SCHOOL OF LAW

___________________________________________________________________________
Name

Email address

Student ID

Program Bachelor of Laws (LLB)

Course name Business associations

Course code LL331

Year Third Year

Semester One

Assignment number One

Date of submission

Mode of learning

Cell

Lecturer Ms. Gondwe

Queen, Mwamba, John and Forward are lawyers who offer legal services to small and medium
enterprises (SMEs). On 5 May 2020, an article was written in the daily newspaper of the looming
insolvency of Queen and Associates. Prior to this article, Mwamba handled a big case of a
transnational business firm, a client brought by Jane a friend of Forward. Jane shared in the profit
of the firm. Upon, reading the article of the looming insolvency, the transnational business firm
which had other businesses with Queen and Associates deposited a huge sum of money for the
cases and paid Mwamba a sum of 150,000 Kwacha for his good work. Mwamba used the money
to purchase a car for himself. One month later, the transnational firm sued Queen and Associates
including Jane as partners for wrongful legal advice which led to a major loss. The partners did
not want this action to affect the good will of the firm and they expelled Mwamba.

As a professional corporate and commercial lawyer, discuss the legal issues and advise Queen
and Associates on the matter in casu.
Introduction

In Zambia we do not an Act of Parliament that governs Partnerships. However, it is governed by

Partnership is defined in the Oxford dictionary of law as an association between two or more
people with the view of making profits 2. Under section 1 of the Partnership Act, Partnership is
defined is defined as a relation that subsists between person carrying on a business in common
view of making profits3. The definition of partnership has a number of elements that will be
discussed hereunder.

There should a relation, which means that there should be relationship between the partners. If
this relationship subsists among the partners, the partners will thus act in utmost good faith in
conducting the business. Carrying on a business, this element means that the partners must have
been carrying on a business therefore the mere existence of a mere agreement to set up a
partnership without further implementation does not constitute a partnership. There must be
some business being carried on by the partners, this point finds support in the case of Miah v
Khan4 where five people partnered to open a new restaurant, before the restaurant could be
opened, a disagreement arose after the money had been spent on fitting the restaurant. The
partners had misunderstandings as to how the assets were to be distributed between the partners
if there was a partnership. The question before court was whether the partners were carrying on a
business or not. The court held that the partnership was created when the partners embarked
upon the activity to establish a partnership. The other element is that the partners should carry on
a business in common; this means that there should be a joint participation in the conduct of the
business; the partners should participate in one way or the other. Partnership can come to
existence by joint participation without an agreement being made. The last element is that the

1
Mushota, L [2006], Company law in Zambia, cases and materials. Lusaka: university of Zambia press
2
Elizabeth A. Martin (1997) Oxford Dictionary of law (ed), Oxford: OUP
3
Section 1 of the partnership Act 1890
4
(2000)1WLR2163
partners should have the view of making profits; this means that the partners should all have the
common goal of making profits.

Types of partners

General Partners

These are partners who have full liability or unlimited liability of the firm. They are also known
as managing partners or active partners because they are fully involve in the day to day
management of the business and they also fully participate in the conduct of the firm. General
partners carry daily activities of the firm on behalf of other partners. If a general partner opts to
retire he must give a public notice in order to relieve himself from the liabilities and other acts
done by his co-partners. If he does not issue a public notice he will still be liable for the liability
and acts done by his co-partner5.

Limited Partner

Limited partner as the name suggests, has a limited liability which means that he is only liable to
the extent to the capital he contributed to the firm.

Silent, Sleeping or Dormant Partner

These are partners who contribute to the capital of the business but do not take part in day to day
running or management of the business. This partner is by virtue of section 6 of the partnership
act bound by the acts of his co-partners even though he does not fully participate in the running
of the business. It is not mandatory for sleeping partner to give public notice when retiring6.

Secret Partner

Secret Partner has unlimited liability, he does not hold out or unveil himself to the public as one
of the partners of the firm.

Types of Partnership

Universal partner

5
Mushota, L [2006], Company law in Zambia, cases and materials. Lusaka: university of Zambia press
6
ibid
Universal partnership is categorized in two categories namely partnership of all property where
partners contribute properties they own and which might own in the near future to a firm and this
does not include inherited properties or properties they might inherit and partnership of all profits
where partners agree to venture into different businesses and take the profits to the firm. 7

Ordinary Partnership

This partnership is also known as limited partnership, partners have limited liability, and they are
protected for debts incurred in the business. In an event where the firm fails or default to pay the
debts, they are not at risk of losing their personal properties8.

