QUESTION 1
Types of partnership
1. Universal partnerships, these are not restricted to a particular transaction or ab
specific business. Two types of universal partnerships are
I. The societas universorum bonorum-this is a partnership of all property that
generally will take place within the context of marriage.
II. The societas universorum quae ex quastu veniunt is a partnership of all
profit, which occurs within the context of commercial undertakings.
2. Partnerships: established in respect of a specific project In Bester v Van Nieker it
was held that if persons who are not partners in other business share the profits and
loss of one particular transaction, they become partners as to that transaction but not
as to anything else.
3. Extra ordinary partnership
Extraordinary partnerships differ from other types of partnerships in that one or more
of the partners have protection against liability to third parties for the partnership
debts. Three types of extraordinary partnerships can be distinguished namely
a). anonymous or silent partnership- In an anonymous or silent partnership, the
business is conducted by one of the partners in his or her name. An anonymous or
silent partner remains undisclosed to the public, he or she is not liable to third parties
for the debts of the partnership. He or she is only liable to his or her partner/s for his
or her proportional share of the partnership losses.
b). Partnership en commandite - In a partnership en commandite, the business of
the partnership is carried on in the name of one or more of the partners, but every
partner whose name is not disclosed is only liable to the other parties to the extent of
the fixed amount of the agreed capital contribution made by him or her. Therefore, if
the partnership incurs losses, the liability of the partner en commandite will not
exceed the fixed amount.
c). Special partnerships-In this type of partnership, the limited liability of a special
partner would be lost if his or her name was employed in the name of the firm or if he
or she personally entered a transaction on behalf of the partnership
, QUESTION 2
The Turquand rule was formulated to keep an outsider’s duty to inquire into
the
affairs of the company within reasonable bounds. The Turquand rule was derived
from Royal British Bank v Turquand. According to the common law Turquand rule, if
the person acting on behalf of the company has the authority to do so, but this is
subject to an internal formality, such as approval by the board, an outsider
contracting with the company in good faith is entitled to assume that this internal
requirement has been complied with. The company will be bound by the contract
even if the internal formality has not been complied with. The exceptions are: if the
outsider was aware of the fact that the internal formality had not been complied with.
or if the circumstances in which the contract was concluded were suspicious 1.
Section 20(7) of the Companies Act contains a provision that in some respects
resembles the Turquand rule by providing that a person dealing with a company in
good faith is entitled to presume that the company, in making any decision in the
exercise of its powers, has complied with all the formal and procedural requirements
in terms of the Act, the company’s Memorandum of Incorporation and any rules of
the company, unless the person knew, or reasonably ought to have known, of any
failure by the company to comply with any such requirement 2. However, this
provision does not replace the Turquand rule, because section 20(8) provides that
subsection (7) must be interpreted concurrently with, and not in substitution for, any
relevant common law principle relating to the presumed validity of the actions of a
company3.
The exceptions to the application of the statutory rule are not expressed in exactly
the same way as the common law exceptions: section 20(7) determines that the rule
will not apply if the third party knew or reasonably ought to have known that the
internal requirement had not been complied with.
John’s contract
The company is bound by the contract concluded because of the operation of
section 20(7) of the Companies Act. There is no indication from the facts that the
1
Royal British Bank v Turquand (1856) 6 E&B 327
2
Companies Act 71 of 2008 s20
3
Companies Act 71 of 2008 s20
Types of partnership
1. Universal partnerships, these are not restricted to a particular transaction or ab
specific business. Two types of universal partnerships are
I. The societas universorum bonorum-this is a partnership of all property that
generally will take place within the context of marriage.
II. The societas universorum quae ex quastu veniunt is a partnership of all
profit, which occurs within the context of commercial undertakings.
2. Partnerships: established in respect of a specific project In Bester v Van Nieker it
was held that if persons who are not partners in other business share the profits and
loss of one particular transaction, they become partners as to that transaction but not
as to anything else.
3. Extra ordinary partnership
Extraordinary partnerships differ from other types of partnerships in that one or more
of the partners have protection against liability to third parties for the partnership
debts. Three types of extraordinary partnerships can be distinguished namely
a). anonymous or silent partnership- In an anonymous or silent partnership, the
business is conducted by one of the partners in his or her name. An anonymous or
silent partner remains undisclosed to the public, he or she is not liable to third parties
for the debts of the partnership. He or she is only liable to his or her partner/s for his
or her proportional share of the partnership losses.
b). Partnership en commandite - In a partnership en commandite, the business of
the partnership is carried on in the name of one or more of the partners, but every
partner whose name is not disclosed is only liable to the other parties to the extent of
the fixed amount of the agreed capital contribution made by him or her. Therefore, if
the partnership incurs losses, the liability of the partner en commandite will not
exceed the fixed amount.
c). Special partnerships-In this type of partnership, the limited liability of a special
partner would be lost if his or her name was employed in the name of the firm or if he
or she personally entered a transaction on behalf of the partnership
, QUESTION 2
The Turquand rule was formulated to keep an outsider’s duty to inquire into
the
affairs of the company within reasonable bounds. The Turquand rule was derived
from Royal British Bank v Turquand. According to the common law Turquand rule, if
the person acting on behalf of the company has the authority to do so, but this is
subject to an internal formality, such as approval by the board, an outsider
contracting with the company in good faith is entitled to assume that this internal
requirement has been complied with. The company will be bound by the contract
even if the internal formality has not been complied with. The exceptions are: if the
outsider was aware of the fact that the internal formality had not been complied with.
or if the circumstances in which the contract was concluded were suspicious 1.
Section 20(7) of the Companies Act contains a provision that in some respects
resembles the Turquand rule by providing that a person dealing with a company in
good faith is entitled to presume that the company, in making any decision in the
exercise of its powers, has complied with all the formal and procedural requirements
in terms of the Act, the company’s Memorandum of Incorporation and any rules of
the company, unless the person knew, or reasonably ought to have known, of any
failure by the company to comply with any such requirement 2. However, this
provision does not replace the Turquand rule, because section 20(8) provides that
subsection (7) must be interpreted concurrently with, and not in substitution for, any
relevant common law principle relating to the presumed validity of the actions of a
company3.
The exceptions to the application of the statutory rule are not expressed in exactly
the same way as the common law exceptions: section 20(7) determines that the rule
will not apply if the third party knew or reasonably ought to have known that the
internal requirement had not been complied with.
John’s contract
The company is bound by the contract concluded because of the operation of
section 20(7) of the Companies Act. There is no indication from the facts that the
1
Royal British Bank v Turquand (1856) 6 E&B 327
2
Companies Act 71 of 2008 s20
3
Companies Act 71 of 2008 s20
