COURT CASES
LAW OF
PARTNERSHIPS
T: 051 401 9111 info@ufs.ac.zawww.ufs.ac.za
GOODRICKES V HALL
FACTS
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Hall and Burn were partners in a restaurant – The Snail
Burn instructed Goodrickes to apply for a liquor licence
Hall knew about the instruction by Burn.
Partnership terminated after that.
Goodricke’s, a firm of attorneys, sued the two defendants (Hall and
Burn ) jointly and severally or professional services rendered
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DECISION IN MAGISTRATE’S COURT
• Burn had the authority to represent partnership
• Authority arose as a result of the express agreement between Hall and
Burn
• Could be implied from “the customary dealings of the partnership”
• Hall then appealed based on the magistrate’s findings of fact and
credibility
GOODRICKES V HALL
DECISION IN NATAL PROVINCIAL DIVISION
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• From the evidence it was clear that Hall knew that Burns
instructed the attorneys,
• In Burns’ dealings wit the attorneys never questioned that Burns
did not have the authority
• Goodricke could rely on express or implied authority
• In this case it was implied authority
• If there was an agreement between Burns and Hall that limited
Burn’s authority?
• Hall needs to proof such limitation
• From facts no such limitation existed
• No agreement to limit authority : Was it concluded in furtherance
of the business of the partnership?
• Yes
WEGNER V SURGESON
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FACTS
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Messrs Bichoff and other leased erwen from the United Dutch Church
These 2 erwen were subleased to Surgeson
Leased expired on 30 and 31 July 1909.
In March 1908 Surgeson took in Wegner as a partner (eating house)
Partnership agreement stipulated the partnership will continue until the sublease
ended or three months’ written notice by either partner
The eating house licence was in Surgeson’s name
After 31 July 1909 – partnership continued until Bischoff informed partnership that
lease has ended.
Firm then wanted to lease directly from Church and partnership approached the
Church
Surgeson offered to lease premises personally – he would negotiate liquidation with
partners and the church said it would be in order.
The firm continued to pay the lease to the Church until December.
He then gave partners notice that partnership should be liquidated before 31
December
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WEGNER V SURGESON
QUESTIONS
• When was the partnership terminated?
• To whom does the renewed lease belong?
• To whom does the licence belong
WEGNER V SURGESON
• JUDGE WESSELS : QUESTION 1 WHEN WAS THE
PARTNERSHIP TERMINATED?
• Partnerships existing for indefinite periods may be terminated by
any partner: “It is my pleasure on this day to terminate the
partnership”
• May not terminate unreasonably to benefit himself – damages
• Possible dates: Surgeson claimed 7 September (when notice
was given that lease ended); 8 December (when notice of
termination was given 31 December (liquidation date?)
• The intention of Surgeson from facts is that it ended on 31
December
WEGNER V SURGESON
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QUESTION 2: WHOSE PROPERTY IS THE NEW LEASE AGREEMENT
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Contract uberrimae fidei contract between brothers
Therefore may not try to overreach the other partner
May not try to take benefits as a result of the dissolution of the partnership
8 September – Renewal for partnership
8 December: Notice to end and acquiring new lease would have occurred
simultaneously – partnership would be the power
31 December – property of partnership
“He was therefore, when he wrote the letter to the church (I think 8
December) asking for a renewal in his own name, dealing on his behalf and
behind the back of his partner,
Under these circumstances it is perfectly clear that the authorities I have
read apply, and that therefore such a lease becomes the property of the
partnership”
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WEGNER V SURGESON
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QUESTION 2: WHOSE PROPERTY IS THE NEW LEASE AGREEMENT
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Contract uberrimae fidei contract between brothers
Therefore may not try to overreach the other partner
May not try to take benefits as a result of the dissolution of the partnership
8 September – Renewal for partnership
8 December: Notice to end and acquiring new lease would have occurred
simultaneously – partnership would be the power
31 December – property of partnership
“He was therefore, when he wrote the letter to the church (I think 8
December) asking for a renewal in his own name, dealing on his behalf and
behind the back of his partner,
Under these circumstances it is perfectly clear that the authorities I have
read apply, and that therefore such a lease becomes the property of the
partnership”
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WEGNER V SURGESON
• QUESTION 3 : WHOSE PROPERTY IS THE LICENCE?
• Partnership agreement stipulates the assets of the
partnership – licence does not form part of the assets .
• Therefore private property of Surgeson
CURTIS AND CURTIS V BEART
• FACTS:
• Curtis, Curtis and Beart were in a partnership in
Johannesburg.
• The partnership agreement was later renewed for another 7
years
• Curtis and Curtis approached court requested dissolution
the partnership:
i) Relationship of confidence between partners no longer
existed
ii) Object of the partnership, namely to make a profit has
failed
CURTIS AND CURTIS V BEART
QUESTION
• Can a partnership be dissolved before expiry date?
