MRL2601
Assignment 1
Semester 2 2025
, Assignment 1, Semester 2: Year 2025
Question 1 – Partnerships (10 marks)
Definition of a Partnership
A partnership is a legal agreement between two or more persons who intend to carry on
a business in common for profit, and who each bring something into the business
whether it's money, property, or labour (expertise). The key requirements for a valid
partnership are:
• A contractual agreement;
• A contribution by each partner;
• A common goal to make a profit;
• The carrying on of a business in common (Cilliers et al., 2000; LAWSA, Vol. 19,
2nd ed.).
Application to the Scenario
Sello’s Contribution:
Sello wants to contribute R25,000 but only on the condition that if the partnership fails,
he will be reimbursed by Ndumi and Freddy. This is a conditional contribution, which
creates uncertainty. If his contribution is guaranteed back, it looks more like a loan, not
a partnership contribution (Strydom v Venter 1951 (3) SA 229 (T)). This undermines the
risk element involved in a genuine partnership. Unless he accepts that his R25,000 is at
risk like everyone else's input, he might not be considered a true partner (Henning,
2008).
Ndumi’s Contribution:
Ndumi plans to contribute his expertise as an electrician. This is acceptable and valid.
Partnerships can be based on labour or skill it doesn't have to be cash or physical
assets. As long as his skill contributes to the business and is done in pursuit of profit, it's
valid (Cilliers et al., 2000).
Assignment 1
Semester 2 2025
, Assignment 1, Semester 2: Year 2025
Question 1 – Partnerships (10 marks)
Definition of a Partnership
A partnership is a legal agreement between two or more persons who intend to carry on
a business in common for profit, and who each bring something into the business
whether it's money, property, or labour (expertise). The key requirements for a valid
partnership are:
• A contractual agreement;
• A contribution by each partner;
• A common goal to make a profit;
• The carrying on of a business in common (Cilliers et al., 2000; LAWSA, Vol. 19,
2nd ed.).
Application to the Scenario
Sello’s Contribution:
Sello wants to contribute R25,000 but only on the condition that if the partnership fails,
he will be reimbursed by Ndumi and Freddy. This is a conditional contribution, which
creates uncertainty. If his contribution is guaranteed back, it looks more like a loan, not
a partnership contribution (Strydom v Venter 1951 (3) SA 229 (T)). This undermines the
risk element involved in a genuine partnership. Unless he accepts that his R25,000 is at
risk like everyone else's input, he might not be considered a true partner (Henning,
2008).
Ndumi’s Contribution:
Ndumi plans to contribute his expertise as an electrician. This is acceptable and valid.
Partnerships can be based on labour or skill it doesn't have to be cash or physical
assets. As long as his skill contributes to the business and is done in pursuit of profit, it's
valid (Cilliers et al., 2000).
