Robyn Shepherd

Category: Commercial Law   

A partnership must consist of at least two people and a maximum of twenty people. The partners involved in the partnership will be held liable for the actions of the partnership. A partnership does not enjoy perpetual succession, meaning, if one of the partners exits from the partnership or one of the partners passes away, the partnership will dissolve. The division of the profit will also be stipulated in this agreement. There is no rule enforcing that the agreement must be in writing, so it can also be a verbal agreement. The partners must have the same goals and outcomes for the business. Furthermore, the partners must contribute something of worth to the partnership. This can be capital, skills or expertise. This might have an influence on the division of profit. 

Types of Partnerships 

There are two types of partnerships, an ordinary partnership and an extraordinary partnership. In an ordinary partnership, the partners are known to the public and contribute to the partnership by means of labour or other contributions. Whereas, an extraordinary partnership is where the partners remain anonymous. In some instances, partnerships are formed between two companies. This is done when a certain task must be completed by the two companies. This is also referred to as a joint venture 

Forming a Partnership 

Just like a sole ownership, a partnership is quite easy to start. All that is needed is the drafting of a Partnership Agreement. This is where all the detail and the terms of the agreement among the partners are stipulated. Then, all that is left to be done is to register the partnership with the South African Revenue Services.  

The Partnership Agreement 

The are various factors to consider when starting a partnership, namely: 

The name of the partnership The business that the partnership will be involved in Roles and responsibilities of each partner If they will be needed full-time How the profit and losses will be shared among partners Which of the partners will have cheque and purchasing rights Other specifications that might be unique to your start-up 

Conclusion 

Partnerships are the perfect agreement to enter into when you share an idea with different people and have compatible recourses. It is easy enough to start and offers a fair amount of freedom to the partners. With the right combination of partners, there is no reason why a partnership won’t take off. 

Contact an attorney at SchoemanLaw for your legal needs by visiting our website at www.schoemanlaw.co.za

Robyn Shepherd| SchoemanLaw Inc
Attorney
www.schoemanlaw.co.za