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F E Smith
F E Smith, Advocate
Category: Law
Satisfied Customers: 9032
Experience:  I have been practising for 30 years.
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WE HAVE AN AGREEMENT DRAWN BETWEEN THE PARTNERS WHEREBY ONE

Customer Question

WE HAVE AN AGREEMENT DRAWN BETWEEN THE PARTNERS WHEREBY ONE OF THE PARTNER IS REQUIRED TO FUND FOR:
SALARY/TRAVEL EXPENSES OFFICE ETC. MOST IMPORTANT CLAUSE WHERE WE NEED ADVICE IS THAT FUNDIN TO BE PROVIDED TO ACHIEVE MINING LEASE/LICENCE. WE HAVE OBTAINED THE MINING LEASE BUT NOT MINING LICENCE...CAN YOU ADVISE IF PARTNER HAS TO FUND THE COSTS FOR ACHIEVING MINING LICENCE?
Submitted: 9 months ago.
Category: Law
Expert:  F E Smith replied 9 months ago.

Could you explain the background detail to this please and the problem in depth?

F E Smith, Advocate
Category: Law
Satisfied Customers: 9032
Experience: I have been practising for 30 years.
F E Smith and other Law Specialists are ready to help you
Customer: replied 9 months ago.
Can I call you or you can ca
Customer: replied 9 months ago.
We have a mining concession in Ghana. We are three partners in all now. 2 of us carried the project as much as we could. We brought in a third partner who was given 33% Shares and further 18% upon him providing the funds for all the expenses to achieve Mining Lease/Licence.
We have been granted a Mining Lease where we need your opinion is Does the Partner needs to provide funds to achieve Mining Licence?
Customer: replied 9 months ago.
Sorry I did not know I have to pay £44 for Phone Converstion. Please cancel the request and refund £44. I am happy to deal with you by writing
Expert:  F E Smith replied 9 months ago.

I was with the client when the telephone request came in.

It should have now cancelled. If you contact admin, they will refund you.

I can only answer you based upon English law.

If there is no partnership agreement, then the partnership is governed by an piece of legislation, the Partnership Act 1890

In it, there is no provision for retirement or death and no provision for holidays what happens if the partners put an equal amounts of investment into the business.

Hence, profits would be split 3 ways in this case regardless of what capital each partner put into the business and regardless of what effort each person put into the business.

There is no obligation to put any money into a business partnership unless there is an agreement directly saying what needs to go in.

Are you able to attach a copy of whatever agreement you have with regard to the initial investment, the shares and the further 18%?

Customer: replied 9 months ago.
Give me your email ID I can do it tommorrow so that you will understand the issue which we have. Your reply is totally on different subject. Laws of Ghana are based on UK laws.
Expert:  F E Smith replied 9 months ago.

The reply is a response to your question about whether the partner leaves to provide funds to obtain the mining licence.

I talk about money going in and money going out.

The penultimate sentence says “there is no obligation to put any money into a business partnership unless there is an agreement directly saying what needs to go in”

you can attach the document on here and I will be able to read it once it arrives.

Customer: replied 9 months ago.
Under the Contract....Atlas were required to pay for:
1. achieving Mining Lease/Licence
2. Deposit funds into separate account for Expenditures to be sanctione by the Directors jointly
3. Pay all the Outgoings for Salary/travel etc.
I need your advise on "Mining Lease/Licence".TERMINOLOGY....DOES THIS IMPLY HE HAS TO PAY FOR ACHIEVING MINING LEASE AND MINING LICENCE?In mining one is granted a Mining Lease of 15 years, than one needs to obtain a Mining Licence.
Our Funder has delivered the Mining Lease but not Mining Licence
Is my interepretation correct that he has to PAY TO deliver the Mining Licence? and has he breached the term of the agreement by not putting the funds in GEM GV Account? HEHAS ALSO NOT PAID SALARY TO ONE OF THE EMPLOYEE?ATTACHED IS THE 3 PAGE CONTRACT, PLEASE NEED YOUR WRITTEN DIRECTIONS
RegardsC J Rabheru
Expert:  F E Smith replied 9 months ago.

In English law, a memorandum of understanding is not binding. It is just what it says, a memorandum of understanding. There is case law on that.

This memorandum has been very badly drafted you might want to go back to whoever drafted it for you advised your it in the first place.

The memorandum of understanding would form the basis for an agreement between you which would be a formal partnership agreement if it was a partnership.

However now, having seen the document, it is not a partnership but a limited company and hence you don’t need a partnership agreement you need a shareholders agreement and a directors service agreement.

Clause 3 of the Memorandum for some reason it does say mining lease/licence rather than a lease and a licence which are two separate things.

It refers in that clause to JK having the liability, but there is no mention anywhere in this memorandum who JK actually is. The first reference I can see JK is in clause 3 but it still doesn’t say who JK is.

It also doesn’t help you is in the beginning of clause 4 it quite clearly says that the proposed Joint Venture is conditional on a whole load of things and is no mention of whether any of those have been satisfied.

I’m sorry to say but I don’t think this document is enforceable because it’s a mishmash of disjointed phrases and obligations. As I said earlier, I would go back to whoever drafted it with a view to bringing a negligence claim against them if you can’t get the issue resolved properly.

Can I clarify anything else for you?

Please rate the service positive. It is an important part of the process by which experts get paid. It does not cost you anything but helps us greatly.

Best wishes.

FES

Customer: replied 9 months ago.
HI
MY SIMPLE QUESTION TO YOU IS DESPITE THE AGREEMENT BEING WISHY WASHY UNDER CLAUSE "D" IS ATLAS RESPONSIBPLE TO PAY FOR MINING LICENCE?.........EVERY WHERE IT SAYS MINING LEASE/LICENCEI AM ATTACHING THE FULL AGREEMENT
Expert:  F E Smith replied 9 months ago.

In my opinion, the memorandum is not enforceable. If it was an agreement rather than a memorandum of understanding, I think it would do exactly what you are looking for an enforceable. However there is a fundamental difference between the documents as you will see here in the second paragraph

http://www.lawteacher.net/free-law-essays/contract-law/memorandum-of-understanding.php

Customer: replied 9 months ago.
ARE YOU IMPLYING THAT THIS MOU IS NOT ENFOREABLE BY BOTH PARTIES? WE ARE NOT REQUIRED TRANSFER 51% OF THE SHARES OR ADDITIONAL 17.67% OF THE SHARES?
Customer: replied 9 months ago.
MY DRAFT LETTER TO ATLAS ADVISE PLEASE
Expert:  F E Smith replied 9 months ago.

If it isn’t enforceable one way, then it is not enforceable the other.

Hence, if he argues that it’s not enforceable then he doesn’t have to pay anything but you get your shares back.

If however you have transferred the shares are already, there is clearly an agreement between you albeit not this one.

What you then have is a verbal or informal agreement, the terms of which are not written down.

Whilst you would not be relying on the Memorandum itself in the terms of an agreement, what you would then be doing is relying on it is evidence of what the informal agreement was.

You transferred the shares and he must pay the money.

If you had not transferred the shares and didn’t want to, it is unlikely that he could make you even if he wanted unless he produced the lease and the licence.

I am familiar with the difference. The lease gives you the land but doesn’t give you the right to mine it. What you need once you have the land is the licence to mine.

What should happen is that the transfer of shares should be conditional upon the lease under the licence. It is a three-way thing.

If he will not provide further funding in respect of the licence, and he has the shares, you are entitled to sue him for the extra funding which he has committed to using the memorandum as evidence of what was agreed.

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