The Partnership Act

The Partnership Act sets out the rules for partnerships carrying on business in Saskatchewan and for the dissolution of partnerships.

Partnerships doing business in Saskatchewan, including extra-provincial partnerships, must register their business names under The Business Names Registration Act.. However, the laws of the jurisdiction in which the extra-provincial partnership is formed govern its formation, internal affairs and limited liability of limited partners.

A partnership is an unincorporated business organization. Unlike business corporations, for example, a partnership has no legal existence distinct from the individuals composing it. The partners are jointly and severally liable.

There are two forms of partnership:
  • general; and
  • limited.

In a general partnership, two or more general partners manage the business, share in the profits, and are equally responsible or liable for its debts. Their individual acts are binding on the other partners and all partners are personally liable for the partnerships' total liabilities.

In a limited partnership, there must be at least one general partner and at least one limited partner. The limited partner or partners may invest in the business but are not directly involved in management, have no say in the daily operations of the company, and are liable only to the extent of their investments.

Partnerships are common for service professions such as accounting, dentistry and law. These can be viewed as "unlimited liability partnerships" because these professions cannot practise with a shield against liability for professional malpractice claims against their firms.

The Act establishes rules for determining whether a relationship is one of partnership, such as:

  • what constitutes partnership property - a joint tenancy, tenancy in common, joint property, or common property do not of itself create a partnership;
  • the relationship between partners (e.g., partners are obliged to provide each other with reasonable notice of all resolutions concerning the affairs of the partnership);
  • the rights and obligations of partners (e.g., a partner may not introduce a new member into the firm without the consent of the existing partners); and
  • issolution procedures (e.g., a partnership is dissolved by any partner giving notice to the other or others of the intention to dissolve it, a partnership is dissolved by the happening of any event that makes it unlawful for the business of the firm to be carried on, or a partnership formed for a single venture is dissolved, even in the absence of a formal act of dissolution, once the venture is terminated).

Amendments to the Act in 2001 authorize limited liability partnerships. The formation of such partnerships is limited to professions. In these partnerships, partners are not, as such, personally liable for obligations of the firm. Liability continues to apply if a person suffers injury because of the partner's negligent or wrongful acts or omissions, including negligence in appointing, supervising or failing to supervise another member or employee of the firm, or where the partner knew of the wrongful acts or omissions and failed to take reasonable steps to prevent them. Limited liability partnerships and extra-provincial limited liability partnerships must register at the Corporations Branch and file annual returns.

Amendments to the Act in 2006 allow Indian bands and limited partnerships to become general or limited partners in another partnership.

Subject to the agreement between the partners, partnerships automatically dissolve if any partner doesn't live up to the partnership agreement for reasons of incompetence, bankruptcy or authorized assignment under the Bankruptcy Act (Canada), or illness or death.

The Publications Saskatchewan Website

You can view the full version of this act and other related pieces of legislation on the Publications Saskatchewan website.
The Partnership Act