Topic 1: Partnerships

Question 1

What is a partnership?

Answer 1

An agreement between 2/more persons where each makes a contribution to a business that is carried jointly in order to make a profit.

Question 2

The formation is done?

Answer 2

Through a partnership agreement

Question 3

Characteristics?

Answer 3

Each partner makes a contribution
With profit as an objective and
Partners all jointly benefit

Question 4

Contribution example?

Answer 4

-Skill
-Money
-Asset
-Labour
or variant of things

Question 5

General principles?

Answer 5

-There needs to be an agreement for a valid contract.
-Partnerships require a min of 2 and a max of uncountable people
I-Not a juristic person. No legal personality

Question 6

Consequences of not being a juristic person?

Answer 6

-No distinction between partnership and its members
-Partners own the asset.
-Partners are liable for the debt to creditors
-Rights and duties in the partnership s that of the partners.

Question 7

Exceptions to a partnership not being a juristic person?

Answer 7

If the partnership is seen as a separate juristic person.
Litigation:
All partners can sue and be jointly sued in their name
and the name of the partnership.

Question 8

Exception 2:

Answer 8

Sequestration/ Insolvency:
-If partnership = sequestration then partners are too
-Partnership assets belong to the partnership’s creditors
-Personal assets belong to personal creditors.

Question 9

Rights and duties in partnership:

Answer 9

Right to:
-share in profits. Profits shared based on agreement.If there is no agreement, then the value of each contribution is measured. IF there is no value, then profits are shared equally.

Question 10

Rights and duties in partnership (2);

Answer 10

Right to:
-Compensation: Not entitled. May not ask compensation for labor, skill, rent, or interest in the partnership.
-Partners may agree on a form of compensation but are entitled to compensation for expenses or losses.

Question 11

Rights and duties in partnership (3);

Answer 11

Right to;
-Management of the business. All partners may participate. Equal share in management rights. However, they may make other agreements regarding management.

Question 12

Rights and duties in partnership (4);

Answer 12

Right to;
-Representation. Every partner may represent the partnership in transactions within the partnership business.
-There must be a mutual mandate.

Question 13

Rights and duties in partnership (5);

Answer 13

Right to ;
Access management information. Each partner has the right to access accounting records held at the main business building. A rep may be appointed to inspect accounting records.

Question 14

Rights and duties in partnership (6);

Answer 14

Right to;
-use partnership assets. Not for personal usage unless consent is given. A joint decision regarding the sale of assets.

Question 15

Duties of partners (1):

Answer 15

Contribution: Each partner should contribute what they undertake to do as a contribution.

Question 16

Duties of partners(2):

Answer 16

Share in the losses but may agree on some partners
not sharing losses. Losses are also shared the way profits are shared.

Question 17

Duties of partner(3):

Answer 17

Care:
-Avoid conflict of interest.
-Special care in personal matters.

Question 18

Duties of partners(4):

Answer 18

Bonafide (good faith)
-Transaction in partnership business must transfer profits to partners.
-Information must be disclosed to partners.

Question 19

Relationship with 3rd-parties?

Question 20

Relationship with 3rd-parties: criminal liability:

Answer 20

-Partnership cannot be prosecuted
-Partners can be prosecuted personally.
-If 1 partner commits a crime then other partners can be prosecuted unless they are not a party to the offence.

Question 21

Relationship with 3rd-parties: Liability for debts?

Answer 21

-Jointly liable by all partners during the existence of the partnership.

-After dissolution: Partly and separately liable

Question 22

Dissolution of partnership… (1)

Answer 22

-Dissolved through;
-Agreement
-Expiration of term
-Completion of business
-change in member, death, or even retirement

Question 23

Dissolution of partnership… (2)

Answer 23

Dissolved through;
-A court order
-Sequestration
-Breach of relationship of trust
-Personal circumstances