MRL2601
ASSIGNMENT 1 2025
DUE 13 MARCH 2025
SEMESTER 1 2025
, ASSIGNMENT 1
Question 1
Two partners who are practicing as dentists, Susan and Jane, decide to dissolve their
partnership by agreement. The partnership agreement is silent regarding the goodwill
of the partnership. Jane continues practicing as a dentist and de facto takes the
partnership’s
clients (valued at R1 million) over for her own benefit. Susan feels it is unfair that Jane
has taken over all the clients and wishes to institute legal action to claim her part of the
goodwill. Explain whether there is a remedy at Susan’s disposal in these
circumstances.
According to the common law principles of partnership, goodwill is regarded as an intangible
asset that forms part of the partnership’s assets and must be shared equally among the
partners upon dissolution¹. In this case, the partnership agreement between Susan and Jane
is silent on the issue of goodwill. When unilaterally taking over the partnership’s clients for her
own benefit, Jane has acted unfairly and deprived Susan of her rightful share of the goodwill.
In terms of Section 24 of the South African Partnership Act, when a partnership is dissolved,
each partner is entitled to an accounting and distribution of the partnership’s assets, which
includes the goodwill². And more to that, Section 25(2) provides that a partner who carries on
business using the partnership’s assets, including its client base, without compensating the
other partner, is liable to account for the profits derived from such business³.
In Tregoning v Tregoning (1913) AD 42, the court held that goodwill is an asset that should
be valued and fairly distributed among the partners upon dissolution⁴. Therefore, Susan has a
legal remedy available to her in the form of instituting an action for an account and
distribution of partnership assets, including her share of the goodwill.
Susan may seek a court order for the valuation of the goodwill and claim compensation from
Jane for the clients she appropriated. The court will consider the value of the client base and
the income generated from those clients when determining the amount due to Susan.
ASSIGNMENT 1 2025
DUE 13 MARCH 2025
SEMESTER 1 2025
, ASSIGNMENT 1
Question 1
Two partners who are practicing as dentists, Susan and Jane, decide to dissolve their
partnership by agreement. The partnership agreement is silent regarding the goodwill
of the partnership. Jane continues practicing as a dentist and de facto takes the
partnership’s
clients (valued at R1 million) over for her own benefit. Susan feels it is unfair that Jane
has taken over all the clients and wishes to institute legal action to claim her part of the
goodwill. Explain whether there is a remedy at Susan’s disposal in these
circumstances.
According to the common law principles of partnership, goodwill is regarded as an intangible
asset that forms part of the partnership’s assets and must be shared equally among the
partners upon dissolution¹. In this case, the partnership agreement between Susan and Jane
is silent on the issue of goodwill. When unilaterally taking over the partnership’s clients for her
own benefit, Jane has acted unfairly and deprived Susan of her rightful share of the goodwill.
In terms of Section 24 of the South African Partnership Act, when a partnership is dissolved,
each partner is entitled to an accounting and distribution of the partnership’s assets, which
includes the goodwill². And more to that, Section 25(2) provides that a partner who carries on
business using the partnership’s assets, including its client base, without compensating the
other partner, is liable to account for the profits derived from such business³.
In Tregoning v Tregoning (1913) AD 42, the court held that goodwill is an asset that should
be valued and fairly distributed among the partners upon dissolution⁴. Therefore, Susan has a
legal remedy available to her in the form of instituting an action for an account and
distribution of partnership assets, including her share of the goodwill.
Susan may seek a court order for the valuation of the goodwill and claim compensation from
Jane for the clients she appropriated. The court will consider the value of the client base and
the income generated from those clients when determining the amount due to Susan.
