Section 2 (1)1 defines a partnership as a relationship which subsists between or among persons not

exceeding twenty in number who carry on a business in common with a view of making profits. Lindley on

partnership has therefore termed this relationship as one of a firm that is business oriented. This can also be

seen under section 1 of the Act where as A legal entity means a body, other than a natural person, that can

function legally, sue or be sued, and make decisions through agents 2.

A partnership depends upon an existing relationship which results from a contract. The contract is, as Jessel

MR explained in POOLEY V DRIVER3,

A contract for the purpose of carrying on a commercial business – that is, a business bringing

profit, and dividing the profit in some shape or another between the partners.

A partnership relationship can arise only by mutual consent, which may be express or inferred from

parties’ conduct. The personal nature of partnership means that a partner has agreed to associate with his

co-partners and no-one else: no new partner can be introduced without the consent of all the partners.

As in the question at hand, a partnership is not a legal entity as manifested in the English law and court

decisions. According to Lord Lindley put it clearly, the general rule is that “partnership is not a legal

entity4.” In other words a partnership is not an entity separate and distinct from the partners who at any

time may compose it. The firm cannot acquire rights nor can it incur obligations. The rights and liabilities

of a partnership are the collection of the individual rights and liabilities of each of the partners. This was

further indirectly emphasized in the case of DULICHAND LAKSHMINARAYAN V THE

COMMISSIONER OF INCOME-TAX, NAGPUR5 that the firm is not recorgnised by English law as

being separate from the members that compose it. Nevertheless members that compose the firm can be

sued in the name of the firm as was held in the case of SADLER V WHITMAN6 in which case it was also

emphazised that,

“the fallacy is to say that a partner in a firm does not, but the firm does, carry on business. In

English law a firm as such has no existance, partners carry on business both as principals and as agents

1
Partnership Act of 2010
2
Blacks Law Dictionary 9th Ed
3
(1877) 5 Ch. D 458, 472
4
Lindley & Banks on Partnership (18th ed 2002)
5
1956 AIR 354; 1956 SCR 154
6
[1910] 1 KB 868 at p.889, per Farwell LJ
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for each other within the scope of the partnership business; the firm name is a mere expression, not a legal

entity…”

On the other hand any legal entity, such as a company can take action in it’s own name to enforce its legal

rights. Conversely it may be sued for breach of its legal duties as observed in EAST AFRICA

ROOFING CO. LTD V PANDIT7 where the Plaintiff a limited liability company filed a suit against the

defendant claiming certain sums of money. The defendant entered appearance and filed a defence

admitting liability but praying for payment by installments. The company secretary set down the date on

the suit for hearing ex parte and without notice to the defendant. This was contrary to the rules because a

defence had been filed. On the hearing day the suit was called in court but either party made no appearance

and the court therefore ordered the action to be dismissed. The company thereafter applied to have the

dismissal set aside. At the hearing of that application, it was duly represented by an advocate. The only

ground on which the company relied was that it had intended all along to be represented at the hearing by

its manager and that the manager in fact went to the law courts but ended in the wrong court. It was held

that a corporation such as a limited liability company cannot appear in person as a legal entity without any

visible person and having no physical existence it cannot at common law appear by its agent but only by its

lawyer

This aspect of legal personality was further and better discussed in the case of SALMON V SALMON &

CO LTD8 where the salmon family, who owned the majority of shares in a leather company, accordin to

the National archives of the UK. After a strike, the business lost profits and went bankrupt. The value of

the corporation at the time of insolvency was below the value of the debts. Creditors sued the individual

shareholders for the rest of the funds. Even though the majority owner of the company was one family, the

House of Lords held that a corporation is separate from the individuals. Only the the corporation held the

debt; the individual shareholders did not hold the debt. As part of a legal incorporation, the liability was

more minimal than that of a partnership or sole proprietorship, according to Examination Preparation

Services which is not the case with a partnership where the property to the business belongs to the

members in common.

7
(1954) 27 KLR 86
8
[1896] AC 22
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From the foregoing, it is evident that from the law on the basis of which our partnership law is premised

does not in any way accord the partnership a legal entity status, but without prejudice to the afore

mentioned facts, the law governing partnerships in Uganda (the Partnership Act of 2010) reflects tension of

either admitting or not admitting that a partnership partakes the status of a legal entity as discussed below;

According to Section 47(2)9 general partners are liable for all debts and obligations of the firm. General

partners’ assets may be taken to pay firm debts. Partnerships often include partnership agreements stating

exactly what percentage of the firm each general partner is responsible for and the percentages vary from

partner to partner.

On the other hand companies/corporate bodies do not hold individuals liable for the company’s debt or

legal obligations as it was stated by Kerr L.J in RAYNOR (MINCING LANE) LTD V DEPARTMENT

OF TRADE10. The company is considered a separate entity and therefore the company itself is responsible

for assuming all debts and legal fees, and the shareholders are not at risk of losing personal assets.

Section 4(1) of the partnership Act provides for registration of the partnership being mandatory. With

reference to Section 3 of the Companies Act11, registration of a company is one of the most important

aspects/requirements that give it a legal status because it is with this name that the company will be

identified or detouched from its members under the corporate vail principle, it being a requirement under

the partnership act as well suggest a situation for making it a legal entity as compared to companies.

