A partnership is not a separate legal entity with separate legal personality on

A partnership is not a separate legal entity with

This preview shows page 193 - 195 out of 265 pages.

A partnership is not a separate legal entity with separate legal personality (on separate legal personality, see paragraph 21.4.1 below). But in certain circumstances, a partnership is indeed treated by law as if it were a separate entity. In terms of the Rules of Court a partnership may sue or be sued in its partnership name. Litigation need therefore not be in the names of all the individual partners. And for purposes of sequestration a partnership is treated as an estate which is separate from those of its members. Creditors of the partnership must, in principle, claim against the partnership estate, and private creditors have a claim against the individual estate of the particular partner. These exceptions have been developed
Image of page 193
Page 321 to avoid practical problems and injustices, and do not detract from the general principle that the partnership is not a separate legal entity. There are various types of partnership. Only the ordinary partnership (as opposed to universal and extraordinary partnerships) is discussed here. 21.3.3 The basic requirements (essentialia) of a partnership Since a partnership agreement is a specific type of contract, it clearly must comply with all the general requirements for a valid contract. Therefore the parties to the agreement must have contractual capacity; they must reach agreement; the contract must be lawful; it must be possible to render performance in terms of the contract, and, if any formalities are prescribed for the contract, they must be adhered to. Legal entities may be parties to a partnership agreement. For example, a close corporation may enter into a partnership agreement with a company, another close corporation, or a natural person. A partnership agreement may, like any other agreement, not conflict with legislation, public policy, or good morals. The Companies Act 71 of 2008 (discussed in paragraph 21.4 ) does not provide for any limitation on the number of partners in any partnership. No formal requirements need be complied with. A valid partnership may therefore be concluded orally, in writing, or tacitly, that is, through conduct. But a written contract is preferable as it creates more certainty about the parties’ rights and duties. There are three key elements or essentialia of a partnership agreement: each partner must contribute towards the partnership; the partnership must have as its object the making of profit to be divided among the partners, and the partnership business must be carried on for the joint benefit of all the partners. If the essentialia are present, and the parties intended to form a partnership, the agreement between them constitutes a partnership. 21.3.3.1 A contribution by each partner Each partner must contribute something or undertake to contribute something to the partnership. This contribution may be capital (any property, for example, money, movable or immovable property), services, knowledge or skill. It may consist of corporeal or incorporeal (for example, copyright) things, and may also comprise a combination of various types of contributions, for example, labour and money. There is, generally, no
Image of page 194
Image of page 195

You've reached the end of your free preview.

Want to read all 265 pages?

  • Spring '16

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture