An Overview on Silent Partnership Agreement
Silent partnership agreement is crucial to run a joint venture smoothly:
Silent partnership agreement is basically a legal agreement between two or more people who enter into a joint venture but in a silent partnership the responsibilities of partners are different from each other. In the silent partnership, the silent partner usually provides finances and stays away from the day to day working of the business while the other partner or partners manage to run the daily affairs of the business. The silent partner do not participate in daily management affairs as he is not responsible for the running of the business but shares the profit or loss according to the pre-determined ratio.
The only responsibility of a silent partner is to provide financial investment to a joint venture while the other partner or partners take the responsibility to run the business by managing the daily affairs of the joint venture. While doing a silent partnership in South Africa, it is highly recommended to draft a silent partnership agreement which will help in the smooth run of the joint business and will also assist in resolving the disputes or misunderstandings that may arise in the course of the business.
Legal importance of silent partnership agreement in South Africa: While running a joint venture in South Africa in which a silent partner is involved, drafting and signing a silent partnership agreement becomes very important. It comes under the South African Companies Act, 1973. This partnership contract helps all partners involved in a silent partnership to determine the duties or responsibilities of each partner and also to define the procedures to resolve the disputes in this partnership in a mutually agreed fashion without going to the court. This silent partnership agreement is drafted by the mutual consent of all partners and helps them to run the business without experiencing any sort of disapproving situation. This agreement clearly states the responsibilities of the silent partner that he is supposed to provide financial investment and the other partner will work hard while participating in the managerial duties and will tackle day to day affairs to run the business. With the help of this silent partnership agreement, all partners will be able to resolve their disputes easily in a peaceful manner instead of going to the court in South Africa. This silent partnership agreement is comprised on the following major points.
Name of Business
Location or physical address of business
Nature or the business
Contributionsfrom partners (time, money, property etc)
Profit/loss sharing ratio
Responsibilities of all partners (silent and others)
Decision making
Termination of the agreement
In a country like South Africa, it is very important to draft a silent partnership agreement which plays a vital role in the smooth sailing of a joint venture and helps all parties to resolve their conflicts rather easily.
Net Lawman are adept in providing all kinds of silent partnership agreement templates which are highly beneficial for people who are going to start a silent partnership as these templates are drafted in a comprehensive and easy way in plain English which can be edited easily according to the requirements of people.
Rule 26(2) of the Central Excise Rules, Is it retrospective
Vide Notification No. 8/2007 (N.T.) dated 01.03.2007, Rule 26 was amended and provision was added to penalize abatement of taking of inadmissible cenvat credit by making documents like invoices, transport documents etc. The Rule reads as, Rule 26(2): Any person, who issues – (i) an excise duty invoice without delivery of the goods specified therein or abets in making such invoice; or (ii) any other document or abets in making such document, on the basis of which the user of said invoice or document is likely to take or has taken any ineligible benefit under the Act or the rules made there under like claiming of CENVAT credit under the CENVAT Credit Rules, 2004 or refund, shall be liable to a penalty not exceeding the amount of such benefit or five thousand rupees, whichever is greater. The purpose of this paper to examine whether the rule can be applied retrospectively and can the past offences be penalized either through retrospective operation of these rules or on argument that such offences were already punishable under Rule 25 of the central Excise Rules, 2002. The Notification No. 8/2007 (N.T.) dated 01.03.2007 says that, After sub rule (1), the following sub rule shall be inserted:- The term -insert- has been defined in Webster Comprehensive Dictionary as -to put or place into something else-, -to introduce-. Oxford Dictionary also defines the term as -put something into something else-. A mere reading of the meaning of the term -insert- suggest that this is a new offence is being created and it cannot be applied retrospectively. The letter of the Joint Secretary (TRU) , explaining the changes states that, in clause 30(f) -A new sub rule (2) has also been inserted to provide for penal action against the person-.- It is seen that this is a new clause to -provide for- penal action. It is clear from this letter too that it is a new rule, which cannot be applied retrospectively. It is to be seen that the rule provides for penalty, a new burden on subjects. Whenever a new burden is imposed on the subjects, without amending the earlier clauses, it is presumed that the new burdens will operate retrospectively. While applying this principle of interpretation of statute the tribunal held in Cameo corporation [2008 (11) STR 161], -It is the consistent view of this Tribunal, where a new category of service is introduced for levy of service tax without amending the definition of a pre-existing category of service in which a given service answering the requisites of the new service is sought to be included by the Revenue for the prior period, there can be no levy of service tax in respect of the given service in the pre-existing category. This position has been made abundantly clear in umpteen number of decisions of this Bench also. In the result, the demand of duty on the gross amount collected by the assessee as consideration for what the Revenue considers as -Business Auxiliary Service- is set aside.