Company law Essay Example

By definition partnership is the relationship which exist between persons carrying on business in common with a view to make profit. For partnership to exist there must be business, and the business must be carried on in common, besides the business must be carried with a view of making and sharing profit.

A partnership may be formed by any kind of agreement ,simple or deed or it may be even be implied from the conduct of the parties concerned .It is necessary for a partnership  have written document containing  the agreement of the partnership for future reference incase of any dispute. This document is called deed of partnership and must be drafted by an attorney. Mostly the Deed has this information the name of the business, the names of partners, and the nature of the business the partners are doing among others.

The relationships of partners come into existence by mutual agreement and the rights and liabilities between themselves are primarily governed by the partnership agreement. For instance a partner is entitled to an indemnity from the firm for any payment made or personal liability incurred in the ordinary and proper conduct of the firm’s business or in anything necessary done for the preservation of the firm’s business or property. Every partner is an agent of the firm and his partners for the purpose of the business of the firm, and every act done by the partner for carrying on in the usual way of the business of the kind carried on by the firm is binding on the firm unless;

           -the partner has in fact no authority to act for the firm in that particular matter.

            -the person with whom he is dealing knows that he has no authority to transact that business.

            -he does not know or believe to be a partner.

Where a partner pledges the credit of the firm for the purpose apparently not connected to the firm’s ordinary course of business, the firm is not reliable unless such a partner is especially authorized by partners or his act is approved by the firm. For example where the business is not of a commercial nature a partner has no implied authority to bind his partners or the firm by drawing or accepting a bill of exchange.

The general rule that every Partner is jointly reliable with others for all debts and obligation of the firm incurred while he a partner and after his death, his estate is also liable for such debts and obligations so far as they remain unsatisfied, but subject to the prior payment of his separate debts.

The partners are jointly liable for the breach of the firm’s contract. It means that in an action where there is more than one defendant, the liability is shared by all the defendants. The plaintiff can only bring one action and if, for any reason he sues only one of the partners and he obtains judgment against them, he can not bring fresh action against all or the rest of them in the case the judgment remains unsatisfied.

For example a firm consisting of four partners A, B,C and D fail to pay contractual debt of $10,000 to X who decides to C and D for the debt and obtains a judgment for the full amount. After the judgment has been pronounced X discovers that C and D can not pay more than $ 5,000, he can not bring a fresh action for the remaining partners for the part of the judgment which is still unsatisfied. Thus it is always advisable to bring an action for the breach of the contract in the same name of the firm and this will include all the partners in the suit.

A firm is liable for any loss or injury caused to third party for the wrongful act or omission of partner if they were done by him while acting in the ordinary course of the firms business or with the authority of his co-partners. In a partnership law every partner is liable and jointly judged with co-partner for all liabilities of the firm. Incase of a joint and several liabilities the plaintiff has several causes of action. He can sue all the partners together or he can sue the separately as long as his claim remain unsatisfied.

According to the information given above the three people were in the partnership and they had the partnership act on how the business should be learn, as  included in the partnership act, how much Thomas should  not incur on behalf of the firm, any debt exceeding 300. Other agreements remained the same as they are stated in accordance in the Partnership Act

1890 By Thomas ordering water dispensing machine at a cost of 316 from Halaways Ltd, the first issue is that, he acted beyond his power because his power confined to 300, Thomas could have consulted before entering into such transaction because within the agreement he as no authority make such transaction.  It should be known that under partnership law, unless a partnership, its assets are insufficient should be held responsible for all debts arising in the partnership, including debts arising from negligent acts. And a partnership is always fully liable for the negligent acts of his co-partners.

According to their partnership agreement act have clearly stated that, Thomas should not incur on behalf of the firm any debt exceeding 300, and then the question comes who is reliable? The partnership should incur the liability .since Thomas is among the partnership the liability should be shared among the three partners. So a partnership should be held liable for the amount Thomas incurred of 316.Any party who will bring that case will win the case and compensated for that amount of money

Grant being trapped in the machine and suffered severe injury, claiming compensation on the grounds of negligence. The question arises what is negligence?  How does negligence arise? Who can sue for negligence? t. The definition of negligence was given in Blyth v. Birmingham Waterworks co. (1856) 11ex by Alderson, B ‘the omission to do something which a reasonable man, guided upon those considerations which ordinary regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would do or doing something which a prudent and reasonable man would not do” Negligence is committed when there has been a failure to take proper care and loss results.

Conduct is judged by the ordinary everyday standards of humanity. What would an ordinary careful person have done in the circumstances? There must be a duty of care in the circumstances and there must have been a breach of that duty of care. In general, anyone who has been negligent and has caused loss can be sued’ the most important decision was the case of Donoghue v. Stevenson which was decided by the British House of Lords in 1932. The facts of this case were as follows.

Mrs. Donoghue went into a cafe in Paisley in Scotland with her friend. Her friend bought her a ginger-beer. When Mrs. Donoghue had drank most of the contents, the decomposed body of a snail floated out of the bottle. She suffered shock and severe gastroenteritis. She sued the manufacturers of the ginger-beer. The manufacturers defended the case. Their ground of defence was that there was no contract between the manufacturers and Mrs. Donoghue. There was, indeed, a contract of sale between the manufacturers and the seller of the beer.

