Conflict of Law-Partnership-Egyptian partnership doing business in Sudan-s-
Whether to apply English or Egyptian Law

Partnership-Liability for acts of othe.r partners-Joint adventure distinguished
-Scots law-Commercial associations in participation under Egyptian law

'In accordance with a written agreement drawn in Cairo between the
appellant together with his two partners and the respondent, the former re-
cruited labourers to work for the latter in the Sudan. The agreement
stipulated that the partners should either come to the Sudan to look after
the labourers or send approved agent to undertake this duty. This agree-
ment was stated to be preliminary to a formal contract to be drawn in the
Sudan according to Sudan Laws, but no such contract was ever drawn.
Sometime after the work began the labourers became dissatisfied with the
terms of service and went on strike. This necessitated the conclusion of a
new agreement between the respondent and the two partners present in the
Sud~. The new agreement resulted in the labourers resuming work on re-
visell terms. Later the respondent Co. instituted proceedings against the

• Court: J. P. Osborne J.

firm claiming a balance. of a certain sum of money. The court of fInt
instance decided in .favour of the respondent and against defendantS jOintly
and severally. The appellant appealed on the ground that he was not a
party to the second agreement and that his partners had no authority to
bind him.

Held: Under English partnership law, which was applied, the appeUant
was bound by the second agreenient because no notice was served on the
respondent to the effect that partners had no authority to. bind the firm.
and there was no partnership deed to the knowledge of the respondent from
which the latter .could have reasonably inferred that the partners were with-
out authority.

Civil Justice Ordinance 1900, s. 4.
Egyptian Native Commercial Code, s. 60.
English Partnership Act 1890.

A.ppeal

June 1, 1924. Osborne J.: The facts of this case are briefly as
follows. The appellant together with two others entered into an agree-
ment in writing with the respondent company in Cairo on November 10,
1922, by which they contracted to recruit certain Egyptian labourers
to work in the Sudan for the respondent company and either them-
selves to go to the Sudan and look after the labourers so recruited or
to send approved agents to represent them in this duty. There are
other details in the contract which was brought before the court. The
"contract" is an ill-drawn document and it is stated at the end of it that
it was intended only as a preliminary to a formal contract to be made
in the Sudan according to Sudan laws. For some reason the formal
contract was never made. The parties to this preliminary agreement
are described as follows: "I the undersigned Shabib Mohammed,
Mahmud and partners" (and the names of the partners one of whom is
Mohammed Ahmed Radwan, the appellant, are inserted in the margin)
and the respondent company, Messrs. Pearson and Sons. The three
"partners" sealed the document.

In accordance with their agreement the appellant and his "part-
ners" recruited labourers in Egypt and sent them up to the Sudan and
two of the partners went up to the Sudan for the purpose of ·loomg
after the labourers. The present appellant did not at. that time gQJo
the Sudan.

In March 1923 the labourers seem to .have become dissatisfied
with the amount of pay that reached them and eventually they went
on strike. . The original agreement provided for payment to the
labourers. of 7 piastres per head for a day of 8 hours and, though the

agreement is silent on the point, it appears that the payment of the
wages was in fact to be by the partners direct to the men-Messrs.
Pearson making payment of the wages earned to the partners.
"Tarhila" at the rate of £E.2 per labourer had been issued to the
partners by Messrs. Pearson under the agreement. Whether this ac-
tually reached the labourers individually and intact does not appear so .
far as I can ascertain, but it is in evidence that part at least of the
dissatisfaction of the labourers was owing to the nonpayment of the
full amount of tarhila and wages to them by the partners, who under
the original agreement had control of the money to be paid to the men.
At the time of the strike the appellant was not in the Sudan. In order
to pacify the men and to induce them to resume work it appears that
a new agreement or a modification of the old one was made on or
about March 14, 1923. This agreement was made with the assistance
of the District Commissioner of Sennar and resulted eventually in the
men agreeing to go back to work but under revised terms. In place

. of the 7 piastres a day the men were to be put on piece work at 25
milliemes per cubic metre of excavation with a guaranteed minimum
of 7 piastres a day.' The remuneration of the partners was also altered
from 4% upon the 7 piastres a day paid to labourers. only, as in the
original agreement, to a rate of 15 % on the wages earned so long as
the men averaged 3 cubic metres a day. If they failed to reach that
average the remuneration was to be at the rate of 10% only on the
wages earned. In either alternative the partners were to supply certain

. raises, chainmen and ghaffirs 'without extra payment. It is clear that
there is here a very considerable apparent variation in the terms of
the remuneration of the partners as compared with those set forth in
the original agreement. I have seen no attempt to calculate what that
variation amounted to nor is it certain to which of the parties it was
most likely to be favourable.

Although the agreement for the new arrangement was denied by
the two partners who were in .the Sudan in March 1923 the district
judge held on the evidence in CS/255/23 that one of them accepted it
and both acted upon its terms in regard to the labourers. Neither of
these partners have appealed, so the terms of the agreement are not
now in question.

