Transcript Slide 1
Dissolution of partnerships LAW OF PARTNERSHIPS T: 051 401 9111 [email protected] GROUNDS FOR DISSOLUTION • • • • • • • • • Mutual agreement Effluxion of time Completeion of partnership business Death of partner Retirement Admittance of new partner Order of Court War Sequestration T: 051 401 9111 [email protected] MUTUAL AGREEMENT • Termination agreement • Expressly or tacidly • Formalities according to partnership agreement • Can deviate from procedure – mutual agreement EFFLUXION OF TIME • Partnership agreement • May extent, short or waive initial term – agreement • Retain same trights and obligations, unless agreement to the contrary COMPLETION OF PARTNERSHIP BUSINESS • Established for a specific project • What happens when purpose partnership was established for falls away DEATH OF A PARTNER • Dissolves immediately • Surviving partners can continue Agreement New partnership agreement • Appointment of successor not valid • Partnership can temporarily continue for benefit of deceased estate Agreement Liquidation is postponed Detrimental effect of unexpected and immediate liquidation is limited RETIREMENT OPF A PARTNER • Unilateral notice • Can be restricted in partnership agreement • Good faith, reasonable, inopportune time Consequences – partnership dissolves - breach of fidiciary duties - damages - share in benefits ADMITTANCE OF A NEW PARTNER • Agreement between existing partners and new partner • Not necessarily the same rights and obligations • Strictly applied - may change in future (Berco Sameday Express 1996) ORDER OF THE COURT • Partner apply to court to dissolve partnership • Dissolution fair and just • Court will consider following circumstances: - Breach of fiduciary relationship Irreparable breach Undermining; adultery; partnership agreement - Change in personal circumstances Long-term illness, certification mentally ill; long-term imprisonment WAR • One of partners is an alien, living in enemy terrotory – dissolves automatic • Not living in enemeny territory – court for dissolution order SEQUESTRATION • Partnership estate sequestrated • Partnership’s estate sequestrated ,CC or Co liquidated • Procedure: Estate of every partner is sequestrated (except extraordinary partners) • Insolvency Act can prevent sequestration of apartner’s estate Undertaking to pay debts ; en Provide security FORMALITIES FOR DISSOLUTION • • • • • No statutory formalities Wide publication required Estoppel Old partnership dissolved – new partnership formed – goodwill transferred Insolvency Act requires publication in Government Gazette Two editions of Afrikaans and English newspaper At least 30 days before and not longer that 60 days before assets are transferred Failure T: 051 401 9111 [email protected] CONSEQUENCES OF DISSOLUTION • Relationship between partners • Relationship between partners and third parties T: 051 401 9111 [email protected] RELATIONSHIP BETWEEN PARTIES • Relationship of good faith continues • Partnership agreement terminates May determine the relationship after dissolution • Termination of mutual mandate unless required to complete uncompleteed business or to have business liquidated RELATIONSHIP BETWEEN THIRD PARTIES • Rights and obligations remains valid Debtors have to perform – all partners must jointly claim More practical arrangement – one person has authority • Liable to perform i.t.o. its obligations Jointly and severally liable Any of the partners can be held liable Can be recovered from other partners LIQUIDATION • • • • • • • Liquidation? ( 2 ways) Partnership agreement can provide for procedure to follow Partners can conduct liquidation themselves Court can be requested to appoint – if partners cannot agree Liquidator fidiciary duty Liquidator to be dischaged Process to be followed Nothing left – loss share Assets left – capital repayed - then they share in terms of contract Action pro socio Actio communi dividundo COURT CASES FOR NEXT WEEK • Berco Sameday Express v McNeil [1996] 4 All SA 100 (W) • Goodricke’s v Hall [1978] 4 SA 208 [N] • Geldenhuys v East and West Investments (Pty) Ltd 2005 (2) SA 74 (HHA) • Wegner v Surgeson 1910 TDP 571 • Curtis and Curtis v Beart 1909 TH 141 • Koekemoer v Langeberg Stene BK 1999 (1) SA 361 (N) T: 051 401 9111 [email protected]