There was a similar contract between the seller of the beer and Mrs. Donoghue’s friend. But there was no direct contract of sale between the manufacturers and Mrs. Donoghue. Consequently, the manufacturers claimed that they were not liable to Mrs. Donoghue in any way and owed no duty of care to her and were not liable for any suffering caused to her. The House of Lords, however, decided differently. They held the manufacturers liable to pay compensation to Mrs. Donoghue. They decided that it was not necessary that there be a direct contractual connection between the person who caused the damage and the person who suffered the damage.

Who can sue for negligence has been the issue, should just can anybody sue for negligence? Before sueing for negligence a time limit should be considered before taking a legal action for negligence. Legal action must be commenced within a specified time, usually three years. Also before one party sue another sufficiently close connection between the person who committed the wrongful act and the person who suffered damage, what is termed “”Proximity” It means that there must be a sufficiently close connection between the person who committed the wrongful act and the person who suffered damage .Proximity has differing rules depending on the kind of damage suffered.

It would make life simpler if anybody who had suffered loss by the negligent acts of another could sue for compensation. But this is not the case. There must be what is termed “proximity”. The concept of “proximity” is rather vague and is not fully settled at the present time. It means that there must be a sufficiently close connection between the person who committed the wrongful act and the person who suffered damage. “Proximity” has differing rules depending on the kind of damage suffered.

Where the loss suffered has been damage to person or property, then a wide category of persons can sue. It was seen in the case of Donoghue v. Stevenson above, that a member of the public, a consumer, could sue a manufacturer. It will be recalled that Mrs. Donoghue suffered damage to her person in the form of sickness.

Where the loss suffered is an economic loss, and then only a narrower category can sue. “Economic loss” does not involve damage to person or property. To enable a person who has suffered loss through such negligence to sue, there must be a closer degree of close connection here.  Generally anybody who has been negligent and has caused damage can be sued. It should be known that there need be no contractual relations between the person suffering the loss and the person committing the wrongful act.

Complete strangers can successfully sue another party and win the case. Example the in case in the case of Donoghue v. Stevenson above, that a member of the public, a consumer, could sue a manufacturer. It will be recalled that Mrs. Donoghue suffered damage to her person in the form of sickness and which the party won ,so the term proximity should be used  categorically .Also the rule states , you must not injure your neighbour. Who is the neighbour ? Neighbours are persons who are so closely and directly affected the act that I ought reasonably to have them in my contemplation as being affected when I am directing my mind to the acts or omissions which are called in question”.

Negligence is committed when there has been a failure to take reasonable care to avoid acts or omissions which it can reasonably be foreseen will be likely to injure someone. It should be noted that a person who suffers loss as a result of the negligence of any employee can sue either the employee or the employer and get compensation according. But an employer will not be liable for the negligence of an employee if the act complained of has no relation to his duties as an employee. For any party who brings sue against the employee is advised to sue employer since the employer has more assets and is usually insured can be able to compensate the party.

To succeed in an action for the negligence, the plaintiff must prove:

  a) That the defendant owes the plaintiff a legal duty of care;

b) That the defendant was in breach of that duty

c) That as a result of the breach of that duty the plaintiff suffered damage

Grant will succeed the case against the partnership since the partnership owe all customers/ neighbour   the legal duty of care, from the above case Grant was in the fitness room which was the business of the three partners so the  plaintiff (Grant) was customer/ neighbour . Grant was trapped in the machine and the heavy weights were pushing down the bar of the machine onto his chest. As a result Grant suffered severe injuries, from the case above Thomas new the weight of the machine and he left it on Grant who mean that there was breach of duty, Thomas could not have gone since he new the damage machine will cause

Any injury caused by one of the partners to customer the partnership is liable for the damage.  Grant will win the case, since breach of duty was breached. Due to the weight of the load machine Grant suffered damage, it was responsibility of the partnership of to make sure that no damage is done to their customer within their premises, due to lack of responsibility from

Thomas, Grant suffered damage by suing partnership will win the case, because machine should have been supervised. Charles and Sheila are wrong on this because the act of one of the partner enjoys the business in this case partnership. How much compensation can be recovered is also another issue. The general scheme of things is that an amount equal to the monetary loss suffered can be recovered. In addition, in appropriate cases, an amount can be recovered for pain and suffering.

The aggrieved person must compute his loss as best he can. For example, an injured employee can sue for medical expenses, pain and suffering, actual loss of earnings, expected loss of earnings, loss of limbs etc. However, not all damage caused by a wrongful act can be recovered. The general test is that only the damage that a reasonable person could have foreseen will be recoverable.

Thomas renting out rooms as office space is acting beyond is power .They  run  business called a `All-fit` which runs a fitness centre. By Thomas starting new business of renting out rooms, they should first change the partnership act first before starting the new activities of business so that it can included in the act. If Thomas will start renting out rooms business, he will be acting ultra vires to the partnership agreement .

He should not be allowed to enter into such a business because the kind of the business they registered does not include renting out rooms space. But we should remember a partnership is always fully liable for the negligent acts of his co-partner. This means that if Thomas goes head and start the business of renting out rooms any negligent acts committed by Thomas the co-partners will be equally liable

Reference

1) Hussain, A. (1999). General Principles and Commercial Law

2) Tudor, J.     (1970). The Law of Kenya. East Africa Publishing House.

3) Morse, G. (2006) Partnership law

4) Ryan, C. Mayson Frech & Ryan on Company Law (2007) Oxford:

5) htt://www.opsi.gov.uk/

6) Limited Liability Partnerships Act 2000chap 12