BUSINESS ASSOCIATIONS CA1

Oaitse W.M Phometsi

201900668
The main issues for consideration concerning the facts presented are as follows

1. Does the company have the capacity to sue or be sued ?

2. Was John in breach of the agreement, and if so, is he personally liable to pay the
plumber? Furthermore, would Peter be acting within his rights by engaging in
business with a commercial client?
3. Under what circumstances may one be expelled from a partnership if any?
4. What are the effects of citing Amogelang’s mother, and in what way if any, can
Amogelang’s mother recover the money she loaned to the partnership?

1)

First and foremost, before discussing the legal capacity of the company, it is of the essence
that a distinction between a partnership (as is the case in the facts presented) and co-
ownership must be made in order to determine whether or not it can be sued. In the case of
Oblowitz v Oblowitz, it is stated that the main features of partnerships are that “they are a
result of an agreement and involve community of profit and loss, individual partners cannot
under any circumstances sue each other as being partners and finally, one co-owner is not
such the agent of others, whereas a partner is.” Having said that, a characteristic of which
can further portray the legal personality of partnership as according to Morenane Syndicate
and Others v Loeto is that the company should have the capacity to contract and in
particular, to own property apart from its members in order for there to be any implication
of the company existing separately from its members. Considering the fact that the company
in the facts stated in this scenario had multiple properties of which it managed, this would
imply that the company is a juristic person and could thus sue or be sued as the property
was owned by the company and not its individual members; and in addition, seeing as the
company had no provisions for its dissolution, such would imply the existence of perpetual
succession. Furthermore, unlike in the Morenane case, the company in this scenario is an
incorporated entity meaning that it acquires separate personality and thus becomes an
artificial entity under the law.

2)

With regards to this issue reference to the partnership’s constitution must be made in order
to determine whether or not John, and by extension Peter, were acting or would have acted
within the scope of their rights and duties. According to the case of R v Bowen, it is said that
“if the language of the agreement is clear and unambiguous, the intention of the parties as
expressed in the agreement must be given effect.” This would imply that seeing as the
agreement clearly states that John cannot under any circumstances instruct emergency
repairs or other disbursements without consulting the other partners, John was in breach of
the agreement and would thus be personally liable to pay the plumber. This same principle
would be applicable to Peter should he decide to commence business with a commercial
client, as according to the facts, the partnership only deals with domestic clients. The case
also stated that “if there is any latent ambiguity it must be resolved by reference to the
document (the partnership’s constitution) as a whole whilst words and phrases having a
recognised meaning as terms of art must be construed in their technical sense.” The
relevance of this quotation in relation to Peter is that since the agency’s constitution
explicitly states that it only deals with commercial letting, he would be in breach of it by
conducting business with a commercial client, meaning that it would not be advisable for
Peter to conduct business in such a manner.

3)

Concerning the manner in which one may be expelled from a society, or in this case a
partnership, reference is to be made sections of the Co-Operative Societies Act. Firstly,
seeing as the members in the company have equal shares, section 30 of the act states that
“each member of a primary society shall have one vote in the deciding of any matter in the
affairs of the society and shall vote in person and not by proxy,” meaning that each person’s
vote will carry equal weight. Secondly, section 32 (4) states that, “any complaint against a
member for persistently contravening the act, regulations or bye-laws shall be made to the
board in writing and the board may, after considering the complaint and hearing the
member, recommend to the general meeting of that society for the member to be expelled.”
Subsection 5 also states that “a notice of 14 days before a general meeting at which the
expulsion of a member is to be considered shall be given to the member concerned
specifying the particulars of that meeting including details of the member’s rights.” This
would mean that Faith’s suggestion to immediately have a meeting in order to vote and
expel Amogelang would not be advisory as it does not conform to the procedure set out in
the aforementioned sections of the Co-Operative Societies Act.
4)

The citing of Amogelang’s mother would result in her name being struck out seeing as she
has no interest and is under no obligation towards the plumber, thus meaning that she
wouldn’t have locus standi in this matter. This is supported by the fact that shareholders and
unsecured creditors have no insurable interest in the property of a company as was the
situation in the case of Macaura v Northern Assurance Company. The brief facts of this case
state that “the majority shareholder insured the property in his own name and the property
got burned down and he proceeded to put a claim on it. The insurance company declined to
pay because although he was a majority shareholder, the company was a separate entity and
thus he had no insurable, legal, or equitable interest in the company’s property” as is the
case in this scenario. However, this does not prevent Amogelang’s mother from suing the
company for the money she loaned it. Because Amogelang was acting as an agent of the
partnership, her actions are equally binding towards all members of the partnership and
thus her mother would be well within her rights to sue the company by way of actio
redhibitoria in order to recuperate the money she loaned it.

In Conclusion, it is very much apparent from the facts of this scenario that the company is a
separate entity apart from its members and thus qualifying it as a juristic person with the
capacity of suing or being sued. It is also very apparent that the ordinary meaning of a
constitution ought to be interpreted in its normal sense, meaning that any deviation from its
ordinary meaning would result in its breach. Furthermore, for one to be cited in
proceedings, it is of the essence for that person to have insurable interest in the matter of
which he/she has been cited in.

List of References

1. Oblowitz v Oblowitz
2. Morenane Syndicate And Others v Loeto
3. R v Bowen
4. Co-Operatives Societies Act
5. Macaura v Northern Assurance Company