Case No.:

AC – APP- 1 – 1956

Court:

Court of Appeal

Issue No.:

1961

Principles

·  Partnership—Petition for dissolution—Effect of agreement preventing sale of shares without consent of partners

A partnership agreement for no fixed term forbade any or the three partners to sell his share without consent of the other two. One partner petitioned for dissolution; one of the other two objected, saying dissolution was prohibited by the clause forbidding sale of shares unapproved by other partners.
Held: The partnership, being at will, is terminable on notice of any member of the partnership. in spite of the partnership agreement not to sell shares without approval of all partners

Judgment

(COURT OF APPEAL) *

AHMED ABDALLA HAMZA v. MOHAMED HUSSEIN SHALABY AND ANOTHER

AC – APP- 1 – 1956

Advocates: Hussein Osman Wanni …… for defendant—applicant

M. I. El Nur J. February 14, 1956 This is a partnership at will. The three partners bought a mill with its buildings and agreed to run it on partnership, sharing both losses and profits. The partnership agreement provided for no time limit, but contained a proviso that no one of the partners could sell his share in the mill, the subject-matter of the partnership, without the Written consent of the other two partners.

Responden.t in this case asked for dissolution of that partnership. The other partner, Ali Higeilan. was in agreement to dissolution but appellant was objecting. The Resident Magistrate Nahud, ordered dissolution and liquidation of the only assets of the partnership, the mill and its buildings. The Province judge, on revision, confirmed the decision of the Resident Magistrate Nahud.

Court; M. A. Abu Rannat Cf. and M. I. El Nur. I.

This is an application for revision of the Province judge’s order confirm mg dissolution of the partnership and sale of the mill. Advocate Wanni for appellant says that the partnership agreement provided that no partner could sell his share in the business without the written consent of the other partners. Therefore, dissolution is wrong. He adds that respondent did not give reasons which justify dissolution, and arbitrators, to whom the dispute was referred by the resident magistrate, were not unanimous about dissolution.

I am afraid there is no merit in this appeal. The law is clear that a partnership which has been entered into for a fixed term is determined by the expiration of that term. A partnership for no fixed term is a partnership at will, and is terminable on notice; and any member of a partnership, the duration of which is undefined, has a right, subject to any agreement between the partners, to dissolve it at any moment he pleases.

In this case the only agreement between the partners, which is put forward by the learned advocate, is that none of the partners is to sell his share in the mill without the consent of the others. This, of course, is not an agreement limiting the right of a partner to dissolve when he wants to do so.

Subject to the consent of the Chief Justice, this application for leave to appeal should be summarily dismissed as hopeless.

M. A. Abu Rannat C.J. February 18,1956:- I agree that the two partners are entitled to demand dissolution. They do not want to sell their shares to outsiders.

Application for appeal is hopeless and I dismiss it summarily.