,CLA2601 Assignment 1 (COMPLETE ANSWERS)
Semester 1 2025 - DUE 7 April 2025
Question 1 Zane, Bongi, Muthu, and Sophy are friends who decide to
form a partnership to purchase and sell new and secondhand mobile
phones. Sophy and Bongi will provide the capital to purchase the initial
stock for the partnership. Zane will be responsible for the repair of
mobile phones, and Muthu will be responsible for the day-to-day
activities regarding the sales, administration, and marketing of the
mobile phone business. The parties agree that the profit derived from the
partnership will be divided equally between Bongi, Sophy, and Zane,
and that Muthu will receive a monthly salary for his services. Discuss
and explain whether the above terms constitute a valid partnership
agreement. Refer to relevant case law in your answer.
10 marks
Introduction
A partnership is a legal relationship between two or
more persons who agree to carry on a business together
with the aim of making a profit. In South African law,
partnerships are governed by common law principles,
and certain essential elements must be met for a valid
partnership to exist.
To determine whether Zane, Bongi, Muthu, and Sophy
have established a valid partnership, we must examine
the essential elements of a partnership as set out in case
law and legal principles.
, Essential Elements of a Valid Partnership
According to South African law, for a valid partnership to
exist, the following essential elements must be present:
1. An Agreement – The parties must enter into an
agreement to carry on business together.
2. Intention to Make a Profit – The parties must have
the common goal of making a profit.
3. Contribution by Each Partner – Each partner must
contribute something to the business (capital,
labour, skills, or expertise).
4. Joint Participation in Business – The partners must
participate in the business, directly or indirectly.
5. Profit Sharing – The profits (and losses) must be
shared among the partners.
6. No Separate Legal Personality – A partnership is not
a separate legal entity from its partners.
The South African case of Pezzutto v Dreyer NO 1992 (3)
SA 379 (A) confirmed these elements as fundamental to
the existence of a valid partnership.
Semester 1 2025 - DUE 7 April 2025
Question 1 Zane, Bongi, Muthu, and Sophy are friends who decide to
form a partnership to purchase and sell new and secondhand mobile
phones. Sophy and Bongi will provide the capital to purchase the initial
stock for the partnership. Zane will be responsible for the repair of
mobile phones, and Muthu will be responsible for the day-to-day
activities regarding the sales, administration, and marketing of the
mobile phone business. The parties agree that the profit derived from the
partnership will be divided equally between Bongi, Sophy, and Zane,
and that Muthu will receive a monthly salary for his services. Discuss
and explain whether the above terms constitute a valid partnership
agreement. Refer to relevant case law in your answer.
10 marks
Introduction
A partnership is a legal relationship between two or
more persons who agree to carry on a business together
with the aim of making a profit. In South African law,
partnerships are governed by common law principles,
and certain essential elements must be met for a valid
partnership to exist.
To determine whether Zane, Bongi, Muthu, and Sophy
have established a valid partnership, we must examine
the essential elements of a partnership as set out in case
law and legal principles.
, Essential Elements of a Valid Partnership
According to South African law, for a valid partnership to
exist, the following essential elements must be present:
1. An Agreement – The parties must enter into an
agreement to carry on business together.
2. Intention to Make a Profit – The parties must have
the common goal of making a profit.
3. Contribution by Each Partner – Each partner must
contribute something to the business (capital,
labour, skills, or expertise).
4. Joint Participation in Business – The partners must
participate in the business, directly or indirectly.
5. Profit Sharing – The profits (and losses) must be
shared among the partners.
6. No Separate Legal Personality – A partnership is not
a separate legal entity from its partners.
The South African case of Pezzutto v Dreyer NO 1992 (3)
SA 379 (A) confirmed these elements as fundamental to
the existence of a valid partnership.
