Gideon Matthews

Student No: 36962325

Question 1.
Identify the different types of partnerships that are recognized in South African law. (5)
Apart from ordinary partnerships, there is also universal, particular and extraordinary partnerships.
Universal partnership differs from other types of partnership in their ambit – they are not restricted to a
particular transaction or a specific business. The two types of universal partnerships can be
distinguished: the societas universorum bonorum1 and the societas universorum quae ex quastu
veniunt2. Particular partnership can be establish in respect of a specific project, for example the
construction of a block of flats. Case study on Bester v Van Niekerk3 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.

Extraordinary partnership can be distinguished in three (3) and it differs from other types of
partnerships in that the liability of certain of the partners to third parties may be limited. Anonymous or
silent partnership, the business is conducted by one of the partners in his or her name, while the
anonymous or silent partner remain undisclosed to the public, he or she is not liable to third parties for
the debts of the partnership, only remain liable to his or her partner/s for his or her proportional share
of the partnership losses, meaning he or she share the full risk of the enterprise. A partnership en
commandite, the business of the partnership is also 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. Special partnerships which
were registered under the now repealed Special Partnerships Limited Liabilities Act of the Cape Province
and Natal were partnerships where 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.
Petrus in his will bequeaths his farm to his two sons on condition that they farm in partnership. Lenta,
an 82-year-old unmarried woman and Maxfed (Pty) Ltd conclude a partnership agreement. A few
pharmacists conclude a partnership agreement with the aim of repackaging and selling stolen
medication. Dobby, an eleven-year-old with assistance from his guardian concludes a partnership
agreement with Playco CC with the aim of marketing and distributing toys.
With reference to the facts provided above and the requirements for the conclusion of a partnership
agreement, explain whether a valid partnership can come into existence in the respective scenarios.
(5)
Petrus’s sons can honor their fathers bequeaths by means of a valid agreement and as contracting
parties they must have the intention of establishing a partnership, it is important for them to maintain

1
Is a partnership of all property that will generally take place within the context of marriage.
2
Is a partnership of all profit which occurs within the context of commercial undertakings.
3
Bester v Van Niekerk 1960 (2) SA 799 (A)
good relations and the utmost good faith in order to ensure the continuance of their business. Lenta as
an 82-year-old can enter into agreement as a “silent partnership” where she enjoy limited liability so
long as she remain anonymous in her capacity as a partner and do not participate in the operation of the
partnership due to her age. The few pharmacists that want to conclude partnership agreement must
comply with the law and cannot conduct business that is prohibited by law or public policy, this
partnership cannot come into existence. Dobby as an eleven-year-old with the assistance of his guardian
can conclude a partnership agreement with Playco CC, the guardian’s assistance may take various forms,
in first place the guardian may act on the minor’s behalf4. Alternatively, the minor may personally enter
into contract with his or her guardian’s consent or the guardian may ratify the agreement after it has
been concluded5. The guardian need not have knowledge of each and every term the contract but must
be aware of its nature and essential terms6. The guardian is obliged to assist the minor in entering legal
transactions which are beneficial to the minor, or to conclude such transactions on the minor’s behalf.
Essential terms7 can consist of contribution – the economic input (something with an economic value as
agreed upon in the partnership agreement) that must be provided by each partner to qualify
partnership. (The contribution can be in the form of money, assets, labour, skills or knowledge. Two
requirements apply: it must have an economic value and it must be exposed to the risk of the business.)

Question 3.
With reference to relevant authority, indicate whether a partnership is recognized as a separate entity
apart from the partnership in terms of South African law. (5)
8
Partnership do not enjoy separate legal (juristic) personality . Partnerships are mainly regulated by
common law principles and there is no partnership Act in South Africa. Although a partnership is not a
juristic person, the law nevertheless regards a partner as an entity for certain limited purposes. A
partnership must comply with the law and cannot conduct business that is prohibited by law or public
policy. Partnerships unlike companies do not have to be registered with the Registrar.

Question 4.
Briefly explain what the requirements are for the formation of a valid trust. (10)
To form a trust, the intention to create a trust must exist. This intention or instruction to the trustee to
manage the trust assets for the beneficiaries must be expresses as an obligation in a written trust deed.
The trust must be established for a lawful purpose and the trust property must be clearly defined.
Beneficiaries of the trust must be clearly identified. At least one beneficiary needs to exist and at least
one trustee must be appointed either in terms of the trust deed or, alternatively, by the Master. A trust
deed must be concluded in writing. If the trust is formed in a will, the required formalities for a valid will
must also be adhered to. Two witnesses above the age of 16 years, along with the testator, must sign
the testament in which the trust is created, and such witnesses may not be a beneficiary of the will.

A trust is created by a document called a trust deed. A trust deed comes either in the form of a contract
(for an inter vivos trust) or a will of a testator (for a testamentary trust). It constitutes a trust’s

4
Ten Brink v Motala 2001 (1) SA 1011 (D); South African Law of Persons J Heaton 5th ed, Chapter 6: Minority pg. 89
5
Ratification pg. 91 SA Law of Persons Heaton J 5th ed, Chapter 6: Minority
6
Van Dyk v SAR & H 1956 (4) SA 410 (W)
7
The essentialia of partnership MRL2601 Study Guide 2017 University of South Africa pg. 101
8
Study Unit 15: Partnerships 1 Introduction para1 MRL2601 Study Guide 2017 University of South Africa pg. 98
constitutive charter. Trusts are mainly regulated by the Trust Property Control Act 57 of 1988 and the
trust deed. All of the parties to a trust may be legal (juristic) persons. Only after a written authorisation
by the Master can a trustee act as such. In Simplex (Pty) Ltd v Van der Merwe and others NNO9, the
court held that section 6 of the Trust Property Control Act was intended to provide proof to outsiders of
the fact that someone is authorized to act as a trustee and not only for the beneficiaries.

Question 5.
Set out five (5) duties of a trustee in relation to a business trust. (5)
A duty of care, skill and diligence
To open a separate trust account at a banking institution
To indicate in his or her bookkeeping the property held as trustee
To register trust property as such
To make trust and trust investment accounts identifiable as such
To keep all documents as proof of investment for five years
To protect and conserve trust property and collect debts in favour of the trust diligently
To give effect to the terms of the trust deed

Bibliography
MRL2601 Entrepreneurial Law Study Guide University of South Africa Muckleneuk, Pretoria
MRL2601/0/2018-2020
The South African Law of Persons Heaton J 5th ed 2017 LexisNexis
https://www.sars.gov.za>partnerships
google.com/search
**I only received my funding from the Finance Department today and it is still not enough to buy the
required prescribed textbooks needed for all my modules for this semester. You will see that I only use
reference from Study Guide and other sources, was on vospresc@unisa.ac.za it only direct you to the
links of possible booksellers.

Thank you very much.

Honesty Declaration!
I hereby declare with all honesty that the work on this assignment is my own, I did not copy from
anyone, nor did I take notes from another student’s scripts. This work is all of my own and mine alone
and I have done research and use the sources as indicated in my bibliography.

9
Simplex (Pty) Ltd v Van der Merwe and others NNO 1996 (1) SA 111 (W)