RE: Legal Opinion on the matter of signing Tripartite Agreement with Company 1.
We refer to your letter dated 03 may 2007 on the above subject.
On perusal of the instructions given in your letter and documents provided it appears that BANK 1 (“the Bank”) have offered a home loan in favour of a borrower for purchasing an apartment from Company 1. However, as it will take some time to complete and register the apartment in favour of the borrower, Company 1 wants disbursement of the loan through a tripartite agreement to be executed amongst Company 1, the borrower and the Bank.
Company 1 is a consortium of two limited companies being COMPANY 1. In this regard, you have provided us with a copy of not arised Consortium Agreement date 01 June 2001, the Memorandum and Articles of Association of the partner companies and the Trade License of Company 1.
In these circumstances, you require our legal opinion as to whether Company 1 is a legal entity, which has the power to enter into the tripartite agreement.
A Consortium is in effect a partnership formed by more than one Partner. The Partners could be legal as well as natural persons. In this instance the partners are both legal persons. As partnership firms have the power to enter into contracts, Company 1 has the power to enter into the tripartite agreement.
From the provided documents it is not apparent as to whether or not Company 1 is registered with the Register of Joint Stock Companies and Firms. If the partnership firm is registered then it can sue third parties and third parties may also sue the partnership. On the other hand, if the partnership firm is not registered then third parties shall have to sue all the partners of the partnership individually.
Clause 10 of the Consortium Agreement empowers the Managing Partner to execute all agreements between third parties with Company 1. However, prior to execution of any agreement with Company 1, Company 1 shall be required to furnish to the Bank a resolution passed by both partners authorising the Managing Partner to negotiate the terms of the Tripartite Agreement and to execute all documents and papers in connection therewith for and on behalf of the partnership.
We are of the opinion that, the Bank may enter into the tripartite agreement with Company 1 and the Borrower provided Company 1 provides the Bank with a copy of the above mentioned resolution.
If you have any further query, please do not hesitate to contact us.
For: “The Lawyers & Jurists”