Capacity to be a firms member

Persons who have capacity to contract, including those of a religion, women, limited
companies, and aliens may enter into the partnership agreement but others also
may do the same thing in certain instances.

According to the age of Majority Act 1971, a minor is a person under the age of 18.
In William Jacks and Co (Malaya) Ltd v Chan and Yong Trading Co[12], The plaintiffs
claimed against the defendants the sum of $12,734.91 for goods sold and delivered
by the plaintiffs to the defendants. The writ was served on Chan and Yong the
partners of the defendant firm. Yong did not take any steps to defend but Chan
denied the plaintiffs claim on the following grounds namely that (a) no firm by the
name of Chan & Yong Trading Co ever existed and that if such a company did exist he
was not a partner thereof (b) he had not in any way represented or held himself out
as partner of the said firm (c) the goods bought from the plaintiffs were for the
personal use of Yong who was a minor and that therefore the partners were not
liable.

Held:
(1) Chan was a partner of Chan & Yong Trading and Chan & Yong Construction
and on the evidence Chan & Yong Trading Co and Chan & Yong Trading were one
and the same firm because there was no evidence that there were two separate
firms by these two separate names;

(2) Chan represented himself to be a partner in the firm by approaching a salesman
of the plaintiffs to ask for credit facilities with the plaintiff company, by registering
the partnership with the Registrar of Businesses and by opening a banking account
with his own money in the name of the partnership with the Bangkok Bank. Each
mode of representation was sufficient to fix him with liability as a partner of the
firm;

(3) the fact that Yong made use of the goods bought from the plaintiffs for his own
purpose did not mean that the partnership and consequently the partners were not
liable. Further as Yong had not taken any steps after attaining the age of majority to
repudiate the partnership he was also liable as a partner of the firm.

However in Goode v Harrison [1984] AC 607 a debt contracted during minority
would not bind the contractor of he did not repudiate the partnership agreement on
attaining the age of majority. It was further held that to avoid incurring liability on
the firms future debts the minor who became of age should repudiate the
partnership agreement before such debts were incurred.






Mara -v- Browne; HL 1896
In a marriage settlement, the first defendant, a solicitor, advised the persons
who were acting as trustees, though not yet formally appointed as such. He
suggested a series improper of investments for the trust funds. The money was
to be lent on speculative building, and the margin was unsatisfactory. The
money was lost. Lord Herschell considered that, if the claimants had charged
him with negligence as a solicitor and brought the action in time, they might
well have succeeded, in which case both he and his partner would have been
liable. But any such action was barred by the Statute of Limitations.
Accordingly the claimants alleged that HB had intermeddled with the trust
and was liable as a trustee de son tort. They alleged that he had laid out the
trust moneys at a time when there were no trustees, and therefore must be
taken to have acted as a principal in the matter and not as a mere agent for the
trustees. Such a claim was not statute-barred.
Held: It is not within the scope of the implied authority of a partner in a firm
of solicitors that he should act to make himself a constructive trustee, and
thereby subject his partner to liability. it is not within the scope of the implied
authority of a partner in . . [a solicitor's] business that he should so act as to
make himself a constructive trustee, and thereby subject his partner to the
same liability.
Court: HL
Date: 01-Jan-1896
Judges: Lord Herschell, A L Smith LJ, Rigby LJ
References: [1896] 1 Ch 199,

When non-trustees interfere with the workings of an express trust to such an
extent as to harm it, they can be deemed to be "constructive trustees", or
trustees de son tort. In Mara v Browne,
[57]
Smith LJ stated that "if one, not
being a trustee and not having authority from a trustee, takes upon himself to
intermeddle with trust matters or to do acts characteristic of the office of
trustee, he may therefore make himself what is called in law trustee of his own
wrong - ie, a trustee de son tort, or, as it is also termed, a constructive
trustee".
[1]
For someone to be made a constructive trustee, they must have had
the property in their possession or control before the application, and have
acted in a dishonest or reckless way. If found liable, the constructive trust will
be held to account personally to repay any loss suffered by the trust fund, and
will be responsible for maintaining that trust property in his possession.

















An individual under the age of 18 years cannot contract business debts or face
bankruptcy on them. He can become a partner with a right to profits and the
power to bind the firm , but can disaffirm the partnership relationship when he
attains his majority. he cannot be liable for his proposed contribution to capital
or for firms debt incurred during his minority. His adults partners are alone
liable for them , even if it was he that bound the firm by them; they cannot
evade liability merely because he is a minor. But he is liable for his own
wrongs, though not for the fraud for misrepresenting that he is an adult; such
misrepresentation will not be implied merely from his carrying on the trade.
Nor will the claim against him in the tort will succeed if it is essentially of the
contractual nature . he cannot take a share in the profits and assets whilst
rejecting the liability; so the adult partner can insist that the partnership assets
are applied in discharging the partnership liabilities before anything is paid to
the minor.
On attaining his majority the minor must elect to affirm or disaffirm the
partnership, but if he disaffirms he can only recover a premium that has been
paid for his entry into the partnership firm if there has been a total failure of
consideration. If he fails to disaffirm he will be liable for the partnership debts
and obligations not incurred during the minority but incurred thereafter.
In Goode vs. Harrison (1821) 5 B&A.147, there was an infant who was known
to be a member of the firm. On attaining majority, he did not expressly either
affirm or disaffirm the partnership. However he was held liable for the debts
incurred by his co-partners subsequently; when he attained majority. according
to the courts view an infant when he becomes major must take care to notify
that he had ceased to be partner if he desires to avoid liability.

















Thus, even if the action by the partner is within the scope of the business carried
on by the firm, if it is carried on in an unusual manner the other partners may
not be bound. Another illustration is Goldberg v Jenkins (1889) 15 VLR 36. In
that case a partner purported to borrow money on behalf of the firm at over 60%
interest when at the time the comparable rates were between 6% and 10%. It
was held that such borrowing was beyond the usual way of the firm and thus
the firm was not bound to the transaction.






























Gulazam v Noorzaman and Sobath
[1957] 23 MLJ 45
Facts:
An agreement between the Plaintiff and Defendants where the Plaintiff would
provide capital for the purchase of cattle and the defendants would look after the
cattle and then sell them in order to gain profits to be distribute
equally amongst them.
When the defendants failed to pay the plaintiff an action was brought against
them.
The Defendant argued that the business had never been registered under any
Acts, hence making it not a partnership at all.
Held:
The plaintiff could claim because the relationship between the individuals had
the business character of a partnership within the scope.