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colonies. 14 The emergence of companies such as East India Company, Virginia
Company, Bermuda Company and numerous others were for the purpose of foreign
trade and to found colonies on behalf of the Crown. 15 These companies strove for
friendly relations with local tribes and leaders while establishing posts for trade. 16 In
exchange, companies provided protection against pirates and hostile natives. 17 Over
time, there the need developed to shift trading risks from individuals, and trading
ventures were set up which prompted the grant of legal status by Acts of Parliament
or Royal Charters. 18
At the domestic level, trade continued to develop on the basis of partnership which
had its roots of origin in Roman law, known as societas and commenda until the end
of seventeenth century. 19 Until then, joint ventures in domestic trade seldom used the
corporate form though later they became beset with enforcement problems. In the
event of dispute, all partners had to be joined together and any error meant that
proceeding had to begin afresh. 20 In addition, disputes among partners often ended
up in dissolution, which would create uncertainty and would not command business
confidence. 21 Therefore, the idea of a corporation began to be an attractive solution
to barriers of commercial viability.
Societas was a form of partnership in which each partner shared profits and losses in
proportion to his contributed shares, but his liability to outsiders remain unlimited.
14 Cooke above n9 at 209; William R. Cornish and Geoffrey de N Clark Law and Society in England
1750-1950 (Sweet & Maxwell, London, 1989) at 248.
15 Ibid.
16 Cornish and Clark above n14 at 248.
17 Ibid.
18 Farrar and Hannigan above n7 at 16.
19 Cooke above n9 at 195.
20 Cornish and Clark above n14 at 248- 249.
21 Ibid.
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