4. DESARROLLO DEL PRODUCTO MECATRÓNICO
4.6. CREACIÓN DE GUÍAS Y MANUAL DE FUNCIONAMIENTO
According to Henning, partnership law is as old as commerce itself and its history as a profit-sharing ‘device’ can be traced from the ancient Near-Eastern civilizations to its present day position as one of the most important forms of business enterprise.757 At the outset it must be noted that it is not the intention of this chapter to critically analyse all the salient aspects of partnership law, but rather to list the five essentials of a partnership to provide a context for the discussion on the distinguishing features of an en commandite partnership.
753Pretorius, J.T., Delport, P.A., Havenga, M. and Vermaas, M. (1999), ‘Hahlo's South African Company Law Through the Cases: A Source Book : a Collection of Cases on Company Law, with Explanatory Notes and Comments’, Juta and Company Ltd, 6th Edition, at pages 35-37.
754Gibson, J.T.R., Visser, C., Pretorius, J.T., Sharrock, R. and Van Jaarsveld, M. (2003), ‘South African Mercantile and Company Law’, Juta and Company Ltd, 8th Edition, at pages 239-240.
755Henning, J.J. and Delport, H.J. (1997), ‘Partnership’ in LAWSA volume 19 (revised in 2006 by Henning, J.J, assisted by Snyman-van Deventer).
756Stiglingh, M., Koekemoer, A.D., Van Zyl, L., Wilcocks, J.S. and De Swardt, R.D. (2017), ‘Silke: South African Income Tax’, LexisNexis, Volume 2, January 2017, paragraph 27, at pages 870-894. See Haupt, P. (2012), ‘Notes on South African Income Tax’, 31st edition.
757Henning, J.J. (2007), ‘The Mediaeval Contractum Trinius and the Law of Partnership’, Fundamina: A Journal of Legal History, 13(2), at page 34.
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Nevertheless, it must be noted that partnerships are not addressed by the Companies Act 71 of 2008 and are largely governed by common law. The Companies Act 61 of 1973, which preceded the Companies Act 71 of 2008, imposed a maximum limit of twenty partners. The current Companies Act 71 of 2008 no longer places any restriction on the number of partners or members of an association formed for carrying on business for the acquisition of gain, and a partnership may now have an unlimited number of partners.758 Henning also states that the contribution of Roman law is evident both in so far as the basic concept of partnership as a consensual contract of the utmost good faith as well as the relationship constituted by it between the partners inter se are concerned.759 He states the following:
‘Developments advanced by the lex mercatoria include the doctrine of mutua praepositio, the liability in solidum of partners to third parties for partnership obligations and the entity theory of the legal nature of partnership. The commenda was an arrangement by which an investor (commendator) entrusted capital to a merchant (commendatarius) for employment in business on the understanding that the commendator, while not in name a party to the enterprise and though entitled to a share of the profits, would not be liable for losses beyond his capital. This concept served as the precursor of the present day Continental (and South African) partnership en commandite as well as the Anglo-American limited partnership.’760
As stated above, the relationship between partners must display uberrimae fides,761 the utmost good faith or commonly referred to as the highest degree of good faith; and this requirement must at all times be considered when drafting the terms of a partnership agreement and/or any dealing in relation to such partnership.762 For instance, a partner would be in breach of his duty of utmost good faith, if it is found that such partner made a secret profit, or competes in business with the partnership. Therefore, a partner must not put him/herself in a situation where his/her personal interests and the interests of the partnership conflict or may potentially be in conflict.763 According to Henning, a partner is accountable to the partnership for any profits or benefits he/she accrues in the
758See Cassim, F.H.I., Cassim, M.F., Cassim, R., Jooste, R.D., Shev, J., and Yeats, J. (2012), ‘Contemporary Company Law’, 2nd edition, Juta and Co, Cape Town, at pages 68-69.
759Henning, J.J. (2007), ‘The Mediaeval Contractum Trinius and the Law of Partnership’, Fundamina: A Journal of Legal History, 13(2), at pages 33-34.
