CLA2601
Assignment 1 Semester 1 2025
Unique #: 770912
Due Date: 7 April 2025
Detailed solutions, explanations, workings
and references.
+27 81 278 3372
, QUESTION 1 (2 ANSWERS PROVIDED)
For a valid partnership to exist in South African law, certain essentialia must be
present:
(a) at least two persons agree to act in common;
(b) each contributes something—whether money, skill, or labour;
(c) the enterprise is carried on for their joint benefit; (d) the object is the
making of profit; and
(d) the intention is that each partner shares in the net profit and bears a
corresponding share in any loss.
In Joubert v Tarry & Co 1915 TPD 277, the court stressed that sharing in the
profits (and losses) of the business is central to the notion of partnership.
In the present scenario, Zane, Bongi, Muthu, and Sophy intend to form a
partnership to buy and sell mobile phones. Bongi and Sophy contribute capital,
Zane contributes repair services, and Muthu is responsible for administration,
marketing, and day-to-day sales. Although they do carry on a business aimed at
making profit for their common enterprise, a potential problem arises regarding
Muthu’s status. The agreement explicitly states that profits are to be divided only
among Bongi, Sophy, and Zane, whereas Muthu receives a monthly salary rather
than a share of net profits.
This arrangement suggests that Muthu may not be a partner at all, but rather an
employee. In Joubert v Tarry & Co, the court indicated that a partner must at least
participate in the business’s net profit; the fact that Muthu does not share in those
profits is inconsistent with partnership. While Muthu’s services constitute a
contribution, the absence of profit participation undermines the joint-benefit
requirement.
Therefore, under the general principles set out in Joubert v Tarry & Co, only
Bongi, Sophy, and Zane effectively meet the requirements of partnership. Muthu’s
fixed remuneration places him outside the circle of co-partners, making the
partnership valid only among the other three.
OR
Varsity Cube 2024 +27 81 278 3372
Assignment 1 Semester 1 2025
Unique #: 770912
Due Date: 7 April 2025
Detailed solutions, explanations, workings
and references.
+27 81 278 3372
, QUESTION 1 (2 ANSWERS PROVIDED)
For a valid partnership to exist in South African law, certain essentialia must be
present:
(a) at least two persons agree to act in common;
(b) each contributes something—whether money, skill, or labour;
(c) the enterprise is carried on for their joint benefit; (d) the object is the
making of profit; and
(d) the intention is that each partner shares in the net profit and bears a
corresponding share in any loss.
In Joubert v Tarry & Co 1915 TPD 277, the court stressed that sharing in the
profits (and losses) of the business is central to the notion of partnership.
In the present scenario, Zane, Bongi, Muthu, and Sophy intend to form a
partnership to buy and sell mobile phones. Bongi and Sophy contribute capital,
Zane contributes repair services, and Muthu is responsible for administration,
marketing, and day-to-day sales. Although they do carry on a business aimed at
making profit for their common enterprise, a potential problem arises regarding
Muthu’s status. The agreement explicitly states that profits are to be divided only
among Bongi, Sophy, and Zane, whereas Muthu receives a monthly salary rather
than a share of net profits.
This arrangement suggests that Muthu may not be a partner at all, but rather an
employee. In Joubert v Tarry & Co, the court indicated that a partner must at least
participate in the business’s net profit; the fact that Muthu does not share in those
profits is inconsistent with partnership. While Muthu’s services constitute a
contribution, the absence of profit participation undermines the joint-benefit
requirement.
Therefore, under the general principles set out in Joubert v Tarry & Co, only
Bongi, Sophy, and Zane effectively meet the requirements of partnership. Muthu’s
fixed remuneration places him outside the circle of co-partners, making the
partnership valid only among the other three.
OR
Varsity Cube 2024 +27 81 278 3372
