Commandite, SOCIÉTÉ EN, or PARTNERSHIP IN

Commandite, SOCIÉTÉ EN, or PARTNERSHIP IN, an expression used for at least two centuries in France, to express a partnership in which one may advance capital without taking part in the management of, or incurring further liability in connection with the business. The term 'sleeping partner' used in this country would nearly express the same idea, were it not for the attendant unlimited liability. The phrase is derived from the old meaning in the commercial nomenclature of France of the word commande, which was applied to the authority given to one person to transact business for another. The working partner had a commande from him who merely advanced capital. The term has acquired importance in political economy, because the law of France exempts the sleeping partners from responsibility beyond the amount they agree to be responsible for. On the other hand, by the law of the United Kingdom, every member of a partnership is liable for all its debts; limitation of liability being only obtainable by incorporation under the Companies Acts. Hence, in the discussions about the question, whether it would be prudent to relax this law, and permit persons to invest money in trading companies without undergoing this responsibility, such companies were called 'partnerships in commandite.' Proposals have from time to time been made in Britain to establish a system of limited partnerships independently of the Companies Acts. The Act 28 and 29 Vict. chap. 86, 5th July 1865, permits loans to trading firms in consideration of a share of the profits, without involving partnership liability. The contract must be in writing, and the lender ranks in a bankruptcy after other creditors.