LAW OF PARTNERSHIP

 THE PARTNERSHIP AS BUSINESS FORM

PARTNERSHIP AGREEMENT

Required for 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)

3rd 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