On June 2, 1923, Messrs. Pearson started action against the part-
ners claiming a balance of some £E.542 on the account. This action
was heard by the district judge, who on June 9 made an order for an
account to be made between the parties to give effect to certain de-

crsrons arrived at by him on, the various points at issue. Following
upon this account on July 2 the district judge made a final decree for
payment of a sum of £E.425.806 m/ms by the appellants to .the
respondent company. Though neither judgment nor decree specifically
apportions liability for this sum, a subsequent explanation by the dis-
trict judge when the matter of the execution of the judgment was
before him declared that the defendants were jointly and severally
liable.

. Two of the partners after some demur and hesitation seem to have
accepted the judgment of the Province Court but the third, Mohammed
Ahmed Radwan, has appealed on the grounds set forth in the petition
now before me.

The appellant admits that he is bound by the first agreement
which he signed in Cairo, but says that he was, not a party to the later
agreement of March 14, 1923, that his "partners" were not his agents
and had no power to bind him for they had no "tawkil" from him. He
claims therefore that, the judgment and decree should be against the
other two partners and that so far as he is concerned he is entitled
to stand upon the terms of the first agreement and to have the action
against him dismissed.

This point seems to have been made. before the district judge
though the record, so far as 1 can read it, is not very clear thereon.
The district judge in his judgment says "All three defendants agree
that according to the terms of their partnership deed, which has not
been produced, the view and decision of the majority of the partners
prevails" and again "I also hold that under the terms of the defendants'
partnership agreement the third defendant is bound by any agreement
into which the majority of the partners have entered or to the condi-
tions of which they have adhered."

Now, so far as 1 can discover, the record contains no mention of
any such admission on the part of the defendants. As 1 felt I might
have failed to read the record correctly 1 took an opportunity of asking
the district judge to elucidate the point and he wrote a note as to his
recollection of the statement said to have been made by the defendants.
He says that the question arose on issues when there seemed to be a
possibility of an issue being necessary as to the joint or several .9t
limited liability of the parties inter se, and that he is certain, 1ft!!
all. three defendants admitted this term of the verbal agreement and
that, for this reason, the issue was never tried. But the record 'is silent
as to all this.

It is unfortunate that the record is defective in this respect in view
of the fact that the appellant utterly denies any such admission either .
by himself or his partners and further says that no such term was in
fact agreed to by the partners and it is perhaps worth noting that the
agreement between the "partners" and Messrs. Pearson contemplated
the presence of .all three "partners" or their agents' in the Sudan. If
this term were in fact one of the terms of the partnership agreement
the appeal must have been dismissed out of hand, I think.

The agreement between the "partners" 'and Messrs. Pearson ends
with a note to the effect that a formal contract embodying the terms
of the agreement was to be agreed and signed "according to Sudan
Laws." There is no enactment dealing with partnership upon the
statute book in the Sudan and all that this note can be' taken to
imply is, I think, that no question of the jurisdiction of the Sudan
courts is involved and in fact none has been raised.

Now after careful consideration of the facts and argument-so
far as there has been any argument before me-I have come to the
conclusion that I am faced with a conflict of law as between the Eng-
lish system and the Franco-Egyptian law in force in Egypt. I will
deal with each separately.

Taking first the English law-and more particularly the Partner-
ship Act of 1890--it seems to me that the association between the
three subcontractors was a partnership within the meaning of the Act
of 1890-though it would, apparently, in Scots law be more properly
called a "joint adventure" -a distinction which seems in practice to
be largely one without a difference and which is not met with in the
English authorities (The. subject is discussed in Pollock's Digest of the
Law of Partnership, 11th ed., pp. 6, 7). The relation .between the
subcontractors was I think that which subsists between l?ersons "carry-
ing on a business in common with a view of profit." I have examined
the definition of the word "business" which is said, in section 45 of the
Act, to "include every trade occupation or .profession" and I cannot.
find any authority that would justify me in concluding that the joint
operations of the associates in the agreement of the subcontractors
inter se were such as to take those operations out of the definition
of "business." Moreover there was apparently an unqualified agree-
ment to- share profit and loss in equal thirds-not, it is true, an essential
condition of English partnership, but at the least a very usual one. I
conclude then that there was in fact a partnership within the meaning
of· the Act between the three subcontractors. It follows therefore that

. each partner is the agent of the firm and of his other partners and can
bind the firm and the other partners by any act done for carrying on
in the usual way the business of the firm (such act not being in its
nature beyond the scope of the partnership) unless he has in fact no
authority to 'act for the firm in the particular matter and the person
with whom he is dealing either knows that he has no authority or does
not know or believe him to be a partner.

In applying this statement of the law to the fact before me two
questions arise. First, was the conclusion of the agreement of March
14th by the two partners an act done for carrying on in the usual way
the business. of the firm and was that agreement in its nature a matter
within the scope of the partnership and, secondly, was there any in-
formation or representation to the respondent company from which
they were bound to infer that the two partners in the Sudan had no
authority to act for the firm and bind the absent partner in making
the agreement?

