THE PARTNERSHIP AS BUSINESS FORM LAW OF PARTNERSHIP

THE PARTNERSHIP AS BUSINESS FORM LAW OF PARTNERSHIP

PARTNERSHIP AGREEMENT Required formation of contract General requirements for valid contract Contractual capacity (minor; companies) Consensus Lawfulness (Companies Act; Certain professions) Performance possible Formalities

ESSENTIAL ELEMENTS Joubert v Tarry (1915) – relied on Pothier 1. Contribution Commercial value Money, expertise, usage, goods 2. Profit as object Patrimonial benefit ( also prevent expenses, etc) De Groot: “gemene baat te trekken” Charitable organisations 3. Do business for joint benefit Business = time, labour, atention Patrimonial benefit Right to share in profits Not necessary to share equally Sensible to stipulate in contract sharing of profit 4. Legitimate purpose

ESSENTIAL ELEMENTS Bester v Van Niekerk (1960) Fourth element dropped How do we know whether a partnership was formed? Joubert v Tarry Facts (Joubert, Gascoyne; Bellevue Colliery; Tarry) Presence of essentialia “Makes no difference what the parties have called it”

ESSENTIAL ELEMENTS Pezzutto v Dreyer (1992 Court of Appeal) Confirmed the four essentiala Contribution need not be the same; something “appraciable” Business need not be a continuous one (project/venture) If 4 elements are present – partnership – unless intention different Conclusion: 1. Essentiala present 2. Intention of the parties Critique: too much attention on intention and not on associative element

NATURALIA Proportion in which profits are shared If there is an agreement If there is no agreement Proportion in which losses are shared Exemption agreement No exemption agreement Power of representation Agreement No agreement Compensation for contribution No compensation for contribution – profit sharing Co-ownership

PARTNERSHIP FUND Conributions form part of partnership fund Ownership = forms part of partnership property Use = right of use forms part of p/s property Co-owners of assets of fund in joint undivided shares Size of share depends on agreement /profit/equal 4 books are contributed by four partners Practical importance dissolution or liquidation Does something form part of partnership fund? (agreement/intention) 3 rd parties = transfer in terms of law of things Constructive delivery

RESTRICTED USAGE Partnership asset only use for partnership purpose Own use = liable towards partnerships Permission