled, then the court will imply
that the mower has four wheels on which to travel. I won't be successful in arguing that
it's a two-wheeled mower, but it comes with two extra, or replacement, wheels.
Sometimes a court will have to interpret contract terms that have more than one
meaning. In these cases, courts will imply the term as it is most reasonably used,
considering the context. For example, if I say the mower is suitable for mowing a yard,
then the court will imply that I mean a residential lawn area. My argument that I meant
the English measurement of only one yard, as in three feet, will fail.
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Implied terms are terms that are not expressly stated but nevertheless form a part
of the contract.
Good faith
In many jurisdictions, a duty of good faith and fair dealing* is implied in all
contracts, ie neither party can do anything that would have the effect of destroying or
injuring the right of the other party to receive the fruits (=benefits or results) of the
contract. Although many jurisdictions (including the US) recognise good faith, English
contract may have been negotiated against the background of the customs of a particular
locality or trade. The parties often assume that their contract will be subject to such
customs and thus do not deal specifically with the matter in their contract.
Course of dealing
If two parties have regularly conducted business on certain terms, the terms may be
assumed to be same for each contract made. The parties must have dealt with each other
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on numerous occasions and been aware of the term meant to be implied. Terms (or entire
contracts) may be implied based on the previous course of dealing between the parties.
Implied warranties
is made using the phrase as is or with all faults. In order to be merchantable, the goods
The warranty of fitness for a particular purpose is implied by law where a seller
knows or has reason to know of a particular purpose or use for which an item is being
purchased by the buyer (and the buyer relies on the sellers expertise in selecting the
product).
Other implied warranties include warranty of title, implying that the seller has the
right to sell items and is the proper owner and, in conjunction with real estate transactions,
the warranty of habitability, often defined as the minimum standard for housing suitable
It should be noted that there are two meanings of the phrase fair dealing. As used
above, fair dealing refers to the transacting of business in an honest manner. However,
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the phrase also refers to the doctrine of limitations and exceptions to copyright which is
found in many of the common law jurisdictions (known as fair use in the United States).
The statutory of implied terms main function is to protect the rights to every buyer
or consumer. These statutory implied terms are in Section 14- 17 of the Sales of Goods
Act, 1957 and are the implied terms in every contract of sale of goods.
Section 14 of the SOGA is divided into three parts. The first part states that an
implied condition on the part of the seller, that, in the case of a sale, he has a right to sell
the goods, and that in the case of an agreement to sell, he will have a right to sell the
goods at the time when the property is to pass. This in short means that it is an implied
condition to the seller to ensure that the buyer will enjoy the ownership as well as
possession and use of the goods, failure to do so gives the buyer the right to reject the
contract as the issue constitutes an implied condition (Razman and Shukor, 2001). The
next part states that there is an implied warranty that the buyer shall enjoy quit possession
of the goods, and if the seller fails to comply, the buyer is entitled to claim for damages
since the matter is being constituted as an implied warranty. Paragraph c, the last part of
Section 14 of SOGA, states that there is an implied warranty that the goods shall be free
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from any charge or encumbrance in favor of any third party not declared or known to the
buyer before or at the time when the contract is made. If the seller fails to comply, the
buyer is entitled to claim for damages since the matter is being constituted as an implied
warranty.
Section 15 of the SOGA is on the sale of goods by description. It states that where
there is a contract for the sale of goods by description there is an implied condition that
the goods shall correspond with the description; and, if the sale is by sample as well as
by description, it is not sufficient that the bulk of the goods corresponds with the sample
if the goods do not also correspond with the description. The case in point is the case of:
In this case, the partys previous contracts entailed the sale goods being flour,
which was sold in bags bearing a recognized trademark. Later the previous contract
description of flour was used to order and flour of identical quality was delivered but,
short of the same well-known trade mark. The court held that the goods did not comply
warranty as to the quality or fitness for any particular purpose of goods, unless the buyer
requests the goods be reasonable for a purpose and the goods be of merchantable quality.
The last section of implied terms is Section 17 of SOGA, and in summary points out that,
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when dealing with goods by sample, it is required by the seller to ensure that the bulk of
the goods must correspond with the sample. If the seller fails to comply, the buyer is
entitled to reject the contract since the matter is being constituted as an implied condition.
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5.0 TRANSFER OF PROPERTY IN THE GOODS
The property in the goods is said, to be transferred from the seller to the buyer
when the latter acquires the proprietary rights over the goods and the obligations linked
thereto. 'Property in Goods' which means the ownership of goods, is different from '
possession of goods' which means the physical custody or control of the goods.
