MRL2601(Entrepreneurial Law) –Assignment 01
Semester 2 Solutions
Due date:
FOR EXAMS, PORTFOLIO, AND ASSIGNMENT
ASSISTANCE WHATSAPP
083 286 8465 EMAIL:
Disclaimer: This document is provided for educational purposes only and represents the
original work of the author, intended solely for learning, research, and reference. No part of
this material has been generated using AI tools, and all sources, where applicable, have been
properly acknowledged to ensure zero plagiarism. By using or submitting this document, you
agree to use it only as a guide for academic purposes, accept full responsibility for any
academic or legal consequences arising from plagiarism, misuse, or institutional violations, and
comply with your institution’s code of conduct and academic regulations. Unauthorized
copying, distribution, resale, or commercial use of this material is strictly prohibited.
, Question 1
The key issue is whether a legally valid partnership can be formed between Themba,
Ndumi, and Freddy, given that everyone intends to contribute different things to the
partnership namely: capital, skill, and use of property, and one of them (Themba)
attaches a condition to his contribution.
A partnership in South African law is defined as an association of two or more
persons who contract with one another to carry on a business for profit. 1 For a valid
partnership to exist, four essential elements must be present: each partner must
contribute something to the partnership (this can be money, property, or services);
the business must be carried on for the joint benefit of the partners; the purpose of
the partnership must be the making of profit; and the partnership agreement must be
lawful and not against public policy. 2 These principles are set out clearly in common
law and confirmed by authoritative legal sources such as Delport. 3 If any of these
elements are absent or undermined, the partnership may be considered invalid.
In the current scenario, Themba proposes to contribute R25 000 to the partnership.
However, this contribution is made subject to the condition that if the partnership
fails, Ndumi and Freddy must reimburse him the full amount. This arrangement
poses a serious challenge to the validity of the partnership. In a genuine partnership,
each partner must bear the risks of the business along with the other partners,
including the risk of loss. 4 A contribution that is protected from loss or subject to
reimbursement operates more like a loan than a true partnership contribution. 5 In
Strydom v Lyons, the court found that an agreement which allowed a person to
recover their capital contribution upon dissolution, without sharing in the losses, did
not reflect the true intention of a partnership. 6 Similarly, Themba's contribution, as
structured, indicates an intention to avoid risk, which is fundamentally inconsistent
with the concept of partnership. Unless this clause is removed or restructured to
1
P.A. Delport, New Entrepreneurial Law 2 ed (2020)
2
P.A. Delport, New Entrepreneurial Law 2 ed (2020)
3
P.A. Delport, New Entrepreneurial Law 2 ed (2020)
4
P.A. Delport, New Entrepreneurial Law 2 ed (2020)
5
P.A. Delport, New Entrepreneurial Law 2 ed (2020)
6
Strydom v Lyons 1964 (3) SA 313 (T) 317.
Semester 2 Solutions
Due date:
FOR EXAMS, PORTFOLIO, AND ASSIGNMENT
ASSISTANCE WHATSAPP
083 286 8465 EMAIL:
Disclaimer: This document is provided for educational purposes only and represents the
original work of the author, intended solely for learning, research, and reference. No part of
this material has been generated using AI tools, and all sources, where applicable, have been
properly acknowledged to ensure zero plagiarism. By using or submitting this document, you
agree to use it only as a guide for academic purposes, accept full responsibility for any
academic or legal consequences arising from plagiarism, misuse, or institutional violations, and
comply with your institution’s code of conduct and academic regulations. Unauthorized
copying, distribution, resale, or commercial use of this material is strictly prohibited.
, Question 1
The key issue is whether a legally valid partnership can be formed between Themba,
Ndumi, and Freddy, given that everyone intends to contribute different things to the
partnership namely: capital, skill, and use of property, and one of them (Themba)
attaches a condition to his contribution.
A partnership in South African law is defined as an association of two or more
persons who contract with one another to carry on a business for profit. 1 For a valid
partnership to exist, four essential elements must be present: each partner must
contribute something to the partnership (this can be money, property, or services);
the business must be carried on for the joint benefit of the partners; the purpose of
the partnership must be the making of profit; and the partnership agreement must be
lawful and not against public policy. 2 These principles are set out clearly in common
law and confirmed by authoritative legal sources such as Delport. 3 If any of these
elements are absent or undermined, the partnership may be considered invalid.
In the current scenario, Themba proposes to contribute R25 000 to the partnership.
However, this contribution is made subject to the condition that if the partnership
fails, Ndumi and Freddy must reimburse him the full amount. This arrangement
poses a serious challenge to the validity of the partnership. In a genuine partnership,
each partner must bear the risks of the business along with the other partners,
including the risk of loss. 4 A contribution that is protected from loss or subject to
reimbursement operates more like a loan than a true partnership contribution. 5 In
Strydom v Lyons, the court found that an agreement which allowed a person to
recover their capital contribution upon dissolution, without sharing in the losses, did
not reflect the true intention of a partnership. 6 Similarly, Themba's contribution, as
structured, indicates an intention to avoid risk, which is fundamentally inconsistent
with the concept of partnership. Unless this clause is removed or restructured to
1
P.A. Delport, New Entrepreneurial Law 2 ed (2020)
2
P.A. Delport, New Entrepreneurial Law 2 ed (2020)
3
P.A. Delport, New Entrepreneurial Law 2 ed (2020)
4
P.A. Delport, New Entrepreneurial Law 2 ed (2020)
5
P.A. Delport, New Entrepreneurial Law 2 ed (2020)
6
Strydom v Lyons 1964 (3) SA 313 (T) 317.
