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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
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
T: 051 401 9111 [email protected]
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
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
• 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)
COURT CASES FOR NEXT WEEK
T: 051 401 9111 [email protected]