760Henning, J.J. (2007), ‘The Mediaeval Contractum Trinius and the Law of Partnership’, Fundamina: A Journal of Legal History, 13(2), at pages 33-34. This concept of limiting the liability of non-managing investors spread from Italy to French commercial law, becoming the société en commandite, the predecessor of the present limited or en commandite partnership. It was incorporated into Roman-Dutch law retaining its French name. See Van der Linden, J. (1806), ‘Regtsgeleerd, Practicaal en Koopmans Handboek’, Unkown Publisher, at 4.1.12.
761The Latin expression meaning utmost good faith.
762This theoretical framework of the law of partnerships discussed in paragraph 3 of this chapter 2 will be contextualised to its practical aspects with regard to the relationship between the private equity fund manager and the investors, as well as the private equity funds’ assets/underlying portfolio investee company(ies) in paragraph 4 of chapter 3.
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performance of his/her duties and cannot apportion for themselves profits, assets, opportunities and benefits which are those of the partnership.764 In Robinson v Randfontein Estates Gold Mining Co Ltd,765Innes CJ stated that:
‘where one man stands to another in a position of confidence, involving a duty to protect the interests of that other he is not allowed to make a secret profit at the other’s expense or place himself in a position where his interests conflict with his duty.’766
Furthermore, Gibson et al define a partnership as a contract between persons, 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.767 Gibson et al states that the term partnership may either refer to the contract between the parties or to the relationship brought about by that contract.768 Therefore, a partnership may be established through a legally binding agreement between the intending partners, commonly referred to as a contract.769 In Oblowitz v Oblowitz,770 it was held that it is essential that there should be a valid contract between the parties, otherwise no partnership can arise. All essentials of a contract must therefore be present, for example, the contract must not be illegal or contrary to public policy. However, the essential feature is the contract, for the rights and obligations of the partners flow from the terms, express or implied, of their agreement.771 It was held in Festus v Worcester Municipality772that a contract of partnership need not necessarily be expressed, it could be tacit or implied from the facts; provided the parties admit of no other conclusion than that the parties intended to create a partnership. However, it would be better for the partnership agreement to be in writing. Therefore a partnership may be formed by the conduct of the parties.773
764Henning, J.J. (2007), ‘The Mediaeval Contractum Trinius and the Law of Partnership’, Fundamina: A Journal of Legal History, 13(2) at page 33.
765Robinson v Randfontein Estates Gold Mining Co Ltd (1921) AD 168. 766Robinson v Randfontein Estates Gold Mining Co Ltd (1921) AD 168.
767Gibson, J.T.R., Visser, C., Pretorius, J.T., Sharrock, R. and Van Jaarsveld, M. (2003), ‘South African Mercantile and Company Law’, Juta and Company Ltd, 8th Edition, at page 240. See also Henning, J.J. (2015), ‘Perspectives on the Law of Partnership in South Africa’, Juta and Company Limited, 1st Edition.
768Gibson, J.T.R., Visser, C., Pretorius, J.T., Sharrock, R. and Van Jaarsveld, M. (2003), ‘South African Mercantile and Company Law’, Juta and Company Ltd, 8th Edition, at page 239. See also Henning, J.J. (2015), ‘Perspectives on the Law of Partnership in South Africa’, Juta and Company Limited, 1st Edition.
769Ex parte Buttner Brothers 1930 CPD 138 at paragraph 145. 770Oblowitz v Oblowitz 1953 (4) SA 426 (C) at 433.
771Henning, J.J. (2015), ‘Perspectives on the Law of Partnership in South Africa’, Juta and Company Limited, 1st Edition.
772Festus v Worcester Municipality 1945 CPD 186 (C).
