FBE2604
Assignment 1
Semester 1
Due 24 March 2026
, Question 1: Whether a Valid Partnership Exists Between Thabo and Lerato
1. Legal Principles: Essentialia of a Partnership
In South African law, a partnership is formed when certain essential requirements are
present, even if no written agreement exists. The classic test comes from Joubert v
Tarry & Co, which sets out three essentialia:
1. Each party must bring something into the partnership (money, labour, skill or
expertise).
2. The business must be carried on for the joint benefit of the parties.
3. The object of the partnership must be to make a profit (Joubert v Tarry & Co
1915 TPD 277).
Later case law confirmed that a partnership can be tacit and does not need to be
formally recorded. The court in Butters v Mncora explained that the intention of the
parties and their conduct are crucial in determining whether a partnership exists (Butters
v Mncora 2012 (4) SA 1 (SCA)).
These principles guide the analysis of whether Thabo and Lerato created a valid
partnership.
2. Application of the Essentialia to the Facts
2.1 Contribution by Each Party
A partnership requires each party to contribute something of value. Contributions need
not be equal but must be intended as partnership capital.
• Thabo contributed R100 000 in cash. However, he insisted that the amount must
be repaid to him in full even if the business fails. This condition suggests that his
contribution resembles a loan rather than risk capital. In a true partnership,
partners usually share both profits and losses, meaning capital is placed at risk.
• Lerato contributed expertise, industry contacts and management services. This
type of non-monetary contribution is recognised as valid in partnership law.
Assignment 1
Semester 1
Due 24 March 2026
, Question 1: Whether a Valid Partnership Exists Between Thabo and Lerato
1. Legal Principles: Essentialia of a Partnership
In South African law, a partnership is formed when certain essential requirements are
present, even if no written agreement exists. The classic test comes from Joubert v
Tarry & Co, which sets out three essentialia:
1. Each party must bring something into the partnership (money, labour, skill or
expertise).
2. The business must be carried on for the joint benefit of the parties.
3. The object of the partnership must be to make a profit (Joubert v Tarry & Co
1915 TPD 277).
Later case law confirmed that a partnership can be tacit and does not need to be
formally recorded. The court in Butters v Mncora explained that the intention of the
parties and their conduct are crucial in determining whether a partnership exists (Butters
v Mncora 2012 (4) SA 1 (SCA)).
These principles guide the analysis of whether Thabo and Lerato created a valid
partnership.
2. Application of the Essentialia to the Facts
2.1 Contribution by Each Party
A partnership requires each party to contribute something of value. Contributions need
not be equal but must be intended as partnership capital.
• Thabo contributed R100 000 in cash. However, he insisted that the amount must
be repaid to him in full even if the business fails. This condition suggests that his
contribution resembles a loan rather than risk capital. In a true partnership,
partners usually share both profits and losses, meaning capital is placed at risk.
• Lerato contributed expertise, industry contacts and management services. This
type of non-monetary contribution is recognised as valid in partnership law.
