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Requirements for Formation of Partnership

  • Date Submitted: 03/29/2011 12:09 PM
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Johanna Hamunyela

In our law of associations there are many different forms of businesses that exist, e.g. close corporations, companies and trusts; however for the purposes of this assignment only partnership business will be discussed in the light of this following statement.
“… it is, I think, a sound practical guide that where Pothier’s four requirements are shown to be present the court will find a partnership established unless such a conclusion is negatived by a contrary intention disclosed on a correct construction of the agreement between the parties.”
The statement is by Ogilvie Thompson JA in the case of Purdon v Muller 1961 (2) SA 211 at 218 E.   The statement will therefore be discussed with full reference to decided cases.
To begin with, a definition of a partnership will be given followed by the four essentials of a partnership as they were set out in the case of Joubert v Tarry.
Next the normal requirements for a partnership to be valid will be discussed with much emphasize to case law. The last requirement of contract will be discussed last. Lastly, the e of substance versus form will be discussed and a conclusion will be made.
For the purposes of this paper, books, cases as well as the internet served as a source of information.

Definition of a partnership
A partnership is a contract (and the legal relationship created by such contracts) between persons, not exceeding twenty in person, in which the persons concerned agree to contribute money, labour or skill to a common stock and to carry on business with the object of making a profit for their joint benefit.
The primary meaning of the word partnership is a contract of a particular kind, but it is also used to denote the relationship between the parties arising from the contract, and it is also used as an adjective in conjunction with the words property or estate, to describe the property or the estate which those persons hold in common for the purpose of carrying on...


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