Advice to Queen and Partners

In accordance with the general rules of agency, a partner will be liable in terms of
a contract which a person concludes on behalf of the partnership if that person had necessary
authority to conclude that agreement on behalf of the partnership.
Authority is essentially the power to perform binding legal acts on behalf of
another. Among other things, authority can be given orally or in writing, or
tacitly by conduct. It is not only on partners that such authority can be conferred
but on employees too. In this case Mwamba had authority to act on behalf of the firm, moreover,
Mwamba was acting in the usual way in which Queen and Partners was doing business. It should
be noted that at common law a partner must not only possess the power to conclude the
agreement on behalf of the partnership, but must in fact conclude the agreement in the name or
on behalf of' the partnership. There therefore, the person with the authority and the third party
did not intend for the partnership to be party to an agreement, then the partnership will not be
party to the agreement9.

There are instances where a partner would ignore his power of representation and conclude
agreements in his personal capacity and personal benefit together with the third party. Where
such neglect occurs, the partner then would be in breach of fiduciary duty to the partnership and
will be liable to compensate the partnership
for the damages10. Amongst the partners any benefits which he acquires in terms of
7
Mushota, L [2006], Company law in Zambia, cases and materials. Lusaka: university of Zambia press
8
ibid
9
Blackette-Ord M, (2007). Partnership Law, (3rd ed). Sussex: Tottel
10
ibid
that contract will be deemed to be mutual benefits of the partnership albeit the partnership not
being a party to the agreement thereby unable to acquire rights
against or incur obligations to the third party in respect of that agreement11.
It is imperative to note that where the partners intended that the partnership should be a party to
the agreement, the partnership will be bound by the contract 12. Therefore, whether or not the
partnership derives any benefit from the agreement, it will be liable in terms of such an
agreement even if only the name of the representative appears on the agreement thus, it is
imperative that parties to such agreements expressly state that the contract is concluded on behalf
of the partnership so that both the name of the partnership and the representative capacity of its
agent are clearly stated13. It is very imperative for Queen and Associates to note that the firm can
be bound by the action of a partner. Section 5 14 of the Partnership Act, 1890 provides that every
partner is an agent of the firm and his other partners for the purpose of the business of the
partnership; and the acts of every partner who does any act for carrying on in the usual way
business of the kind carried on by the firm of which he is a member bind the firm and his
partners, unless the partner so acting has
in fact no authority to act for the firm in the particular matter, and the person with whom he is
dealing either knows that he has no authority, or does not know or believe him to be a partner.
Section 615 also provides that an action done by partners and executed in the firm-name, or in
bound by any other manner showing an intention to bind the firm, acts on be- by any person
thereto authorised, whether a partner or half of firm. not, is binding on the firm and all the
partners. However, pursuant to section 9 of the Partnership Act, which states that Every partner
in a firm is liable jointly or severally with other partners, fellow partners cannot escape the
liability16.
Furthermore, a partnership is governed by a partnership deed which act as a constitution of the
firm. However, the partnership deed contains the regulations and clauses that govern the terms
and conditions of the firm. Therefore, if there is no express provision that provides for expulsion
of other partners, they have no authority whatsoever to expel a fellow partner. Section 25 of the

11
R C, Banks (2010). Lindley & Banks on Partnership, (19th ed). London: Sweet and Maxwell.
12
Andrew C., (1996). Business Entities, London: Sweet and Maxwell.
13
R C, Banks (2010). Lindley & Banks on Partnership, (19th ed). London: Sweet and Maxwell.
14
Partnership Act 1890
15
ibid
16
ibid
Partnership act provides that no majority of the partners can expel any partner unless a power to
do so has been conferred by express agreement between the partners17.
Conclusion
In conclusion, as explained above, Mwamba had authority to act on behalf of the firm and he
was acting in usual way of doing business hence his actions were binding on the firm and
partners. The partners will be held liable jointly and severally. However, Queen and Associates
did not expressly state in the partnership did that a partner will be subjected to expulsion hence,
they had no authority to expel Mwamba.

17
Partnership Act 1890
Bibliography

Books

Andrew C., (1996). Business Entities, London: Sweet and Maxwell.

Blackette-Ord M, (2007). Partnership Law, (3rd ed). Sussex: Tottel

R C, Banks (2010). Lindley & Banks on Partnership, (19th ed). London: Sweet and Maxwell.

Legislation

Partnership Act 1890