FBE2604
Assignment 1 Semester 2 2025
Unique #:
Due Date: August 2025
Detailed solutions, explanations, workings
and references.
+27 81 278 3372
, QUESTION 1
1.1. (2 ANSWERS PROVIDED)
A partnership and a company are two very different business forms in South African
law, particularly in relation to their legal personality, formation, liability, continuity,
and ownership of assets. A company is a separate legal or juristic person that comes
into existence through incorporation in terms of the Companies Act. This means it
has its own rights and duties, can own property in its own name, and can sue or be
sued without involving its shareholders personally. Shareholders in a company are
not personally liable for the debts of the company, as they enjoy the protection of
limited liability. The assets of a company belong exclusively to the company, and
shareholders have no direct proprietary rights in them. Profits made by the company
belong to the company itself and can only be distributed to shareholders once a
dividend has been declared. A change in the membership of a company does not
affect its existence, so it can continue operating indefinitely regardless of changes in
ownership.
A partnership, on the other hand, does not have a separate legal personality. It is
formed through an agreement between two or more persons to carry on a lawful
business together with the intention of making a profit. Because it has no juristic
personality, the partners themselves jointly own the partnership assets and are
personally liable for its debts. This means that if the partnership cannot meet its
financial obligations, creditors can claim directly against the partners’ personal
estates. During the existence of the partnership, partners are jointly liable for debts,
and after dissolution, they are jointly and severally liable, allowing a creditor to
recover the full debt from one partner, who can then claim contributions from the
others. The partnership’s existence is closely tied to the membership of the partners,
so a change in partners generally leads to its dissolution unless otherwise agreed.
Unlike a company, where shareholders cannot act on behalf of the company unless
appointed as directors, every partner in a partnership (unless restricted by
agreement) has the authority to bind the partnership in transactions that fall within
the scope of the business.
In short, a company offers the advantage of separate legal personality, limited
liability, and perpetual succession, making it less risky for the personal assets of its
Varsity Cube 2025 +27 81 278 3372
Assignment 1 Semester 2 2025
Unique #:
Due Date: August 2025
Detailed solutions, explanations, workings
and references.
+27 81 278 3372
, QUESTION 1
1.1. (2 ANSWERS PROVIDED)
A partnership and a company are two very different business forms in South African
law, particularly in relation to their legal personality, formation, liability, continuity,
and ownership of assets. A company is a separate legal or juristic person that comes
into existence through incorporation in terms of the Companies Act. This means it
has its own rights and duties, can own property in its own name, and can sue or be
sued without involving its shareholders personally. Shareholders in a company are
not personally liable for the debts of the company, as they enjoy the protection of
limited liability. The assets of a company belong exclusively to the company, and
shareholders have no direct proprietary rights in them. Profits made by the company
belong to the company itself and can only be distributed to shareholders once a
dividend has been declared. A change in the membership of a company does not
affect its existence, so it can continue operating indefinitely regardless of changes in
ownership.
A partnership, on the other hand, does not have a separate legal personality. It is
formed through an agreement between two or more persons to carry on a lawful
business together with the intention of making a profit. Because it has no juristic
personality, the partners themselves jointly own the partnership assets and are
personally liable for its debts. This means that if the partnership cannot meet its
financial obligations, creditors can claim directly against the partners’ personal
estates. During the existence of the partnership, partners are jointly liable for debts,
and after dissolution, they are jointly and severally liable, allowing a creditor to
recover the full debt from one partner, who can then claim contributions from the
others. The partnership’s existence is closely tied to the membership of the partners,
so a change in partners generally leads to its dissolution unless otherwise agreed.
Unlike a company, where shareholders cannot act on behalf of the company unless
appointed as directors, every partner in a partnership (unless restricted by
agreement) has the authority to bind the partnership in transactions that fall within
the scope of the business.
In short, a company offers the advantage of separate legal personality, limited
liability, and perpetual succession, making it less risky for the personal assets of its
Varsity Cube 2025 +27 81 278 3372