The transfer of property in the goods from the seller to the buyer is the essence
of a contract of sale. Therefore the moment when the property in goods passes from the
Ownership -- The moment the property in goods passes, the seller ceases to be
their owner and the buyer acquires the ownership. The buyer can exercise the
proprietary rights over the goods. For example, the buyer may sue the seller for non-
delivery of the goods or when the seller has resold the goods, etc.
Risk follows ownership -- The general rule is that the risk follows the
ownership, irrespective of whether the delivery has been made or not. If the goods are
damaged or destroyed, the loss shall be borne by the person who was the owner of the
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goods at the time of damage or destruction. Thus the risk of loss prima facie is in the
Action Against Third parties -When the goods are in any way damaged or
destroyed by the action of third parties, it is only the owner of the goods who can take
Suit for Price - The seller can sue the buyer for the price, unless otherwise
agreed, only after the gods have become the property of the buyer.
Insolvency - In the event of insolvency of either the seller or the buyer, the
question whether the goods can be taken over by the Official Receiver or Assignee, will
depend on whether the property in goods is with the party who has become insolvent.
Goods must be ascertained: Unless the goods are ascertained, they (or the
property therein) cannot pass from the seller to the buyer. Thus, where there is a
contract for the sale of unascertained goods, no property in the goods is transferred to
ascertained goods the property in them is transferred to the buyer at such time as the
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parties to the contract intend it to be regard shall be had to the terms of the contract, the
and future goods are laid down. These sections provide that where goods contracted to
be sold are not ascertained or where they are future goods, the property in goods does
not pass to the buyer unless and until the goods are ascertained or unconditionally
appropriated to the contract so as to bring them in a deliverable state, either by the seller
with the assent of the buyer or by the buyer with the assent of the seller. Such assent
may be expressed or implied, and may be given either before or after the appropriation
is made.
The above rule is fundamental rule and it applies irrespective of what the parties
agreement to sell. example: Sale of ten tons of wheat from a granary, has not the
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effect of transferring property to buyer (It is an agreement to sell only) until ten tons are
appropriated to the contract by the seller and the buyer knows it.
identify and determine the specific goods to be delivered under the contract. The
can be a unilateral act of the seller, that is, he alone may set apart the goods,
appropriation involves the element of mutual consent of the seller and the buyer.
(ii) The appropriation must be intentional, i.e., it must be made with intention
to appropriate goods to specific contract, and it must not be due to mere accident or
mistake.
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(iii) The appropriation must be made either by the seller with the assent of the
buyer or by the buyer with the assent of the seller. Assent of the other future party is
thus necessary; whether before of after the appropriation is made for a valid
appropriation.
(iv) The appropriation must be unconditional, i.e. the seller should not reserve to
himself the right of disposal of the goods until and unless certain conditions are
fulfilled.
Delivery to Carrier: When a seller delivers the goods to a carrier or other bailee
for the purpose of transmission to the buyer and does not reserve the right of disposal,
the property passes on to the buyer at once. As soon as goods are loaded and railway
receipt obtained and the same is sent to buyer direct the ownership is passed on delivery
of goods to railway company. If the railway receipt is sent to banker with instructions to
deliver the same on payment, the right of disposal is said to be reserved and the property
will not pass to buyer at the time of delivery of goods to railway co.
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(i) Absolutely for the buyer. Where the bill of lading or railway receipt is made
out in the name of the buyer and is sent to him, the presumption is that no right of
disposal has been reserved by the seller in respect of those goods. The ownership in
(ii) Absolutely for the seller. Where the bill of lading or railway receipt is taken
in the sellers or his agents name and is sent to the agent of the seller to be delivered to
the buyer on the fulfillment of certain conditions, the seller is deemed to have reserved
the right of disposal of the goods. In such a case the ownership does not pass to the
buyer until the necessary conditions are fulfilled and the documents of title are delivered
to the buyer.
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6.0 SUMMARY
Business law is a broad area of law. It covers many different types of laws and
many different topics. This lesson explains generally what business law is and how it's
used.
Business law encompasses all of the laws that dictate how to form and run a
business. This includes all of the laws that govern how to start, buy, manage and close
or sell any type of business. Business laws establish the rules that all businesses should
follow. A savvy businessperson will be generally familiar with business laws and know
when to seek the advice of a licensed attorney. Business law includes state and federal
business transactions are with society. Any regulation or legal rights that affect
Business law includes a complex web of state, federal and municipal statutes.
