MRL2601 SUBMISSION OF ASSIGNMENT 01

By

HAWWAA DAWOOD DESAI

15103986

Submitted in partial fulfillment of the requirements for the

degree LLB

In the

DEPARTEMENT OF LAW

SCHOOL OF LAW

UNIVERSITY OF SOUTH AFRICA

SUPERVISOR: Prof J Geldenhuys

ASSIGNMENT NUMBER 01/02

2024

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Contents
Question 1 ......................................................................................................................................... 3
Question 2 ......................................................................................................................................... 3
ACADEMIC HONESTY DECLARATION.......................................................................................... 7

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Question 1

A partnership is a form of business where two or more individuals come together to

carry on a trade or business with the intention of making a profit. It is important to
have a valid partnership agreement that outlines the terms and conditions of the
partnership, including the contributions of each partner.
In this case, Sello intends to contribute R25 000.00. It is common for partners to
contribute capital to a partnership, and Sello's financial contribution will be
considered a valid contribution. However, Sello's condition that Thabelo and David
reimburse him if the partnership fails should be discussed and agreed upon by all
parties before entering into a partnership agreement. It may be advisable to include
provisions in the partnership agreement that outline the responsibilities and
consequences if the partnership fails, such as how losses will be distributed and any
repayment obligations.
Thabelo intends to contribute his expertise as an electrician. This is also a valid
contribution to the partnership. Thabelo's skills and knowledge as an electrician will
be essential in selling and installing solar batteries. It is important to determine the
value of Thabelo's contribution and agree on how it will be recognized and
compensated within the partnership agreement. This can be done through an
agreed- upon salary or a percentage of the profits.
David intends to contribute the use of his Hilux pickup truck. While the use of the
truck can be considered a contribution, it is important to discuss the extent and
duration of this contribution. It is essential to determine any limitations on the use of
the truck, such as whether it will be used exclusively for partnership purposes or if it
can be used for personal uses as well. Additionally, any expenses related to the
truck, such as fuel and maintenance, should also be discussed and agreed upon
within the partnership agreement.
In conclusion, based on what each partner intends to contribute, a partnership
agreement can be valid.

Question 2

2.1.1 Paul’s actions in purchasing a delivery vehicle for the trust’s business of
retailing computer equipment can be considered lawful based on the nature of
the business and his duty as a trustee.

As mentioned, a trustee in a business trust is empowered to carry on activities

inherent in the type of business carried out by the trust. In this case, the
retailing of computer equipment would likely require the transportation of such

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 equipment to customers or between different locations. Therefore, purchasing
a delivery vehicle can be seen as a necessary and integral part of the trust’s
business operations.

Furthermore, in Sackville West v Nourse and Another 1925 AD 516 1, it was

established that a trustee has a duty not to expose trust assets to undue risk.
If the purchase of the delivery vehicle is reasonable and necessary for the
business operations, it should not be considered an undue risk to the trust
assets. It can be argued that failing to provide reliable transportation for the
computer equipment could pose a greater risk to the assets and the success
of the business itself.

Additionally, in Doyle v Board of Executors 1999 (2) SA 805 (C) 2, it was

determined that a trustee must act with the utmost good faith in dealings with
the beneficiaries of the trust. By purchasing the delivery vehicle, Paul is
potentially benefiting the trust by ensuring the efficient and safe transportation
of the computer equipment, thus acting in the best interest of the
beneficiaries.

Therefore, based on these considerations, Paul’s actions in purchasing the

delivery vehicle for the trust’s business can be deemed lawful and in line with
his duties as a trustee, if the decision is reasonable and necessary for the
trust's business activities.

2.2.2 Other duties of a trustee include:

As a trustee, Paul has a fiduciary duty to act in the best interests of the trust
and its beneficiaries. Here are five other duties that Paul has as a trustee:

1. Duty of loyalty: Paul must always act in the best interests of the trust
beneficiaries and avoid any conflicts of interest. He should not use his position
for personal gain or take advantage of any opportunities that arise from the
trust's activities.

2. Duty to exercise reasonable care and diligence: Paul should carry out his
trustee duties with a reasonable level of care and diligence. This includes
taking the time to understand the trust's activities, making informed decisions,
and seeking professional advice if necessary.

3. Duty to preserve and protect trust property: Paul is responsible for

safeguarding and preserving the trust property, including the computer
equipment. He should ensure that the assets are properly maintained,
insured, and protected from loss or damage.

1 Sackville West v Nourse and Another 1925 AD 516

2 Doyle v Board of Executors 1999 (2) SA 805 (C)

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 4. Duty to account: Paul must keep accurate records of all transactions and
activities related to the trust. This includes maintaining financial statements,
recording income, expenses, and any distributions made to the beneficiaries.
He may also need to provide regular reports to the beneficiaries, as required
by the trust's governing documents or applicable laws.

5. Duty to act impartially: Paul should treat all beneficiaries fairly and impartially.
He must not favour one beneficiary over another unless specifically
authorized by the trust deed. This duty ensures that all beneficiaries are given
equal consideration and that Paul does not engage in any discriminatory
practices.
It's important for Paul to understand and fulfil these duties diligently to fulfil his
responsibilities as a trustee.

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Bibliography

Sackville West v Nourse and Another 1925 AD 516

Doyle v Board of Executors 1999 (2) SA 805 (C)

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ACADEMIC HONESTY DECLARATION

Declaration
1. I understand what academic dishonesty entails and am aware of University
of South Africa’s policies in this regard.

2. I declare that this assignment is my own, original work. Where I have used
someone else’s work, I have indicated this by using the prescribed style of
referencing. Every contribution to, and quotation in, this assignment from
the work or works of other people has been referenced according to this
style.

3. I have not allowed and will not allow anyone to copy my work with the
intention of passing it off as his or her own work.

4. I did not make use of another student’s work and submitted it as my own.
NAME: Hawwaa Dawood Desai

STUDENT NUMBER: 15103986

DATE: 11/03/24