JULY 2023, VOL.

I, ISS (I)

COMMERCIAL LAW 1B
JOURNAL
at the University of Zululand

FEATURED IN
THIS JOURNAL

Welcome
Introduction to
business entities
Partnerships

Welcome to Commercial Law B, second

semester (2LAW102). In this module, we will
be looking at the various types of business
WELCOME entities that an entrepreneur can choose
from to start a business. We will, however,
spend most of this semester on company law.
As you know,
This semester you will also have tutors.
Please sign up for ONE of the groups (link
available in Moodle) and attend the tutorials
regularly.
Good luck with the semester!
BUSINESS ENTITIES
This Learning Unit is self-study and will be assessed.

An entrepreneur can choose from the following business entities:

Sole proprietor
Partnership
Business trust
Company
Since 1 May 2011, no new close corporations can be registered.
You need to know when a particular business entity is the most
appropriate to choose. You also need to know the pros and cons of
each business entity. In addition, you need to be able to contrast
the various business entities.
PARTNERSHIPS
A partnership is formed based on agreement between two or
more parties in terms of which each partner contributes money,
skill or labour with the object of making a profit.

Please take note of the following:

There is NO limitation on the number of partners in a
partnership.
The biggest disadvantage of a partnership is that it has no
legal personality, meaning that the partners are liable for the
debts of the partnership.
Amongst each other, partners are generally liable pro rata to
each other, depending on their contribution, unless
otherwise agreed.
A partnership must ALWAYS have a profit objective and ALL
the partners must shre in the profit of the partnership.
Generally, partners are liable jointly and severally for the
debts of the partnership. This means the creditor can claim
the FULL amount of the debt from one of the partners and
then the partner can claim from the other partners' pro rata
payment from them.
PARTNERSHIPS (CONTINUED)
Extra ordinary partnerships have two things in common:
The anonymous partner or the partner en commandite does not
participate in the management of the partnership. This means
that parties external to the partnership does not know about
them.
These partners are liable to the partners only and not to third
parties, i.e. persons external to the partnership.
Anonymous partners are liable to the other partners pro rata.
Partners en commandite are liable to the other partners
according to their contribution.

Please take note of the following:

A partnership terminates in various ways. One of which is a
change in the partners for whatsoever reason.
Generally speaking, all partners may participate in the
management of the partnership.

You CANNOT only study this

summary. This was prepared to assist
you in respect of the most important
information relating to partnerships.