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The Business Law major focuses on the fundamental relationship between law
and business and is ideal for those planning careers in a wide range of business areas
industrial relations.
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7.0 REFERENCES
1. https://worksmart.org.uk/work-rights/pay-and-contracts/contract-
terminology/what-difference-between-implied-and-express-terms
2. https://sol.du.ac.in/mod/book/view.php?id=645&chapterid=391
3. http://studypoints.blogspot.my/2011/08/discuss-various-rules-
regarding_3667.html
4. http://www.ekconsultinggroup.com/assets/resources/Law_Sale_Goods.pdf
5. https://www.lawteacher.net/free-law-essays/commercial-law/sale-of-goods-law-
in-malaysia-commercial-law-essay.php
6. http://www.streetdirectory.com/travel_guide/154234/exercising_and_running/im
portance_of_business_law_knowledge.html
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8.0 COURSEWORK
proprietorship.
1. Structure
view of profit.
2. Registration
Act 1956.
3. Transferability
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generally transferable transfer his status as transfer his business to
4. Management
such are neither its firm for carrying on its and manages the firm
generally entitled to
5. Number of
maximum is fifty.)
6. Constitution
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constituted in writing, i.e. formed orally or in writing. since the sole-proprietor is
Articles of Association.
members for their shares capital but their liability withdraw capital. His
cannot ordinarily be for the firms debts to its liability for the firms debts
8. Borrowing powers
Memorandum of purpose.
Association.
assets as security by floating charges but they create floating charges but
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creating floating charges. can mortgage the firms can mortgage the firms
assets. assets.
and information to
public
procedure and are required they need not supply information about the firm
11. Dissolution
partners.
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2. Please define liability of partners.
Ordinary Torts
By virtue of section 12, Partnership Act 1961 in order to make a firm liable, the tortuous
act must be committed by a partner either in the ordinary course of the business of the
firm or with the authority of his co-partners: Blyth v Fladyate [1891] 1 Ch. 337.
Misapplication Section 13 of the Partnership Act 1961. Every partner is liable jointly
and severally for everything for which the firm, while he is a partner therein, becomes
liable under sections 12 or 13 abovementioned: section 14, Partnership Act 1961. This
means that if the partnership firm is liable for wrongs under section 12 of the Partnership
Act 1961 or liable to make good the loss due to misapplication of money or property, the
plaintiff can sue all the partners jointly or may even sue one or more of the partners
concerned.
Misappropriation
Section 15 of the Partnership Act 1961 provides to the effect that if a partner, acting in
his individual capacity, improperly makes use of trust property in the business of the firm,
as a general rule, his other partners are not liable to the beneficiaries. However, if the trust
money is still in the firm's possession or under its control, the beneficiaries can recover
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Contractual Liability
Section 11 of the Partnership Act 1961 states to the effect of this section is that all partners
in a firm are jointly liable for all contractual and other debts and liabilities including tax
and judgment debts which are incurred while each is a partner. A joint liability basically
means that where there is only one cause of action for the recovery of debt, and that cause
longer available against any partner or partners whom the creditor failed to sue at the first
instanceGuinness Anchor Marketing Sdn Bhd v Chellam Joe Vetha Thya Singh [1999]
7 CLJ 392.
Third parties may sue all the partners individually or the firm - Krishnan v Abdul Razak
& Anor [1967] 1 MLJ 43 where an action was brought against the partners individually
and not in the name of the firm, the failure of any partner to file a defence entitled the
plaintiff to sign final judgment against him. Similarly, when a firm sues third parties, it
can do so in its own name or all the partners can be joined as plaintiffs in the actionM.
Facts:
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The plaintiffs brought an action in their personal capacities for alleged breach of an
defendant contended that the plaintiffs were riot entitled to maintain the suit in their
personal capacities.
Held:
The plaintiffs had the alternatives of joining all the partners as plaintiffs or of suing in the
name of the firm, and as they had failed to take either alternative, the claim had to be
dismissed.
Criminal Liability
Although partners are jointly liable in civil cases, they are not jointly liable in criminal
Chung Shin Klan & Anory Public Prosecutor [1980] 2 MLJ 246
Facts: Officers from the Trade Description Department raided the accused's tailor shop.
At that time, there were ten workers engaged in stitching materials into jeans and jackets.