- In view of this it is clear that the rules cannot be applied retrospectively. Further, as Rule 25 has not been amended, it cannot be argued that such offences were already part of Rule 25 of the Central Excise Rules. It is to be seen that penal statutes which creates offences or which have the effect of increasing penalties for existing offences will only be prospective by reason of the Constitutional restriction imposed by Article 20 of the Constitution . In Pyare Lal Sharma v. MD, J&K Industries Ltd. , the Supreme Court held that unauthorized absence as ground for termination applies only after the amendment making such ground. Unauthorised absence prior to the date of amendment cannot be considered for termination. It is further submitted that Rule 26 and its amendments are delegated legislation. In the field of subordinate legislation, the courts have taken a consistent view that while a legislature may enact laws with retrospective effect, a delegate cannot exercise a similar power and gives retrospectivity to the Rules made by it unless the parent statute gives it a power to do so either expressly or by necessary implication. In view of this this author is of the opinion that Rule 26(2) is prospective in operation and cannot be applied to past transactions.
[Top]Its the business, stupid bringing strategy tools into the practice of law
A lawyer who has not studied economics is very apt to become a public enemy” Brandeis J. Law schools do not generally teach anything about business, as opposed to business law. As a result, lawyers learn about business legal forms and contracts, but nothing about the non-legal imperatives of running a business like corporate finance, marketing, or corporate strategy. Furthermore, as members of an inherently conservative profession many lawyers resist engaging in any topic that goes beyond the four corners of their legal brief (“I only give legal advice”).
This is highly problematic for business, because every legal problem comes within a business context, and lawyers who are not willing or able to understand that context cannot give good advice; Brandeis J.s dictum is as applicable with respect to business knowledge as it is with respect to economics, and there remains a significant knowledge gap between the practice of law and the practice of business.
In some cases lawyers address this knowledge gap by specializing not only in a particular field of law but also in a particular industry, and in this way they develop industry expertise in substitution of more general business knowledge. At the same time the scale of the knowledge gap can be masked by the natural hubris of the legal professionlawyers who are at the pinnacle of every information and decision making-tree they are associated with can suffer from the illusion of knowing more, not less, than their clients.
A great deal has been written about alternatives to lawyers billing by the hour, or lawyers working from home instead of at a desk in a big law firm, but in my view these topics are relatively trivial. A much more significant topic is bringing business financial and strategy tools into the practice of law in order to develop a multi-disciplinary approach to the delivery of legal services.
In a litigation context for example the focus of lawyers should not be on winning their clients case but on solving the underlying business problemsthe disputes which were the reason clients came to them in the first place. One very simple example of this would be to compare the cost of litigation with the cost of buying the other sides companyif the two numbers bear some similarity then a rare opportunity for a litigator to participate in value creation instead of value destruction may exist.
Business clients want to know how much their case will cost, how long it will take, what the risks are, and the probable result. These four basis elementscost, risk, time, and reward, are the foundation of the financial analysis of any business proposal, and there is no reason why lawyers cannot make reasoned and reasonably reliable assessments of these elements in any given legal contextthe law is no more uncertain than many projects undertaken by business, and in many cases is substantially more certain.
Once we have attached numbers, or a range of numbers, to the four elements then we can financially model them the same way we can model any other business proposal. We can start with a simple spreadsheet comparing cost to risk-discounted reward, or add time to give a net present value calculation (which will show how high the reward would have to be to justify the risk over time, all other things being equal). Nor does it stop therewe can go on to decision tree modeling to assess the value of certain choices and options, and use sensitivity analysis or tornado diagrams to identify the assumptions in the model around which most of the risk in the model revolves; this in turn allows us to go back and further assess the assumptions.
I am aware of no lawyers anywhere in the world who consistently adopt this multi-disciplinary approach in their practices. Discovering such lawyers, and developing a framework with readers to put some flesh on the bones of this theoretical multi-disciplinary approach, is a key objective of this Journal.
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