MRL2601 ASSIGNMENT 01

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Question 1

Identify the different types of partnership that are recognised in South African law.5

- Ordinary partnership
- Universal partnership
- Particular partnership
- Extraordinary partnership
- Special 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 conclude 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)

Scenario 1

In the first scenario, a valid partnership can come into existence if both parties to the contract reach
an agreement about the nature and content of their contract.

Scenario2

In scenario two yes a valid partnership can come into existence because the facts provided does not
stop or hinder the partnership to be valid.

Scenario 3

In scenario three the contract is void because although the other requirements are met the question
of legality is set above, the pharmacists cannot form a partnership because their means are unlawful
and are contrary to the good morals of the society.

Scenario 4
A valid partnership can come into existence in scenario 4 because though Dobby is eleven years old
and does not have contractual capacity has the assistance of his guardian so the partnership will be
acceptable and valid.

Question3

With reference to relevant authority, indicate whether a partnership is recognised as a separate

entity apart from the partners in terms of South African law.

For the purpose of sequestration, the Insolvency Act treats a partnership as an independent entity
which is separate from its members. Although the view that a partnership is only an association of
persons is closely adhered to in South Africa, it is not being applied constituently. For the sake of
efficacy and equity, the partnership is treated as a separate entity in certain limited cases and under
certain conditions. Other countries adhere to the so-called entity theory and view the partnership as
an entity body which exist independently of its members and can acquire its own rights, liabilities
and assets and other countries such as South Africa support the aggregate theory. In this theory the
partnership is simply regarded as a contractual association of specific persons. The partnership is not
an entity which exists independently of the partners. The rights and obligation of the partnership are
the rights and obligation of the partners and the assets of the partnership usually belong to the
partners jointly in undivided shares. One of the naturalia of a partnership is that partners are co-
owners of the assets of the partnership in joint undivided shares because a partnership is not a legal
entity

Question 4

Briefly explain what the requirements are in relation to the formation of a valid trust.

For a valid trust to be formed the following requirements must be put into consideration. The first
one to be put into consideration is that a founder must have the intention of creating a trust, the
founder should express his document in such a way that a legally binding trust obligation is created.
The trust obligation consists of either the duty on a trustee or the founder to ensure that the trust
assets are admistered by a trustee. The will or agreement which gives the rise to the obligation must
be legally valid. The trust property must be defined with sufficient certainty. It must be possible to
ascertain which property is subject to the trust, whether the property was tangible or intangible
either I it is money or other types of properties. The object of the trust must be certain it can either
be to benefit named ascertainable or a class of persons or further one or more impersonal objects
like sports and culture. Certainty of objects means that it must be clear who the beneficiaries or
objects are. Lastly the trust object should be lawful and executable, the trust document should be
accepted by the court. The property should be defined with certainty and must be lawful No general
formalities are attached to the creation of a trust

Question 5

Set out five (5) duties of a trustee in relation to a business trust

 - He must observe his duties in terms of the trust document. He must transfer the trust
benefits to the trust beneficiaries in terms of the trust document
- He must fulfil his duties impartially and in good health
- In performance of his duties and the exercise of his powers he must act with care, diligence
and skill that can reasonably be expected of a person who manages the affairs of another.
- He must preserve the trust property and keep it free from burdens such as liens
- He must manage those trust assets which are capable of producing an income in such a way
that a reasonable return is obtained.

BIBLIOGRAPHY

1 New Entrepreneurial Law prescribed textbook for MRL2601 by Diet Delport chapters 14 and 15

2 Entrepreneurial Law study guide for MRL2601

3 wikipedia https://en.m.wikipedia.org three certainities