The premises were searched and officers discovered various types of `Texwood' labels
and tags, and `Texwood' jeans and jackets both finished and unfinished. During the raid,
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only the first accused was present in the shop. The second accused, a partner, was not
present. The charge made against both the accused was that in the courseof their business,
they applied a false trade description name `Texwood' to ten pieces of jackets and fifty-
seven pairs of jeans. Both accused were convicted and sentenced for an offence under
Held:
showing that the second accused was implicated in the offence except
the Trade.
Interpretation Act 1967. It does not include every partner in a partnership. Section 14 of
the Partnership Act 1961 provides for joint liability for contracts and recovery of damages
and fines, not criminal liability. It would be otherwise if the firm was the subject of the
charge.
Therefore, the second accused's appeal was allowed and his conviction was quashed.
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Order accordingly.
Duration of Liability
A new partner who has just been admitted into a firm is not liable for the debts incurred
prior to his admissionsection 19(1), Partnership Act. However, if the new partner agrees
to be liable for the existing debts of the partnership at the time of his admission, he would
be liable.
(2) A partner who retires from a firm does not thereby cease to be liable for partnership
(3) A retiring partner may be discharged from any existing liabilities by an agreement to
that effect between himself and the members of the firm as newly constituted and the
creditors, and this agreement may be either express or inferred as a fact from the course
Case:
Liability of Persons for Holding Out Section 16, Partnership Act 1961 provides that
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Case:
After retirement, a partner is still liable to persons who deal with the firm after a change
in its constitution unless he has given notice to such persons that he is no longer a partner:
Cases:
-Philips Singapore Pte. Ltd v Han Jong Kwang & Anor [1989] 2 MLJ 323
-Mayban Finance (Singapore) Ltd v Yap Thiam Sen & Anor. [1991] 1 MLJ 204
-Malayan Banking Berhad v Lim Chee Leng & Anor [1985] 1 MLJ 214
Facts:
A retired partner had inserted a notice of his retirement in several issues of a newspaper
to which certain old customers were proved to be regular subscribers. After his retirement,
these same old customers lent money to the firm on the security of promissory notes
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executed by the remaining partners. One of the lenders later sued the retired partner on
these notes, denying having actually seen notice of his retirement in the papers.
Held:
The retired partner was liable on the notes. Actual notice was necessary as far as old
Facts:
This was an appeal against a receiving and adjudicating order made following a failure to
satisfy the judgment debt. The appellant alleged that the judgment entered against him
was wrong in law because the claim against him contained a material error in respect of
It was alleged that he had withdrawn from the partnership on 1 February 1976 but the
withdrawal was wrongly registered as 23 August 1978. The respondent relied on section
38(1) of the Partnership Act 1961 to treat apparent members of the partnership firm as
still being members until they had notice of the change. The High Court held that a person
who had habitual dealings with a partnership is entitled to be specifically notified of the
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On appeal. the Supreme Court held as follows:
Held:
1. The respondent was, on the evidence available, a person who had habitual dealings
with the partnership and was therefore to be specifically notified of the withdrawal of the
appellant from the partnership, something which the latter had omitted to do (the case of
Hop Aik Tin Mining Company v Kam Hoy Trading was followed here).
2. The respondent creditor was therefore entitled under section 6 of the Registration of
Businesses Act 1956 to rely on the particulars kept in the Business Registry to ascertain
whether the appellant remained a partner of the firm at the commencement of the suit.
The Singapore case of Philips Singapore Pte Ltd v Han Jong Kwang & Anor also decided
on the issue whether the registration of the retirement of a partner with the Registrar of
Businesses constituted constructive notice to third parties who dealt with the partnership.
It was held that the mere fact of registration of retirement did not give notice of that fact
In Mayban Finance (Singapore) Ltd v Yap Thiam Sen & Anor [1991] 1 MLJ 204, the
High Court of Singapore held that a third party was entitled to treat a withdrawing partner
as still being a member of the firm until the third party received notice of the change in
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constitution of the firm. In other words, the withdrawing partner would still be liable to
the third party for all debts incurred by the firm between his withdrawal and the service
of notice to the third party. In Jemco Sdn Bhd v Andrew Liau Ka Lieng & Ors [1985] 2
MLJ 119 oral notice of the retirement of three defendants was held to be effective notice.
MALAYAN BANKING BERHAD v LIM CHEF LENG & ANOR [1985] 1 MLJ 214
Facts:
The respondents were partners of a firm called Berjasa Corporation. The appellants sued
the respondents under a trust receipt which matured and became payable on 14 June 1975.
Held:
The respondents incurred the debt on the trust receipt before their resignations or
retirement and they could not escape liability by merely pleading resignation or retirement.
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