MRL2601
Assignment 1
Semester 1
Due 6 March 2026
, Question 1
1.1 Advise Ben on the difference between a partnership and a company.
Answer:
Ben needs to understand that a partnership and a company are two very different legal
forms of doing business, particularly from a corporate law perspective.
1. Legal personality A partnership does not have a separate legal personality
from its partners. The business cannot exist independently from the individuals
involved. Partners jointly own the business and are personally involved in
management and decision-making. This means they are personally liable for the
debts and obligations of the partnership (Havenga et al., 2020).
Example: If Ben and his colleague form a partnership offering aviation legal consulting
services and the partnership incurs debt from an international client dispute, both
partners can be held personally responsible for the debt.
A company, on the other hand, is a separate legal person once registered in terms of
the Companies Act 71 of 2008. It exists independently from shareholders and directors,
can own property, enter contracts, and sue or be sued in its own name (Companies Act
71 of 2008; Cassim et al., 2019).
Example: If Ben registers a private company for international aviation compliance, the
company itself is liable for its debts; Ben’s personal assets are generally protected.
2. Liability In a partnership, partners have unlimited liability. Personal assets may
be used to settle business debts (Havenga et al., 2020). In a company,
shareholders enjoy limited liability, only risking the amount they invested
(Cassim et al., 2019).
Example: A partnership creditor could claim Ben’s house; a company creditor can only
claim company assets.
Assignment 1
Semester 1
Due 6 March 2026
, Question 1
1.1 Advise Ben on the difference between a partnership and a company.
Answer:
Ben needs to understand that a partnership and a company are two very different legal
forms of doing business, particularly from a corporate law perspective.
1. Legal personality A partnership does not have a separate legal personality
from its partners. The business cannot exist independently from the individuals
involved. Partners jointly own the business and are personally involved in
management and decision-making. This means they are personally liable for the
debts and obligations of the partnership (Havenga et al., 2020).
Example: If Ben and his colleague form a partnership offering aviation legal consulting
services and the partnership incurs debt from an international client dispute, both
partners can be held personally responsible for the debt.
A company, on the other hand, is a separate legal person once registered in terms of
the Companies Act 71 of 2008. It exists independently from shareholders and directors,
can own property, enter contracts, and sue or be sued in its own name (Companies Act
71 of 2008; Cassim et al., 2019).
Example: If Ben registers a private company for international aviation compliance, the
company itself is liable for its debts; Ben’s personal assets are generally protected.
2. Liability In a partnership, partners have unlimited liability. Personal assets may
be used to settle business debts (Havenga et al., 2020). In a company,
shareholders enjoy limited liability, only risking the amount they invested
(Cassim et al., 2019).
Example: A partnership creditor could claim Ben’s house; a company creditor can only
claim company assets.