However not with standing the above section, the name is a mere expression not a grant of a legal status12,

but it being a requirement of law in uganda to be registered with the registrar of companies, there is no

reason why different status should be accorded other than that of a company that makes it a legal entity.

In relationship to the above, Section 4813 requires limited liability partnership, subject to subsection (2),to

be registered with the Registrar in accordance with section 50 of the same act. This makes the LLP acquire

the status of a legal entity. However the same section 48 of the partnership act has a proviso which is to the

effect that “…..a limited liability partnership that is not so registered shall be taken to be a general

partnership and all its members’ general partners” which means that even unregistered LLPs have the

9
Partnership Act of 2010 Laws of Uganda
10
(1889) Ch. 72 at 176
11
CHAPTER 110 of Laws of Uganda
12
AJ V Sadman
13
See note 1 above
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capacity of recognition as the ordinary partnership which in turn denies them the capacity of recognition as

corporate bodies thus not being legal entities but instead mere partnerships.

Section 514 in cross referance with Section 915 and Section 1216 bring out the fact that the liability of

partners for partnership debts arises through a partner’s status as agent for the other partners: the partners

are liable as principals for the obligations incurred by their agent. This was expanded in the case in the case

of BANK OF AUSTRALASIA V BREILLAT17. This therefore suggest a creation of a legal in the sense

that the action binds the partners and not the firm based on the common law notion that “a partnership

relationship is built on a fudiciary form of relationship as was expounded on in the case of RE

AGRICULTUARIST CATTLE INSURANCE CO18 where the court of appeal of England jurists stated

it therein and further explained the relationship between the partners and the outside world that each

partner is an unlimited agent of each other in every matter connected with the partnersip business and not

being in its nature beyond the scope of the partnership. It will be the partnership to be liable since the

partner would have acted for and on behalf of it and in its name. The actions get to the members making it

look like the firm is enjoying a corporate vail in a way suggesting it being a legal entity of its own.

Section 22(1)19 is to the effect that a partnership is able to own property whether the property was acquired

directly (through an express agreement ) or impliedly. However it is not easy to determine whether an asset

is partnership property as it was observed in the case of BARTON V MORRIS20 where a man and

awoman, who were unmarried but lived together purchased a farm which they held as joint tenants. They

lived at the property and carried on a partnership, without a written partnership agreement.The woman died

in an accident. The question was whether the partner became solely entitled by survivorship. The high

court held that even though the farm was shown as a partnership asset in draft accounts, it had not been

made partnership property.

Section 2321 provide for handling and accrues from the partnership property, its clear therein that a firm’s

property is not jointly owned by the members and the profits accruing from the use of the property also

14
Partnership Act of 2010 – Laws of Uganda
15
Ibid
16
Ibid
17
(1847) 6 Moo PC 152; 13 ER 642
18
(1870) LR 5 Ch App 725
19
Partnership Act of 2010 – Laws of Uganda
20
[1985] 1 ALL ER 1032
21
Supra at note 14
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belongs to the firm as observed in the decision off FOSTER V HALL22 where property which was bought

using partnership money and registered in the name of one partner were declare to be partnership property.

In AAS V BENHAM23 where a partner in a ship-broking firm used that information to help write a

prospectus for the ship-building company’s reconstruction, and made profits for himself as a result of the

reconstruction. The money contributed to the firm was held not to be belonging to the partners but rather

to the firm and that every partner is obliged to account to the firm any property acquired in the partnership

name and any use of partnership property plus the profits resulting from that use. The foregoing therefore

explains that a firm can own property exclusive of the partners and this suggest a situation of it being an

independent entity from its partners thus making it a legal entity.

In relation to the above, section 2524 is to the effect that one cannot claim a partner’s property meaning it

can not be used to pay off someone’s debts save for a court order as propounded therein. This suggests that

it is a different entity since all the property belongs to the firm not the partners.

From section 3025 and the authority of LAW V LAW26 partners are under duty to disclose all information

regarding the firm to each other in a way this mainly affects the partners operating on different accounts

this therefore means that partners are accountable individually to such acts and not liable to the fim in

whose name they are acting as agents thus making it a different entity from the partners in turn suggesting

a legal entity status to the partnership.

Section 1027 that provides for liability of minors on firm’s obligations that the firm making them not

personally liable, this in a sense creates two persons the minor and the firm being separate entities. This in

turn gives a firm the status of a legal entity to account for the minors act.

Conclusively, from the abovementioned, despite the fact that the provisions discussed inter alia suggest a

legal entity status of a Partnership firm as from the Partnership act of 2010. It should be evoked that

adopting an entity approach to partnership does not mean that a partnership becomes a body corporate due

to its sui generis nature as an entity.

22
[2012] NSWCA 122
23
[1891] 2 Ch 244
24
Supra at note 1
25
Partnership Act of 2010 – Laws of Uganda
26
[1905] 1 Ch 140
27
Partnership Act of 2010 – Laws of Uganda
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