J K Kinoti v G J Kibanga [2013] KECA 85 (KLR)
The bottom line
#The Court of Appeal ruled that intending to be business partners is not enough — you must actually share profits, losses and capital to claim a partnership in Kenya.
What this practically means
#Executive summary
#Key legal issues
#Whether a partnership existed between the appellant and the respondent under the repealed Partnership Act (Cap. 29)
No partnership existed. The appellant's conduct was that of an agent earning commission on sales; he neither shared in profits or losses nor contributed capital. The appellant being a signatory to the business bank account did not of itself infer a partnership, and the letter of 17th July 1989 did not acknowledge him as a partner. The mere intention to incorporate a company or form a partnership cannot warrant a declaration that a partnership exists.
Applying section 3(1) and section 4 of the repealed Partnership Act, the Court tested whether persons carried on a business in common with a view of profit. Receipt of a share of profits is only prima facie evidence of partnership and remuneration of an agent by a share of profits does not of itself make the agent a partner. The evidence - commission-based sales, sole proprietorship registration, capital of Kshs 400,000 never contributed, and the company never incorporated - pointed to agency, not common venture. As a first appeal the Court re-assessed the evidence and reached its own conclusion, affirming the trial court's dismissal of the suit.
The standard of proof of an oral partnership agreement
An oral partnership agreement is legally cognisable, but the party asserting it must prove its material terms, which may be proved by the parties' conduct, the mode they dealt with each other and with other people.
The trial judge had been faulted for holding there was no agreement to form a partnership. The Court clarified that absence of a partnership deed is not fatal since agreements may be oral, following Mworia & Another v Kiambati. However, the evidential burden remains on the claimant. Here the appellant failed to prove shared profits, losses or capital contribution, so even assuming an oral agreement was alleged, it was not proved on a balance of probabilities.
Legal principles established
#- A partnership agreement may be oral or in writing, but a party claiming an oral partnership bears the burden of proving its material terms, which may be established by the parties' conduct and mode of dealing.
- It is the conduct of the parties to a business that determines whether a partnership exists; mere intention to form a partnership or a company does not of itself create a partnership.
Court orders
#- 1.The appeal is dismissed with costs to the respondent
- On appeal from
- High Court of Kenya at Meru
- H.C.C.C No. 216 of 1989
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Appellate Jurisdiction Act (successor jurisdiction to the repealed Constitution's Court of Appeal; judgment pre-dates the 2010 Constitution's appellate provisions)
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (4)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Ruth Chepkemoi Chesimet & another v Kipkurui Arap Chepwony [2018] KEELC 2845 (KLR)[2018] KEELC 2845 (KLR)9 May 2018applied
- Ruth Chepkemoi Chesimet & another v Kirui Arap Chepwony [2018] KEELC 3432 (KLR)[2018] KEELC 3432 (KLR)9 May 2018applied
- Hellen Wangari Wangechi v Carumera Muthoni Gathua[2015] KEHC 1758 (KLR)26 Oct 2015
- Jane Wanja Gahiengo v David Wanjohi Kamau & another [2014] KECA 677 (KLR)[2014] KECA 677 (KLR)20 Mar 2014applied
Cite this brief
#Cite this brief
Caselaw, "J K Kinoti v G J Kibanga [2013] KECA 85 (KLR)", Case Analysis (2013). Civil Appeal No. 343 of 2010. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2013/85/eng@2013-12-10
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.