The business of the firm was not only to recruit labourers in
Egypt' and send them to the Sudan but also, as I infer from the first
agreement with Messrs. Pearson, to look after and superintend the
labourers at their work in the Sudan and thereby to earn a commission
01;1 their wage which would represent the profits of the partnership.
The men had ceased to work and in effect the business of the partner-
ship was at a standstill until, consequent upon the new agreement,
they resumed work.

I think therefore that the conclusion of the second agreement in
the circumstances that I have previously stated was an act done for
carrying on in the usual way the business of the firm and that the
agreement was a matter in no way beyond the scope of the partnership;

As to the second point the appellant alleges that. he sent 3.., letter
or two letters to the respondent company warning the latter not to pay
out any moneys due to the partnership to his two partners "'until the
amount due on the tarhila" had been liquidated. There is no evidence
before me in support of the allegation and no copy of the letter has
been put in, but even accepting the appellant's statement as true,
such a warning could not possibly amount to· notice to the respondent
company that the two partners in the Sudan had no authority to bind

. the firm and the other partner. In fact the appellant's whole conten-
tion is that at law they never had such authority and if that was his
view there would have been no need for such notice.

I hold therefore that, if the Engilsh law is to be applied, the ap-
pellant is bound by the act of his partners in relation to the agreement
of March 14th and that the respondent company were justified in enter-
ing into that agreement with the two partners in the Sudan as represent-
ing and as having power to bind the third member of the firm equally
with the other two.

Turning now to the Franco-Egyptian law and applying its prin-
ciples to the facts before me I am bound to hold that the relationship
between the three subcontractors was not strictly speaking a partner-
ship at all, but in reality a "commercial association in participation"
an association with neither a partnership capital nor a firm name--in
fact ,very much what I have referred to above as called a "joint ad-
venture" in Scots law. Such an association is defined and explained
in section 60¹ of the Egyptian Commercial Code. It is formed in view
of one or more commercial operations and the purposes, form and'
conditions of such an association and the respective interests of the
several partners are regulated by the contract, written or verbal, be-
tween the participating partners.

I have already noted that in practice there appears to be now no
real difference even in Scots law between the incidents of "joint ad-
venture" and those of "partnership" proper, and once the "joint ad-
venture" is formed all the legal results of 'partnership follow. But it
would appear that a doubt long survived in Scotland as to the liability
of the "joint adventure" for the engagements of the individual "joint
adventurers" within the limits of the adventure--in contradistinction to
the well defined liability in partnership proper.

No such doubt exists in the Egyptian Commercial code, ,section
60 of which runs: "the participating partner who contracts with a third
person, is alone directly liable to such person." And so it would ap-
pear that if Egyptian law is to be applied, only the two partners who
entered into the agreement of March 14th with Messrs, Pearson are
bound by that agreement and that the appellant is not so bound and
if that law were to be applied he must succeed in his appeal.

1 Section 60 of the Egyptian Commercial Code describes "Commercial ass0-
ciations iB-1>articipation" as follows:

"Such associations are formed in view of one or more coinmercial opera-
tions. The purposes, forms. and conditions of such associations and the
respective interests of the several partners are regulated by the contract

                between the participating partners."                                                            

As I have already noted, there is no Ordinance in the Sudan
governing partnership. And I do not think it possible to say that any
body of custom exists in regard to partnership sufficiently definite and
fixed to be taken as a guide. Therefore the court in coming to a de-

        cision must apply the test of equity."                                                  .

I have already noted the circumstances in which this second
agreement was made. In fact, if some arrangement of the kind had
not been made, the workmen would no doubt have given further trouble
and greater loss would have been caused to both parties in this case.
If the appellant had carried out the terms of the first agreement strictly'
either he or his accredited agent would have been on the spot to have
had a say' in the new arrangement. It is true that Messrs. Pearson
had informed him on February 12, 1923, that "as his partners were
already at Makwar" they saw rio reason for him to go there. But
Messrs. Pearson had not then in contemplation the position that arose
in March and perhaps it might even be said that the appellant should
have inferred from the letter that the respondent company regarded
the two partners in the Sudan as the appellant's representatives-which

        I think they undoubtedly did.                                                                    .

The original contract was negotiated in Cairo and the man Shahib
was the prominent one among the partners. He spoke and ~parently
acted on behalf of the partnership throughout and I think it was na-
tural enough that the respondent company should have regarded him
as the individual with whom more than, any other they were entitled
to deal as representing the partnership itself.

Had there been any formal intimation to Messrs .. Pearson that t~ .
partners' were not the agents the one of the other or had there been
any written deed' of partnership within their knowledge from which
that fact might reasonably be inferred, the position would have been
entirely different. And further it would appear that the appellant
came up to the Sudan in April and must then have known the details
of the new agreement. The action was not started until June by the
respondent company and it does not appear that the appellant made
any protest or took any action against Messrs. Pearson or did any thing
to repudiate his liability on the agreement between the time of his
arrival in the Sudan and the date of the petition in the action (June
4th).                                                                                     .              .

• Apparently the -learned Judge means 'section 4 of the Civil Justice Ordi-
nance 1900 (Sect .. J1 C.J.O. 1929) which talks about equity, justice and good

conscience.