The debates which have recently taken lace on the Lord Chancellor's Companies ill in the House of Lords and the asso-lated Chambers of Commerce, have sti ingly proved, Xf prov were needed, that the principle of limited liability has deen of immense importance to the development of English trade and industry, and forms a well-nigh indispensable element in the economical system of the country; s0 much so, that most competent observers would rather put up with the evil consequences the mushroom growth of limited liability companies has from time to time in individual cases carried with it, than eliminate or curtail to any consider: able extent the principle of limited liability itself. It can therefore only be a question of how the principle can best be utilised for the attainment of commercial purposes, with a view to affording an approximate guarantee for the legitimate and proper establishment and management of undertakings based on that principle to would-be investing capitalists as well as to creditors. While the Lord Chancellor's Bill is endeavouring with a view to that end to place limited "liability companies on a sounder legal basis, another Bill providing; for associations based partly on general partly on limited liability has found its way into the House of Commons after having passed the House of Lords. The Bill, having been proposed by the Associa ted Chambers of Commerce, was introduced by Lord Bramwell. Its object is to establish limited partnership in England, It is necessary at the outset to avoid the erroneous conception (cide Edward Manson, Law Quarterly Review, Jan. 1889) that this form of partnership association would be in any way likely or destined to replace companies, or to supersede them. On the contrary, both forms of association can and will exist beside each other, being, apart from the common clement of limited liability, of an entirely different nature. First of all, it is to be observed that, for ent prises of considerable magnitude, the limited partnership association will, as a rule, not be considered the appropriate form, as on the one hand vast amounts of capital will not submit themselves blindly to the operations of a private trader (as general partner), which limited partnership neces-sitares; on the other hand, a competent trader with large capital of his own will hardly find it desirable to work for and share the profits of his business with others, who will only have a limited risk, while he would be liable with every farthing of his property, as he will regularly be in a position to borrow the additional money required at reasonable interest. A combination of great capital contributed by a number of people will therefore, as here: tofore, form itself into a company; a trader with large means will work privately, or in conjunction with others in the form of general partnership, if the Bill, ey., or a similar one, should become law. Furthermore after the exclusion of such cases, there is still a singular constellation necessary in order to indicate the fitness of a limited partnership being formed. The frst clement of such constellation must be one or more competent and responsible traders; the second, an undertaking "f moderate extent already in existence, or to be established, which requires more capital or credit'than those men possess; the third, one or more capitalists having confidence the abilities, character, and responsibil lity of them, as well as in the soundness of the undertaking and willing to invest These conditions fulfilled, there is, my opinion, no doubt that limited partnership, as affording an opportunity for the combination of capital with individual responsibility and ability, and being therefore free from the inherit defect of companies, would prove very beneficial and constitute 4 factor of considerable value to the commercial community. It would also be particularly useful in relieving the register of the limited liability companies from a great many undertakings, which by themselves perfectly sound are nevertheless unsuitable to be worked as companies, and failing in consequence of this unate defect. become losses instead of gains to the national wealth. Having stated under what conditions in my opinion limited partnerships should be established, I will now briefly point out the principal distinguishing feature between limited partnership and companies, which that the former will always retain the character of a private firm, that the centre of gravity will always lie in the general partner, his responsibility and ability, and that the limited partners will only appear to contribute towards the capital of the business. To illustrate this by an instance: A. and B. intend to establish (or extend) a busines for which they have only £5,000. In order to make it a success they want £10,000; D. and contribute as limited partners the remaining £5,000. It will have commercially the same effect and be equivalent to A. and themselves finding the whole £10,000.
While the individual element ther predominates in limited partnership disappears altogether in Li lability companies: here an undertaking and capital to work it, there traders who work an undertaking and capital intrusted to them. To put it inthe form of a definition: A company is an entity consisting of capital to be utilised in a certain concern by the tributors (through their servants); 1 limited partnership is an association of one or more traders working " commercial con-corn in which they are backed up by additional capital of others. I need not state expressly that all those observations with regard to limited partnerships do not apply to their internal legal nature. There it must be kept in mind, unless confusion h the relations of dormant partners that limited partners must be principals of the business like the general partners, that they have a pro ratd share in it and its property, not only in the profits, and that the only difference between them and the general partners would be in their limited liability and their exclusion from the management.
As is known, limited partnerships exist in nearly all the countries in Europe, and several unsuccessful attempts have been made to introduce the system in England. As to the causes of failure to supplement the English mercantile law by this institution, I can only refer to the observations made on the subject by Sir Frederick Pollock, in his Essays in Jurisprudence and Ethics," from which I may be allowed to quote only one passage: In England we shall never get a code or any chapter of a code by force of pure argument. We must make it clear that a strong body of persons are interested in the thing bein, done, want it done, and see their way doing it." I need not after this expressly state that he is very much in favour of the Now that the initiative has been taken by the Chambers of Commerce (the best argument in its favour, as Lord Bramwell says in his introductory speech), which, I think, cannot any more be considered quantity négligeable, as one of the members of the House of Commons in 1882 declared it to be, and the matter might have reach-a further stage toward its realisation, it should, in my opinion, be the duty of the lawyers as Well as legislators to make
Text read from the printed page and cleaned; old type leaves the occasional error.