773In the case Fink v Fink and Another 1945 WLD 226, the facts of the case was that a wife owned the farm and the husband managed it. The husband and wife were married out of community of property. They bought cows and the milk produced being in excess of what they needed for their own use, the surplus was sold. From that small beginning a very substantial milk-producing and distribution business was established. To that business, both had contributed money and labour. All profits made were pooled back into the business. The question before the court was whether this could be seen as a partnership. The court looked at the essentials of what makes up a partnership. The court held that both parties added to the business aim of the business which was to benefit the partnership. The object of the business was to make profit and court found that the
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Briefly turning to the legal nature of a partnership, Pretorius et al states that, unlike a company, a partnership is not a separate person in law, with rights and duties apart from its members.774 A company acts through its directors, while a partnership acts through its partners with each partner being an agent of the partnership.775 The assets and liabilities of a partnership are the assets and liabilities of its members.776 This principle is defined as follows in Wille et al:
‘Although the assets or property mentioned above are invariably referred to as ‘partnership property’, they do not actually belong to the firm, since the firm is not a persona and cannot therefore own property. The property is owned jointly by the partners in undivided shares, i.e. they are co-owners, in such proportions as have been stipulated.’777
Gibson et al states that a partnership is simply a group of people acting jointly; and that the relationship between a partnership and third parties is governed by the law of agency.778 Therefore, partners are agents of each other.779 The agency of a partner for his co-partners arises by implication of law as soon as the relationship of partnership is established. In Potchefstroom Diaries and Industries Co Ltd v Standard Fresh Milk Supply,780De Villiers JPheld that a partner has not only the powers of an agent, but he is also a surety for his fellow partners for they are all liable jointly and severally. The learned Judge stated further that not only is a partner an agent, but he has the double character of agent and principal in one and the same transaction.781 When a partner makes a contract with a third party, he acts as an agent for his other partners and as a principal for himself. He can bind the partnership if he acts in the name of the partnership and within the scope of the partnership business.782 However, at common law a partnership is not a persona, but as stated in Potchefstroom
wife’s contribution went far beyond the duties of a wife in such a case. The court held a partnership existed between the spouses.
774Pretorius, J.T., Delport, P.A., Havenga, M. and Vermaas, M. (1999), ‘Hahlo's South African Company Law Through the Cases: A Source Book : a Collection of Cases on Company Law, with Explanatory Notes and Comments’, Juta and Company Ltd, 6th Edition, at page 35.
775Pretorius, J.T., Delport, P.A., Havenga, M. and Vermaas, M. (1999), ‘Hahlo's South African Company Law Through the Cases: A Source Book : a Collection of Cases on Company Law, with Explanatory Notes and Comments’, Juta and Company Ltd, 6th Edition, at page 35.
776Pretorius, J.T., Delport, P.A., Havenga, M. and Vermaas, M. (1999), ‘Hahlo's South African Company Law Through the Cases: A Source Book : a Collection of Cases on Company Law, with Explanatory Notes and Comments’, Juta and Company Ltd, 6th Edition, at page 35. Support for this contention is to be found in Gibson, J.T.R., Visser, C., Pretorius, J.T., Sharrock, R. and Van Jaarsveld, M. (2003), ‘South African Mercantile and Company Law’, Juta and Company Ltd, 8th Edition, at pages 242-243.
777Wille, G., Du Bois, F. and Bradfield, G. (2007), ‘Wille's Principles of South African Law’, Juta and Company Ltd, Eighth Edition, at page 612. See also Muller and Another v Pienaar 1968 (3) SA (A) 195 at 202 F-H; and Strydom v Protea Eiendomsagente 1979 (2) SA 206 (T) at 209 C-D.
778Gibson, J.T.R., Visser, C., Pretorius, J.T., Sharrock, R. and Van Jaarsveld, M. (2003), ‘South African Mercantile and Company Law’, Juta and Company Ltd, 8th Edition, at page 246. See also Henning, J.J. (2015), ‘Perspectives on the Law of Partnership in South Africa’, Juta and Company Limited, 1st Edition.
779Munro v Ekerold 1949 (1) SA 584 (SWA) at 589.
780Potchefstroom Diaries and Industries Co Ltd v Standard Fresh Milk Supply Co 1913 TPD at 506-513. 781Potchefstroom Diaries and Industries Co Ltd v Standard Fresh Milk Supply Co 1913 TPD at 506-513. 782Potchefstroom Diaries and Industries Co Ltd v Standard Fresh Milk Supply Co 1913 TPD at 506-513.
