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General classification.

CHAPTER IV.

OF THE FORMS ASSUMED IN SCOTLAND BY ASSOCIATIONS
CONSTITUTED FOR PECUNIARY PROFIT.

ASSOCIATIONS for the purposes of gain assume in Scotland a great
variety of forms suitable to the nature of the undertakings with
which they are concerned; yet, in so far as regards their legal
character and import, they may be conveniently classed as follows:-
1. Private partnerships, including common law companies.
2. Companies erected by public authority, but not vested with
full corporation privileges.

3. Proper corporations.

4. Proper corporations with peculiar privileges and powers.

Private firms.

I. PRIVATE PARTNERSHIPS AND COMMON LAW COMPANIES.

These are formed at common law by the mere will of the members, and may in like manner be dissolved. Of private partnerships or firms we have already given a general description. They consist of few members, and realize the idea of the Roman Societas. Where the partners are associated for a single adventure or transaction, the copartnery is sometimes called a joint adventure, and has been treated of by some writers as a separate contract. But after mature consideration, we have come to be of opinion that there is no good reason for maintaining this distinction, and that, so far from elucidating, it tends rather to obscure the legal principles which necessarily regulate the partnership relation, whether it is applied to a single adventure or to a series of transactions (a).

(a) Per Lord Eldon in Davidson's Appeal, 1815, 3 Dow 218; 2 Bell's Com. 649.

companies.

Common law companies are essentially partnerships, and differ Common law from private firms in so far only as the rules applicable to the latter are necessarily modified and adapted to meet the requirements of associations with a numerous and fluctuating membership. This is so much the case, that it is not always easy to determine whether a given association should be designated as a partnership or as a company. It may, however, be taken as a general rule, that a partnership deserves the name of a company when it possesses most of the following characteristics: When it is managed by directors, trustees, managers, or other special officers, and not by the whole body of partners; when the shares are of equal value, and transferable at the will of the holder; and when the profits and losses are apportioned with reference to the shares, and not to the partners.

Where common law companies differ from partnerships, they approach the nature of corporations; and in the law of Scotland, it may be said that they stand midway between the two, being somewhat more than mere partnerships, and somewhat less than corporations. It is their occupying this intermediate and debateable ground that has made them the subject of many legal questions. Under the denomination of common law companies, it is intended to comprehend all such associations as, though possessing a more numerous membership than private firms, exist merely at common law, and possess neither the privileges of complete corporations by charter or special act, nor such more restricted rights as may be enjoyed by letters patent or registration, all such associations, in fact, as are not included under the three remaining classes. Since common law companies are fundamentally partnerships, they will be throughout this work treated of under one category; but care will be taken to point out in the proper places such distinctions in their management and legal consequences as shall be found to exist.

Common law

companies

approach the

corporation.

II. COMPANIES ERECTED BY PUBLIC AUTHORITY, BUT NOT VESTED
WITH FULL CORPORATION PRIVILEGES.

Under this category are included companies formed under the Registration Act of 1862, but without limited liability; companies formed under the Letters Patent Act, 1837, 1 Vict. c. 73, without

Imperfect or tions.

quasi corpora

the full corporate privileges; and companies whose special act withholds from them some of the naturalia of a corporation. They are generally termed quasi corporations.

Proper corporations.

III. PROPER CORPORATIONS.

A general description has been already given of such associations. They can only be formed by charter or special act.

IV. CORPORATIONS WITH PECULIAR PRIVILEGES AND AGGRESSIVE
POWERS.

Privileged corporations.

Order of treatment.

Such corporations can only be created by Act of Parliament, and are now generally formed by combination of their special acts with the provisions of one or more of the Consolidation Acts, under which, by their special acts, they are brought. The Consolidation Acts have been enumerated in the Introduction (p. 11).

