, PLEASE USE THIS DOCUMENT AS A GUIDE TO ANSWER YOUR ASSIGNMENT
Please also note that the author of this document will not be responsible for any plagiarism you
commit.
Question 1
1. Sebo, Tiyani and Tshepo want to start a partnership with the aim of selling African cuisine.
Sebo intends to contribute R15 000.00 on condition that should the partnership fail, Tiyani and
Tshepo will reimburse her. Tiyani intends to contribute his expertise as a qualified chef. Tshepo
intends to contribute the use of his cooking equipment. They come to you for advice on whether
a partnership agreement will be valid based on what each of them wants to contribute. Advise
them fully. (In your advice, define a partnership, deal with each contribution and conclude.)
A partnership is a business arrangement where two or more individuals come together to carry out a
business with the aim of earning a profit. The partnership is based on a mutual agreement where each
partner contributes something of value to the business, whether it be money, property, skills, or other
resources. The success of the business depends on the shared efforts of all parties involved, and the
partners benefit from the profits generated by the business.
Essential Elements for a Valid Partnership Agreement
Contribution by Each Partner: For a valid partnership, each partner must make a
contribution to the business. This can be in the form of financial investment, property, skills, or
other resources that have commercial value.
Joint Effort for Profit: The partnership must be established with the intention of running a
business for the shared benefit of the partners, with the goal of making a profit.
Legitimacy of the Agreement: The partnership must be founded on a legitimate contract that
expresses the mutual intent to establish a business together. All partners should agree to the
terms of the partnership.
Risk Exposure: The contributions made by each partner must be exposed to the risks of the
business. This means that a partner cannot be assured of receiving their contribution back in the
event of the business's failure.
Analysis of the Contributions
Sebo’s Contribution: Sebo intends to contribute R15,000.00 to the partnership but has
attached the condition that, should the partnership fail, Tiyani and Tshepo will reimburse her.
While the R15,000.00 is a valid financial contribution, the condition that Sebo’s money be
reimbursed if the business fails raises concerns. In a partnership, contributions must be exposed
to the risks of the business. If Sebo’s contribution is secured with a reimbursement clause, it
may not meet the requirement of a risk-bearing contribution. The essence of a partnership is
shared risk, and ensuring that one partner is reimbursed in the event of failure contradicts the
principle of joint risk exposure. Therefore, Sebo's contribution may not be considered valid in
the context of this partnership.
Please also note that the author of this document will not be responsible for any plagiarism you
commit.
Question 1
1. Sebo, Tiyani and Tshepo want to start a partnership with the aim of selling African cuisine.
Sebo intends to contribute R15 000.00 on condition that should the partnership fail, Tiyani and
Tshepo will reimburse her. Tiyani intends to contribute his expertise as a qualified chef. Tshepo
intends to contribute the use of his cooking equipment. They come to you for advice on whether
a partnership agreement will be valid based on what each of them wants to contribute. Advise
them fully. (In your advice, define a partnership, deal with each contribution and conclude.)
A partnership is a business arrangement where two or more individuals come together to carry out a
business with the aim of earning a profit. The partnership is based on a mutual agreement where each
partner contributes something of value to the business, whether it be money, property, skills, or other
resources. The success of the business depends on the shared efforts of all parties involved, and the
partners benefit from the profits generated by the business.
Essential Elements for a Valid Partnership Agreement
Contribution by Each Partner: For a valid partnership, each partner must make a
contribution to the business. This can be in the form of financial investment, property, skills, or
other resources that have commercial value.
Joint Effort for Profit: The partnership must be established with the intention of running a
business for the shared benefit of the partners, with the goal of making a profit.
Legitimacy of the Agreement: The partnership must be founded on a legitimate contract that
expresses the mutual intent to establish a business together. All partners should agree to the
terms of the partnership.
Risk Exposure: The contributions made by each partner must be exposed to the risks of the
business. This means that a partner cannot be assured of receiving their contribution back in the
event of the business's failure.
Analysis of the Contributions
Sebo’s Contribution: Sebo intends to contribute R15,000.00 to the partnership but has
attached the condition that, should the partnership fail, Tiyani and Tshepo will reimburse her.
While the R15,000.00 is a valid financial contribution, the condition that Sebo’s money be
reimbursed if the business fails raises concerns. In a partnership, contributions must be exposed
to the risks of the business. If Sebo’s contribution is secured with a reimbursement clause, it
may not meet the requirement of a risk-bearing contribution. The essence of a partnership is
shared risk, and ensuring that one partner is reimbursed in the event of failure contradicts the
principle of joint risk exposure. Therefore, Sebo's contribution may not be considered valid in
the context of this partnership.