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Diaries and Industries Co Ltd v Standard Fresh Milk Supply, is ‘a contractual compound of several personae’.783
Nevertheless, a partnership is a contract as mentioned above, therefore all the essentials of a contract must be present.784 The essential features of a partnership were expressed in the following terms in the case Joubert v Tarry and Co:
‘These essentials are fourfold. First, that each of the partners brings something into the partnership, or binds himself to bring something into it, whether it be money, or his labour or skill. The second essential is that the business should be carried on for the joint benefit of both parties. The third is, that the object should be to make profit. Finally, the contract between the parties should be a legitimate contract.’785
According to Gibson et al, if these fouressentials are present then prima facie a partnership exists, however they are not in themselves a sufficient test because there may be other facts that show that actually no partnership was intended and that there was no partnership.786 For example in Pezzutto v Dreyer,787the court held that each partner must contribute something appreciable, thus something of commercial value, although such contribution need not be capital. The contribution may be in the form of money, skill or labour. In Pezzutto v Dreyer788 the partners had intended jointly to exploit a mine dump. Thus the contribution made by Pezzutto and De Polo was the right to exploit the mine dump. In Pezzutto v Dreyer,789Smalberger JA stated the following:
‘For a partnership to come about there must be an agreement to that effect between the contracting parties. In determining whether or not an agreement creates a partnership a court will have regard, inter alia, to the substance of the agreement, the circumstances in which it was made and the subsequent conduct of the parties. The fact that parties regard themselves as partners, or referred to themselves as such, is an important, though not necessarily decisive, consideration. What is necessary to create a partnership agreement is that the essentialia of a partnership should be present … The three essentials are (1) that each of the partners bring something into the partnership, whether it be money, labour or skill; (2) that the business should be carried on for the joint benefit of the parties; and (3) that the object should be to make a profit
783Potchefstroom Diaries and Industries Co Ltd v Standard Fresh Milk Supply Co 1913 TPD at 513. See also Gcilitshana v General Accident Insurance Co SA Ltd, 1985 (2) SA 367 at paragraph 371.
784Gibson, J.T.R., Visser, C., Pretorius, J.T., Sharrock, R. and Van Jaarsveld, M. (2003), ‘South African Mercantile and Company Law’, Juta and Company Ltd, 8th Edition, at page 240.
785Joubert v Tarry and Co 1915 TPD 277 at 280-281.
786Gibson, J.T.R., Visser, C., Pretorius, J.T., Sharrock, R. and Van Jaarsveld, M. (2003), ‘South African Mercantile and Company Law’, Juta and Company Ltd, 8th Edition, at page 240. See also Henning, J.J. (2015), ‘Perspectives on the Law of Partnership in South Africa’, Juta and Company Limited, 1st Edition.
787Pezzutto v Dreyer 1992 (3) SA 379 (A) at 390. 788Pezzutto v Dreyer 1992 (3) SA 379 (A) 390. 789Pezzutto v Dreyer 1992 (3) SA 379 (A) 390.
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… A fourth requirement mentioned … is that the contract should be a legitimate one. However, as has been pointed out previously, this requirement is one common to all contracts and is therefore not a particular essential of a partnership … Where Pothier's four requirements are found 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 ... In essence, therefore, a partnership is the carrying on of a business (to which each of the partners contributes) in common for the joint benefit of the parties with a view to making a profit. In this context a business is ‘anything which occupies the timê and attention and labour of a man for the purpose of profit’ (Standard General Insurance Co v Hennop790). The business need not be a continuous one; a joint venture in respect of a single undertaking can amount to a partnership provided the essentialia of a partnership are present … Finally, it should be noted that the contribution to be made by each partner need not be of the same character, quantity or value (Pothier: 1.3.9). However, each partner must contribute something ‘appreciable’, i.e something of commercial value, although such contribution need not be capable of exact pecuniary assessment as, for example, where a partner contributes his labour or skill (Pothier: 1.3.9 and 10; B v The Commissioner of Taxes791).’792
Nevertheless, the final essential element to be discussed is that the business must be carried on for the joint benefit of the parties. The aforesaid element is a defining element of a partnership.793 The element of joint benefit includes several other related elements discussed above, namely that the business must be carried on; the parties to the contract must be co-owners of property rights of the partnership and co-holders of all other rights belonging to the partnership; the partnership must have a common stock; and the business must be carried on in common because where each party can act independently and in his own interest no partnership exists.794 According to Gibson et al, it is an essential of a partnership that the profit made be for the joint benefit of the partners.795 These authors