, MRL2601 Assignment 1 (COMPLETE ANSWERS)
Semester 2 2026 - DUE 11 August 2026; 100% Correct
solutions and explanations.
Question 1
1.1
When a partnership is dissolved, all partnership assets must be identified,
valued, and distributed between the partners according to their respective
rights. One issue that may arise is whether the goodwill of the partnership
forms part of the assets available for distribution.
Goodwill is the intangible value of a business arising from its reputation,
established client base, and the likelihood of attracting future business. In
commercial partnerships, goodwill is generally regarded as an asset of the
partnership. However, the position differs in professional partnerships.
Marcus and Cobus practised as quantity surveyors, which is a professional
partnership. In South African law, the goodwill of a professional partnership
is generally regarded as personal to the individual practitioners rather than as
a separate partnership asset, unless the partnership agreement expressly
provides otherwise. This is because clients are free to choose which
professional they wish to consult and cannot be treated as property capable of
being owned or transferred.
In this case, the partnership agreement is silent regarding goodwill. After the
dissolution, Cobus continued practising and the former partnership clients
voluntarily chose to make use of his services. Although the clients are valued
at R1 million, this does not automatically mean that the goodwill constitutes a
partnership asset that must be shared.
The courts have recognised that, unless there is an express agreement
providing otherwise, a former partner is entitled to continue practising and
may accept work from former partnership clients without compensating the
other partner. Since there is no restraint of trade or clause requiring payment
for goodwill, Cobus has acted within his legal rights.
Semester 2 2026 - DUE 11 August 2026; 100% Correct
solutions and explanations.
Question 1
1.1
When a partnership is dissolved, all partnership assets must be identified,
valued, and distributed between the partners according to their respective
rights. One issue that may arise is whether the goodwill of the partnership
forms part of the assets available for distribution.
Goodwill is the intangible value of a business arising from its reputation,
established client base, and the likelihood of attracting future business. In
commercial partnerships, goodwill is generally regarded as an asset of the
partnership. However, the position differs in professional partnerships.
Marcus and Cobus practised as quantity surveyors, which is a professional
partnership. In South African law, the goodwill of a professional partnership
is generally regarded as personal to the individual practitioners rather than as
a separate partnership asset, unless the partnership agreement expressly
provides otherwise. This is because clients are free to choose which
professional they wish to consult and cannot be treated as property capable of
being owned or transferred.
In this case, the partnership agreement is silent regarding goodwill. After the
dissolution, Cobus continued practising and the former partnership clients
voluntarily chose to make use of his services. Although the clients are valued
at R1 million, this does not automatically mean that the goodwill constitutes a
partnership asset that must be shared.
The courts have recognised that, unless there is an express agreement
providing otherwise, a former partner is entitled to continue practising and
may accept work from former partnership clients without compensating the
other partner. Since there is no restraint of trade or clause requiring payment
for goodwill, Cobus has acted within his legal rights.
