4. Form of syndicate agreentent.—As in the case of the partnership no specific form of agreement to he used for the syndicate is established; the agreement may be oral or it may be in writing. It is said that syndicates in which the business involved millions of dollars have been arranged over the telephone. Fre quently, in the big syndicates including the financial houses of New York, whose purpose is to underwrite the sale of securities, preliminary arrangements are made by telephone and the understanding arrived at is then confirmed by an exchange of letters. Some times the agreement is more formally set forth in a written or printed contract to which the members sub scribe.1 5. Administration, of the the property of a syndicate is managed in the name of one person, who holds it in trust for the other members. Everything concerning the syndicate is then arranged for by this so-called manager. In the syndicate agree ments used in ordinary financial transactions a clause like the following is frequently found: The Syndicate Managers may sell to any subscriber any bonds or temporary' certificates held hereunder, and any such subscriber may make any purchase of bonds or temporary certificates from the Syndicate Managers. The Syndicate Managers shall have absolute control over the disposition of all bonds and any temporary certificates held by them hereunder, subject to the provisions hereof. They shall have sole direction and management and entire control of the Syndicate, and shall have exclusive power to determine whether and to what amount or amounts and at what time or times the option of purchase above mentioned shall be exercised. They shall be sole judges, in behalf of the Syndi cate, as to the form and terms of said bonds. The enumera tion of particular or specific powers in this agreement shall not be considered as in any way limiting or abridging each power and discretion intended to be conferred upon and re served to the Syndicate Managers, in order to authorize them to do any and all things proper, necessary or expedi ent, in their discretion, to carry out the purposes of this agreement. The Syndicate Managers shall not be liable for
any error of judgment, or for any mistake of law or fact, or for anything except gross negligence or bad faith. Each subscriber nominates and appoints the Syndicate Managers, his agents and attorneys irrevocably until the termination of this agreement, to enter into or execute any and. all ar rangements or agreements deemed by the Syndicate 'Man agers expedient or necessary to said agreement for the pur chase of said bonds by the Syndicate and the issue of the temporary certificates herein referred to, and to accomplish the objects and purposes of the Syndicate; and each sub scriber hereby- ratifies and assents to any action of the Syn dicate Managers taken under this agreement, and agrees to perform his undertakings herein, from time to time, promptly on the call of the Syndicate Managers, to the full extent of his portion of the entire Syndicate liability.' 6. Menibers cannot bind the syndicate.—Unfortu nately the legal relationship arising out of a joint adventure is not defined in the common law, and one who examines the cases which relate to the subject will be struck by an apparent confusion in the minds of the courts before whom these agreements have come. Some of this confusion is due to the fact that the agreements are by no means uniformly worded, and that the courts therefore construe each one as it comes before it. It is generally conceded, however, that when an agreement provides that the members are not partners, and when the property is held by the managers who are given authority to control it, no member can bind the syndicate by a contract with a third person. Unlike the case of the partnership, - . .
therefore, each member is not a general agent within the scope of the syndicate business. This form of