Chapter 17

Question 1

Define Partnership?

Answer 1

A partnership may be defined as a ‘legal relationship’ created by way of a contract between two or more persons, in terms of which each of the partners agrees to make some contribution to the partnership business, which is carried on for the joint benefit of the parties and the object of which is to make a profit.

Question 2

Types of Partnerships

Answer 2

-Ordinary
-Particular
-Extraordinary
-Universal

Question 3

Universal Partnership

Answer 3

A universal partnership involves partners contributing all their property or all their profits to the partnership, usually for an open-ended period and for wide-ranging purposes, with a commensurate sharing of the profits of their enterprises.
Example; Marriage in community of property (or a similar relationship) is a
partnership universorum bonorum, but universal partnerships also occur in commercial undertakings.

Question 4

Particular partnership

Answer 4

A particular partnership will usually be a more
temporary and focused arrangement, in terms of which partners contribute their resources for a particular defined purpose only and share only in profits from that particular project together.

Question 5

Ordinary Partnership

Answer 5

In an ordinary partnership, partners are jointly and severally liable for all of the debts of the partnership.

Question 6

Extraordinary Partnership

Answer 6

The liability of partners in an extraordinary
partnership is limited in some way.

Question 7

There are three forms of extraordinary
partnership:

Answer 7

a) An anonymous partnership has at least one partner whose name is not disclosed to the public and who is not liable to third parties for the
debts of the partnership, but is liable to the other partners to the extent agreed between the partners.

b) A partnership en commandite has undisclosed partners who make a fixed contribution and who are not liable to other parties beyond that fixed commitment.

c) A special partnership (a form of partnership registered under a now-repealed Act) has general partners (who are jointly and severally liable
for the debts of the partnership and are the only persons authorised to transact the business of the partnership) and special partners (whose names are not disclosed and who are not liable beyond an agreed specific contribution)

Question 8

The four essential elements of partnership are that:

Answer 8

1. each party makes an appreciable contribution to the partnership;
2. the business is carried on for the joint benefit of the partners;
3. there should be a profit objective; and
4. the contract between the parties should be a legitimate contract made with the intention of establishing a partnership.

Question 9

Aggregate theory of partnership

Answer 9

South African law adopts the aggregate theory of partnership, which does not regard the partnership as having separate legal personality from its members.
The partners own the partnership property as co-owners and the rights and liabilities of the partnership are also the individual partners’ rights and liabilities. Thus, a change of partner destroys the identity of the partnership

Question 10

A partnership may be dissolved or terminated by:

Answer 10

a) effluxion of time;
b) the end of the undertaking;
c) mutual agreement between the partners;
d) change in the membership of a partnership (a new partnership may be
agreed to);
e) insolvency of the partnership or any of its members;
f) notice of dissolution given by one of the partners;
partners becoming alien enemies on or after the outbreak of war; or
g) order of court granted upon application of one or more of the partners for good cause.