Dissolution in case of lunacy of a partner.

Misconduct of

partner as cause of dissolution.

arise from insolvency; but it may arise in cases where the capital of all the partners being lost it is necessary to supplement it by fresh additions. If any of the partners are unwilling, or unable, to bring in more, the consequence being that the business can only be carried on at a loss, the Court would grant a dissolution of the partnership. (Jennings v. Baddely, 3 K. and J., 78).

In order to make the lunacy of a partner a cause of dissolution, it must be proved to the satisfaction of the Chancery Division of the High Court (to which division all causes for the dissolution of partnership are assigned by the Judicature Act, 1873), or to the Lord Chancellor (to whom the custody of all lunatics is primarily entrusted by sign manual from the Crown), that the insanity not only exists, but is incurable. The Court will make strict inquiries into the case, and will not allow the mental affliction of a partner to be used to his detriment by his co-partner. (Kirby v. Carr, 3 Y. and C. Ex., 184),

When the misconduct of a partner is so gross that mutual confidence is destroyed, it is also a cause of dissolution; and the Court will dissolve a partnership, when it is proved to its satisfaction that, owing to such misconduct, the partners cannot work amicably together. If the partner who is the cause of

interest of one

of dissolution.

the dissolution has brought in money by way of premium, such premium will not be repaid him, nor any part of it; and if he owes any portion to the firm at the time of dissolution he will have to pay the whole amount (Black v. Capstick, 12 Ch., Div. 863). Another ground of dissolution is the Transfer of transfer of the interest of a partner without partner ground the consent of the co-partners. If such a transaction were allowed, it would have the effect of introducing a partner into the firm without the consent of all the members; and that, as we have seen, would be opposed to the principles upon which partnerships are formed. Although such transfer dissolves the partnership, it does not take away from the transferee the right to payment of what is found due to the transferer when the partnership accounts are made up. When a partnership is dissolved from any Notice of discause whatever, notice is usually inserted in solution to be the London Gazette, in order to make it a

notice to all the world.

The creditors of a firm are entitled to receive notice by circular of the dissolution, in order to fix them with notice of the fact. (Graham v. Hope, Peake 154).

advertised.

to notify dis

Any partner may publicly notify the fact Right of partner of any change in the firm, whether that solution. change arises from retirement or dissolution,

and may call upon his co-partners to do

what is necessary to enable him to give such notice. After the dissolution, the rights and obligations of the partners collectively continue only so long as may be necessary to complete the settlement of affairs. This will be clearly seen when we consider the difficulty of winding up a business that may have been in existence for years, and the necessity in such a case of the supervision of some directing power cognisant of the responsibilities of the firm, and consequently capable of bringing the business to a conclusion as promptly as may be consistent with the completeness that is necessary.

CHAPTER VII.

COMPANIES AS TRADERS.

The Act that regulates this branch of Companies Acts, 1862. commerce is the Companies Act, 1862, which was passed for the purpose of consolidating and amending the laws relating to the incorporation, regulation, and winding up of trading companies and other associations. No association consisting of more than ten persons can now be formed for the purpose of carrying on business as bankers, unless it is registered under the Act as a company, or formed in pursuance of some other Act of Parliament, or of letters patent. No association or partnership, consisting of more than 20 persons, can be formed for the purpose of carrying on any business which has for its object the acquisition of gain, unless it is also registered as a company under this Act, or is formed in pursuance of some other Act of Parliament, or of letters patent, or is a company engaged in working mines within and subject to the jurisdiction of the Stannaries. Any seven or more persons may subscribe their names to a

D

Memorandum of Association

Limited by

Shares.

memorandum of association, and by complying with the requirements of the Act, in the matter of registration, may form an incorporated company with, or without, limited liability.

When a

the

on company is formed of a Company principle of having the liability of the members limited to the amount unpaid on their shares, it is called a company limited by shares; and the following particulars are necessary, in order to make the memorandum of association valid. It shall contain

1. The name of the proposed company with the addition of the word "Limited " as the last word in such name;

2. The part of the United Kingdom in which it is proposed to have the registered office;

3.—The objects of the company;

4. A declaration that the liabilities of the members of the company is limited;

5. The amount of capital with which the company is proposed to be registered, divided into shares of a certain fixed amount.

No subscriber is allowed to take less than one share; and each subscriber shall write opposite his name in the memorandum of association the number of shares he takes.

A company formed on the principle of having the liability of its members limited