Partnerships

Question 1

General principles

Answer 1

1. consensus/Agreement
2. Contractual capacity
   -Minors may not be in partnership
   -Unrehabiltated insolvents require consent of trustee
   -Companies and CC may be part of partnerships
3. Legality
4. Physical possibility of performance
5. Contractual formalities

Question 2

essentialia

Answer 2

1) Every partner makes a contribution
2) Profit as objective
3) Intention to work together on an equal basis
4) For the joint benefit of partners

Question 3

Litigation

Answer 3

-The rights and duties of the partnership are that of the partners COLLECTIVELY.
-When suing the partners must sue in their own name AND the name of the partnership
-If the partnership’s estate is sequestrated: So too is every partner’s estate.
-The partner being sequestrated estate is first liquidated then the collective partners estate and after that the other partners personal estates

Question 4

Rights and duties:

Answer 4

Rights:
1. Right to share in profits.
2. Right to compensation.
3. Management of business.
4. Representation.
5. Access to management information.
6. Use of partnership assets.

Duties:
1. Contribution.
2. Share in losses.
3. Care.
4. Bona fides

Question 5

When is a Partnership bound by an agreement:

Answer 5

1. Agreement is valid
2. The contract is concluded in the name of the partnership or on behalf of it
3. Representation
   - Authority- Mutual mandate( within the scope of business) or Partners authorise
   - Duty of the 3rd party to ensure that the partner had the necessary power of attorney- if relying on mutual mandate then bona fides.
   - Doctrine estoppel- Remedy to the 3rd party who has been deceived by a partner
   -Doctrine of Undisclosed Principal

Question 6

Doctrine estoppel

Answer 6

Must prove-

1) Unlawful and culpable representation was created by the partner who was the deceiver
2) 3rd party relied on this deception
3) To their detriment

Question 7

Doctrine of Undisclosed Principal

Answer 7

• Where a representative enters into a contract with a 3rd party in their own name while concealing that they are actually the representative/agent of the principal - 2 contracts arise- 3rd party has the choice of holding the partnership or the individual liable
• Intention-Intention of the parties to the agreement determines if the partnership is a party to the agreement or not.
• Partnership ratified the transaction- If the partner concludes the agreement without the necessary authority but the agreement is acceptable to the co-partners, then the partnership can ratify the agreement after the conclusion

Question 8

Criminal liability

Answer 8

• Partners may be prosecuted - held accountable in their personal capacity
• Co-partners conspire to commit a crime/offence – they can be held liable or if it is the type of offence for which they incur vicarious liability, partners can be prosecuted.

Question 9

Liability of debts

Answer 9

Liable:

During existence:
-Jointly liable (co-debtors)
- Have to be charged equally

After dissolution:
-Joint and Several Liability
- Creditors can hold one partner liable for the entire amount of the debt

Recovery:
- All partners must file a claim for the recovery of an amount due to the partnership
- That claim must be instituted jointly by the partners = co-creditors

Question 10

Dissolution

Answer 10

1. Agreement between the partners
2. Expiration of term/time period
3. Completion of business
4. Change in members via Death, Retirement, New partner
5. Court order- sufficient grounds
   - Partnership agreement
   - Breach of relationship of trust
   - No prospect of profit
   - Personal circumstances, e.g. illness or imprisonment
6. Sequestration