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Postponement of rights of person lending or selling portion of share in consideration of profits in case of insolvency.
Meaning of firm and firm-name.
No. 1.] THE ORDINANCES OF HONGKONG: [AD. T.
receipt of such a share, or of a payment contingent on or varying with the profits of a business, does not of itself make him appear in the business; and in particular-
(a.) the receipt by a person of a debt or other liquidated amount by instalments or otherwise, out of the accruing profits of a business does not of itself make him a partner in the business or liable as such;
(b.) a contract for the remuneration of a servant or agent of a person engaged in a business by a share of the profits of the business does not of itself make the servant or agent a partner in the business or liable as such;
(c.) a person being the widow or child of a deceased partner and receiving by way of annuity a portion of the profits made in the business in which the deceased person was a partner is not, by reason only of such receipt, a partner in the business or liable as such;
(d.) the advance of money by way of loan to a person engaged or about to engage in any business on a contract with that person that the lender shall receive a rate of interest varying with the profits, or shall receive a share of the profits arising from the carrying on of the business, does not of itself make the lender a partner with the person or persons carrying on the business or liable as such: Provided that the contract is in writing signed by or on behalf of all the parties thereto; and
(e.) a person receiving, by way of annuity or otherwise, a portion of the profits of a business in consideration of the sale by him of the goodwill of the business is not, by reason only of such receipt, a partner in the business or liable as such.
5. In the event of any person to whom money has been advanced by way of loan upon such a contract as is mentioned in the last preceding section, or of any buyer of a goodwill in consideration of a share of the profits of the business, being adjudged a bankrupt, entering into an arrangement to pay his creditors less than twenty shillings in the pound, or dying in insolvent circumstances, the lender of the loan shall not be entitled to recover anything in respect of his loan, and the seller of the goodwill shall not be entitled to recover anything in respect of the share of profits contracted for, until the claims of the other creditors of the borrower or buyer for valuable consideration in money or money's worth have been satisfied.
6. Persons who have entered into partnership with one another are, for the purposes of this Ordinance, called collectively a firm, and the name under which their business is carried on is called the firm-name.