[2005] KEHC 2 (KLR)
The court held that in a partnership, each partner is personally liable for debts and obligations incurred in the ordinary course of the partnership business, regardless of whether a particular partner had knowledge of or expressly consented to the transaction. The fact that the loan offer was not formally accepted...
Source-derived case information.
- Citation
- [2005] KEHC 2 (KLR)
- Parties
- Appellant: Marcy Munjiru Waiguru; Respondent: National Bank of Kenya Limited
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Law Courts)
- Jurisdiction
- Kenya
- Case Number
- Civil Appeal 15 of 2005
- Procedural Posture
- Civil Appeal / Judgment
- Outcome
- appeal dismissed with costs
- Judges
- DK Maraga
- Legal Topics
- Partnership Liability, Partner Authority, Loan Liability, Personal Guarantee
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Marcy Munjiru Waiguru
Appellant
National Bank of Kenya Limited
Respondent
Procedural Posture
Civil Appeal / Judgment
Legal Issues
- 1 Is a partner liable for debts incurred by another partner without their knowledge or express consent.
- 2 Does the absence of formal acceptance of a loan offer by one partner absolve the partnership from liability.
Ratio Decidendi
The court held that in a partnership, each partner is personally liable for debts and obligations incurred in the ordinary course of the partnership business, regardless of whether a particular partner had knowledge of or expressly consented to the transaction. The fact that the loan offer was not formally accepted by signature was immaterial because the loan was actually advanced and utilized by the partnership. Therefore, the appellant, as a partner, was liable for the debt owed to the respondent bank. The appeal was found to have no merit and was dismissed with costs.
Court Disposition
appeal dismissed with costs
Orders
- The appeal is dismissed with costs to the respondent.
Full Case Text
Judgment text and source record
16 paragraphs
IN THE HIGH COURT OF KENYA
AT NAIROBI
CIVIL APPEAL NO. 15 OF 2005
MARCY MUNJIRU WAIGURU…………...............................................……………APPELLANT
VERSUS
NATIONAL BANK OF KENYA LIMITED......................................................………RESPONDENT
JUDGMENT
This appeal raises one simple issue: whether or not one is liable for the liabilities incurred by one’s partner which one is unaware of.
The facts of the case are simple and straight forward. The Appellant and one Isabella Kathule Mbaabu (Isabella) were partners in the business of a school known as St. Joseph Daycare Nursery School in Savannah Estate Nairobi. By her letter dated 28th August 1989 Isabella applied for a loan of Kshs.127,800/= to purchase equipment for the school. In its letter of offer dated 30th August 1989, the Respondent approved a sum of Kshs.70,000/= against the security of a personal guarantee by one John Kamau Mwaniki and a charge of that sum against his piece of land known as Title No. Kabete/Nyathuna/1002.
Although Isabella did not formally accept the offer by signing or returning a copy of the Respondent’s said letter, the Respondent nevertheless advanced the sum of Kshs.70,000/= to the school. When the school defaulted in the repayment the Respondent recovered the sum of Kshs.70,000/= from the said John Kamau Mwaniki that he had guaranteed and upon failure to get the balance from the school it filed Nairobi RMCC No. 2958 of 1996 and obtained judgment against the partners for Kshs.70,000/=. This appeal is by Mercy Munjiru Waiguru, one of the partners, against that judgment.
In his submissions, before me, counsel for the Appellant faulted the trial court for holding the Appellant liable for a loan she did not know anything about. He argued that Isabella having not even accepted the offer the trial court should have dismissed the Respondent’s claim. For the Respondent it was argued that on the law of partnership, the Appellant was bound by the acts of her partner.
I have considered these submissions. Partnership is an association of two or more people carrying on business with the aim of making a profit. Because it is an unincorporated company the law views a partnership as being one and the same as its owners. One of the major characteristics of a partnership is each partner’s personal liability for any legal actions and debts of the partnership.
In this case Isabella applied for a loan to purchase equipment for the school. That she did not formally accept the Respondent’s offer of the loan is, in my view, immaterial bearing in mind the fact that the loan was actually advanced and utilized by the school. In the circumstances I agree with counsel for the Respondent that on the law of partnership as summarized herein above the Appellant was clearly liable to the Respondent. I therefore find no merit in this appeal and I accordingly dismiss it with costs.
DATED and delivered this 29th day of June 2011.
D.K. MARAGA
JUDGE