It was originally intended to treat of each of these four classes seriatim, exhausting the one before entering on the other. But as the work advanced, it was found that this method would involve much repetition, and a continual reference to earlier chapters; and that the important object of showing how the fundamental principles of the two primary types-viz. the simple partnership and the corporation—have been by legislative aid expanded, limited, or supplemented, so as to meet the requirements of every kind of undertaking, could not in this manner be satisfactorily attained. What is deemed a more commodious method has accordingly been adopted. The four classes will be examined under each division of the subject, carrying them on abreast from their formation to their dissolution, and thus, while avoiding repetition, rendering the one illustrative of the other.

CHAPTER V.

FORMATION OF THE PARTNERSHIP RELATION IN PRIVATE

COPARTNERIES AND COMMON LAW COMPANIES.

necessary.

PARTNERSHIP is one of those contracts which do not require Writing not writing for their constitution. It is constituted by mere consent, and may be proved not only by written contract, but by facts and circumstances (a).

important.

In all cases, however, when practicable, the contract should be Writing reduced to writing; for, though this will not in general avail in questions with the public, it will obviate many difficulties which may otherwise arise in determining the rights, duties, and liabilities of the partners among themselves. The written contract of partnership generally assumes the form of a contract or of partnership articles. Such documents are at best only limitatory of or auxiliary to the common law, which is always ready to break in when it has not been effectually excluded by contract. What ought to be contained in them will therefore fall to be considered at a subsequent part of this work, after the operation and effect of the rules of the common law have been explained.

When the contract of partnership has been embodied in a document properly authenticated, the fact that the relation exists, as well as the date of its commencement, can generally be determined without much difficulty; but when, as frequently happens, the existence of the partnership relation has to be inferred from facts and circumstances, the problem becomes very complicated and embarrassing.

(a) 2 Bell's Com. 622; 1 More's Lect. 198. Stevenson v. Wright, 1687, M. 12732; Logan v. Brown, 1824, 3 S. 15; Thomson v. Campbell's Trustees, 1831, 5 W. and S. 16; M Kinlay v. Gillon,

1830, 9 S. 90, aff. 5 W. and S. 468;
Livingston v. Gordon, 1755, M. 14551.
Such also was the Roman law. Dig. lib.
xvii. t. 2, s. 4; Story on Part. s. 86-7.
It is so also in English law, Coll.
P. 3.

Difficulties relation has to from facts and

when the

be inferred

circumstances.

No test of the partnership relation.

No practical definition.

These difficulties will be understood, when it is borne in mind that the inquiry is not merely as to the date of the commencement or the termination of a particular firm or company, but frequently extends to such questions as the following: Are A. and B. partners of a particular concern? When did they become so, or when did they cease to be so? Does the partnership relation exist between A. and B., though neither is in connection with any ostensible company or firm? Are B. and C. dormant partners, though admittedly they do not appear to take any concern in the business of the firm? Furthermore, persons who have not constituted partnership inter se, not unfrequently find themselves involved in liabilities to the public to the same effect and extent as if they had; and this state of matters is often denominated quasi partnership, a phraseology which, though it may be conducive to brevity of expression, is often productive of great confusion of thought.

The complication and embarrassment to which these various circumstances have given birth are familiar to every student of the law of partnership; and it must be admitted that neither in England nor Scotland have the courts succeeded in laying down practical rules for their effectual removal.

In one sense, it is no doubt a question of fact to be ascertained by a jury or its equivalents, whether, in the absence of a written contract or equivalent admission, the partnership relation is established by the facts and circumstances of the case. But this presupposes the possibility of distinctly ascertaining what is of the essence of the contract, or at least of fixing upon some test which shall serve as a means of deciding in all cases whether the facts, as established, are to be taken as evidence of the existence of partnership. The difficulty as to the law of the question would be removed, if the Legislature had arbitrarily defined what constitutes partnership, or if lawyers could have fixed on a definition of that contract at once exhaustive and practical. But such has not been the case. The Legislature has not as yet spoken authoritatively; and no definition has ever been given of partnership, which is either sufficiently exhaustive or sufficiently exclusive to be adopted as a practical rule.

In the absence of a practical definition, the tribunals have

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