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LAW OF PARTNERSHIP PowerPoint PPT Presentation


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LECTURE 1. LAW OF PARTNERSHIP. THE TERM PARTNERSHIP. Different meanings: Agreement giving rise distinctive legal relationship Specific legal relationship arising from agreement Association of persons created by agreement. THE TERM PARTNERSHIP. Agreement / contract

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LAW OF PARTNERSHIP

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Lecture 1

LECTURE 1

LAW OF PARTNERSHIP


The term partnership

THE TERM PARTNERSHIP

  • Different meanings:

    • Agreement giving rise distinctive legal relationship

    • Specific legal relationship arising from agreement

    • Associationof persons created by agreement


The term partnership1

THE TERM PARTNERSHIP

  • Agreement / contract

  • 2-20 (influence of new Companies Act)

  • Contribution

  • Joint benefit of parties

  • Profit


Characteristics

CHARACTERISTICS

  • Number of partners:

    • 2-20 partners

    • Not only one member

  • Object of the partnership:

    • Material or patrimonial benefit

    • See Ally v Dinath: “gemeenbaattrekken”


Characteristics1

CHARACTERISTICS

  • Associative element:

    • affectio societatis = working together as equals to make profit

  • No legal personality:

    • Contractual association of persons

  • Informal formation:

    • No formalities

    • No registration

    • Oral, written agreement

    • Tacitly through conduct


History

HISTORY

  • Oldest

  • Traced back to Greek, Roman and Roman Dutch law

  • Influenced development of other business forms/law


Sources of law

SOURCES OF LAW

  • Legislation

    • No Act

    • Other legislation e.g. Attorneys Act etc

    • At the moment no project to codify law of partnerships

  • Common law

    • Based on Roman Dutch Law

    • Jurists like Grotius, Van der Linden, Van Leeuwen and Voet

    • Appeal Court in Robson v Theron = Potier


Legal nature

LEGAL NATURE

  • Internationally: Entity theory and aggregate theory

  • Entity theory

    • USA, Netherlands, Scotland

    • Partnership independent from members

    • Own rights and obligations; assets and liabilities

    • Party to litigation (sue and be sued in own name)

    • Partners still responsible for debt

  • Aggregate theory

    • South Africa

    • Partnership merely a contractual association of persons

    • Rights and obligations; assets and liabilities those of partners

    • No party to litigation

    • Partners responsible for debt

    • Dissolves when members change


Legal nature1

LEGAL NATURE

  • Theories not followed dogmatically, exceptions to aggregate theory

  • Litigation

    • Individual partner not sued for partnership debt during subsistance

    • Individual partner cannot enforce partnership claim

    • In principle partners sued jointly in own names during subsistance

    • However Rules of Court: may be sued in business name; first assets of partnerships, then assets of partners

  • Sequestration

    • Insolvency Act treats partnership as seperate entity

    • Partnership sequestrated – ordinary partners’ estates + partnerships are sequestrated

    • Process


Types

TYPES

  • Type 1: Universal partnership

    • Societas universorum bonorum

      Partnership of all property

      Partnership of all property owned as well as future property (business and other)

      Usually a cohabitive relationship

      Schrepfer v Ponelat

    • Societas universorum quae ex quastu veniut

      Partnership of all profit

      Contribute all profits from business

      More accurate: general trading partnership


Types1

TYPES

  • Type 2: Extraordinary partnerships

     Liability limited in some or other way

    Should have ordinary partner

    Limited liability can be lifted

    Silent partnerships

    Partnerships en commandite


Types2

TYPES

  • Silent partnership:

    • Partnership in name of some partners

    • Not liable whole debt to creditors

    • Pro rata liable towards partners for losses

  • Partnership en commandite

    • Same as silent partnership

    • Fixed profit share

    • Only liable for losses to a fixed amount


Ally v dinath

Ally v Dinath


Ally v dinath1

Ally v Dinath

  • Lived together in an Islamic relationship

    Plaintiff claimed assets, labour, income pooled

  • Q1: Was a universal partnership tacitly created?

  • Q2: Not intened to make profit

  • Q3: Tacidly terminated


Ally v dinath2

Ally v Dinath

  • Q1: Was a universal partnership tacitly created?

  • Q2: Not intened to make profit

  • Q3: Tacidly terminated

  • Yes

  • Dismissed – savings costs

  • Yes – relationship irretrievably broken down


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