332 The object of making a profit to be divided among the partners In a

332 the object of making a profit to be divided among

This preview shows page 72 - 74 out of 100 pages.

3.3.2 The object of making a profit to be divided among the partners In a partnership the parties must intend to make a profit in which each of the partners expects to share. If the object of the parties is something other than making a profit ± for example to found a charitable organisation or a cultural society or a sports club ± their association is not a partnership. No partnership can exist without community of profit. If the parties agree that one or more of them will not be entitled to a share of the profits no partnership comes into being. This requirement is met if a partner has only an expectation of sharing in the profit ± for example if the particular partner will share in the profit only when it exceeds a specific amount. The expectation should, however, be realistic. 3.3.3 Partnership business to be carried out for the joint benefit of the parties Whether the partnership is formed for the completion of one project only or for the purpose of establishing an ongoing, long-term business enterprise, it is of absolute importance that each partner benefits from the formation of the partnership. Schematically illustrated: 66
Image of page 72
_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Activity Tristan, Moodley, Soekie and Ramgobin conclude an agreement in terms of which they agree to run a business that repairs small electrical appliances. The object is to make a profit. Tristan will be responsible for managing the business and doing the repairs and Moodley will allow the business to operate rent- free from premises which he owns. Soekie is to be employed as a receptionist in the business at a salary of R1 500 per month and agrees not to draw her salary until the business is making a profit. As soon as the business is making a profit she will receive her salary plus any arrears. Ramgobin is to contribute R5 000 to the business but it is agreed that R2 500 must be repaid to him at the end of the first year for which the business has been operational, irrespective of whether the business is making a profit or not. Which ONE of the following answers is CORRECT ? 1 A valid partnership agreement has not been concluded between Tristan, Moodley, Soekie and Ramgobin because Moodley has not made, or has not agreed to make, a contribution to the business. 2 A valid partnership agreement has not been concluded between Tristan, Moodley, Soekie and Ramgobin because Tristan has not made, or has not agreed to make, a contribution to the business. 3 A valid partnership agreement has not been concluded between Tristan, Moodley, Soekie and Ramgobin because Soekie has not made, or has not agreed to make, a contribution to the business. 4 A valid partnership agreement has not been concluded between Tristan, Moodley, Soekie and Ramgobin because Ramgobin has not made, or has not agreed to make, a contribution to the business.
Image of page 73
Image of page 74

You've reached the end of your free preview.

Want to read all 100 pages?

  • Spring '16
  • Lessor

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture