South African law of partnership

(a) Sources

The modern South African law of partnership, uncodified as it is, is still firmly rooted in the societas of the ins commune. Even where the courts have turned to English law, the position has not substantially been changed.

Thus, for instance, partnership is said to be a contract uberrimae fidei.^[2429] This phrase, Latin, yet slightly illogical^[2430] and unRoman, attempts to reflect what Ulpianus had referred to as "ins quodammodo fraternitatis", which is implicit in societas.^[2431] The notion of the implied authority of the socii to act for each other has been imported from English law^[2432] but finds, as we have seen, its correspondence in the ius commune. English literature has often been referred to (particularly: Lindley on Partnership}, but more as a matter of persuasive authority and in view of the fundamental similarity between the English and the Roman-Dutch law of partnership.^[2433] This similarity is explicable partly because the medieval lex mercatoria was the historical basis of English commercial law (including commercial associations),^[2434] and partly on the basis that the jurisdiction of the Court of Chancery (due to the convenience of its procedure) extended to all matters which involved the taking of accounts, partnership being one of these.^[2435]

Much attention has been paid by the South African courts to Pothier, whose Tratte du contrai de societe was translated into Dutch by Johannes van der Linden, the last of the classical Roman-Dutch writers.^[2436] Thus, the following formulation of the essentialia of a partnership contract is based on Pothier:

"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.... Where all these four essentials are present, in the absence of something showing that the contract between the parties is not an agreement of partnership, the court must come to the conclusion that it is a partnership."^[2437]

The first authoritative statement occurs vaJoubert v. Tarry & Co.,^[2438] and it has been confirmed on a number of occasions.^[2439] It has, however, been pointed out that this definition is partly trivial^[2440] and partly inconclusive.^[2441] The authority of Pothier has also been invoked to justify continuation of the partnership for the benefit of a deceased partner's estate, where this was expressly provided in the partnership agreement.^[2442] Such pacta de stando in perpetua societate appear to have been common in the commercial practice of the usus modernus;^[2443] among the Roman-Dutch writers their validity was in dispute.^[2444]

(b) General features

Otherwise, the South African courts still recognize the general common-law principle that "a partnership is not a legal entity or persona separate from its members".^[2445] Occasionally, however, a "juristic ghost"^{151 ^[2446] materializes, for the societas, even though not a legal person, may sue or be sued in its own name, and it is treated by the Insolvency Act (24/1936) as having a separate estate and as being in the position of any other debtor.^[2447] South African law accommodates all sorts of partnerships, universal and particular^[2448] (including unius rei).^[2449] Whether a universal partnership may be only universorum quae ex quaestu veniunt or also universorum bonorum is questionable.^[2450] Unlike in most modern civil-law jurisdictions, no distinction is drawn between civil and commercial partnerships.^[2451] The ordinary action with which one partner sues another is the actio pro socio.^[2452] It normally lies only after dissolution of the partnership, but may also be brought manente societate, most notably in order to enforce a partner's duty to contribute to the partnership.^[2453] The partnership may be quoad sortem or quoad usum, in other words, the establishment of a partnership fund is not essential for the constitution of a partnership, although it is very common.^[2454] The individual items contributed to such fund must be made the common property of all the partners.^[2455] At the termination of the partnership^[2456] the partnership assets therefore have to be divided or distributed again.^{161 * ^[2457] Thus the question arises, whether such liquidation is to be effected in terms of the actio pro socio or of the actio communi dividundo. The Appellate Division of the Supreme Court had occasion to pronounce on it in a case involving the goodwill of a partnership practice of veterinary surgeons.^[2458] Joubert JA, in an interesting and most erudite judgment, conceded that, from a purely historical and technical point of view, the actiones pro socio and communi dividundo are separate and distinct legal remedies, each with their own characteristics.}}

Nevertheless, he chose to follow the "logical and practical"^[2459] approach of Pothier (introduced by Van den Linden into Roman-Dutch law), according to whom the actio pro socio may be employed for the distribution or division of partnership assets in the same way and with the same result as the actio communi dividundo. As, in turn, the principles of the common law applicable to the actio communi dividundo have been extended in Roman-Dutch law by means of an utilis actio communi dividundo to res incorporales which are held in co-ownership,¹⁶⁶ the choice of remedy no longer matters. In the result, it was held that by virtue of either of the actions, the retiring partner was entitled to payment of his half-share of the goodwill of the partnership practice which the other partner continued to run.¹⁶⁷

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Source: Zimmermann R.. The Law of Obligations. Roman Foundations of the Civilian Tradition. Juta & Co, Ltd,1992. — 1241 p.. 1992

South African law of partnership

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