JUDGEMENT
• Yes, it can be dissolved in terms of the Roman Dutch law if
there was iusta causa (Maasdorp)
• Misconduct
• Gross and persistent negligence
• Business cannot be carried on at a profit
CURTIS AND CURTIS V BEART
Misconduct:
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Keeping of stock
Supervision of office and shop
Engagement and control of clerks
Treatment of customers
Served customers with hat on (not respectful)
Going out to drink with customers
That in itself does not warrant dissolution
The senior partner, however, repeatedly spoke to him
about his inappropriate behaviour – said he would improve,
but did not = ground for dissolution
CURTIS AND CURTIS V BEART
Business cannot be carried on at a profit
In Jennings v Baddeley (supra), WOOD, V.C.,said (p. 1032), in
reference to an argument that the Court could not dissolve a
partnership on the ground of its being incapable of being carried
on at a profit: "I very much doubt that proposition. The doctrine of
this court has always been that expectation of profit is implied in
every partnership; that every partnership is entered into by the
partners with the view to deriving profit from the concern. No one
can suppose that persons, who have agreed to carry on a
business for a certain term, will continue to carry it on during as
many years as the term may have to run, when it is clear that
during the residue of the term they must be working at a certain
loss
CURTIS AND CURTIS V BEART
• Lost was increasing every year
• Since the contract was renewed, no profit was made , and
the lost was increasing every year
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• Oder to dissolve partnership
KOEKEMOER V LANGEBERG STENE BPK
Facts
• Langeberg sold bricks to Koekemoer before he was in partnership – goods
were paid for everytime
• Then Koekemoer entered into partnership with the second defendant (son)
Later another partner was added and onother – the partnership became
Wilco Contractors.
• Koekemoer terminated partnership – and Walco was actually a CC, but
Langeberg was never told about this state of affairs.
• Langeberg sold goods to Koekemoer (and or partnership) Koekemoer said
that the goods were not sold to the partnership, but to CC that was
liquidated.
• Langenberg said that Koekemoer negligently presented the company as a
partnership and Koekemoer was therefore estopped from relying on the true
state of affairs.
• He would never have sold goods to the CC without a new credit application
and if he knew that Koekemoer was not in partnership anymore.
• Cheques until 25 February 1995 in the name of Koekemoer and Son and
thereafter Wilco Contractors
KOEKEMOER V LANGEBERG STENE BPK
Agreed on the following:
• that the goods were in fact delivered to the close
corporation, Wilco Kontrakteurs CC and the close
corporation had not paid for the goods;
• that the Appellant and his son had dissolved their
partnership but had not notified the Respondent that they
were no longer trading as a partnership;
• The Appellant and his son had been negligent in not
notifying the Respondent of the dissolution of the
partnership.
KOEKEMOER V LANGEBERG STENE BPK
The issues in dispute
• whether Koekemoer had known that the partnership was
dissolved;
• whether Langeberg knew at the time of the transactions that he
was actually doing business with Wilco;
• whether the fact that the Respondent was conducting business
with Wilco was so obvious that knowledge of this fact had to be
imputed on Koekemoer;
• whether the Appellant and his son were legally liable for the
amounts claimed in respect of the goods delivered to Wilco.
• The court a quo found in favour of the Langeberg and the
Kokeremoer appealed
KOEKEMOER V LANGEBERG STENE BPK
Judgment: Common Law
• Dissolution of a partnership would only be enforceable against a
third party (Langeberg) if he was notified thereof or if he obtained
knowledge thereof in some other manner.
• Where proper notice of dissolution was not given to a third party, a
partner could also be held liable under the common law or on the
grounds of estoppel where the third party subsequently contracted
with the successor of the partnership in the belief that the original
partnership still existed, especially where the third party had
previously transacted with the partnership.
• In order to prevent these consequences, the partners should give
notice in the Government Gazette or in a ordinary newspaper that
the partnership was dissolved.
KOEKEMOER V LANGEBERG STENE BPK
Estoppel
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Langeberg had to show that the Koekemoer and his son negligently
represented that the Langeberg was still contracting with the partnership
during the relevant period and that such representation resulted in prejudice
to the Respondent.
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The Respondent’s acceptance that the Appellant was at all relevant times a
partner of Wilco Contractors could not be seen as unreasonable.
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The Court held that the defence of estoppel should succeed.
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The Court concluded that the Appellant and his son were liable to the
Respondent.
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The appeal was accordingly dismissed with costs
BERCO SAMEDAY EXPRESS V MC NEIL AND OTHERS
• Facts:
• Cox and Joubert started a business in partnership
• Mc Neil appointed as manager in Jhb branch – later joined as a
partner
• Partnership carried on a business as courier
• McNeil resigned and give notice “close of day” (allocation of
costs, expenses for Cox’s son)
• McNeil started a competing business soon afterwards
• Joubert and Cox approached Court for an order that McNeil:
Not to use confidential information
Not to solicit employees
Not to approach customers of the partnership
Return costing file and tickler box
BERCO SAMEDAY EXPRESS V MC NEIL AND OTHERS
• Point raised in limine by McNeil:
• The new partnership had no locus standi to institute
proceedings against him
• There was no evidence that the remaining partners had
acquired business or its assets as a liquidator had not been
appointed
BERCO SAMEDAY EXPRESS V MC NEIL AND OTHERS
• Unilateral notice
• Can be restricted in partnership agreement
• Good faith, reasonable, inopportune time
Consequences – partnership dissolves
- breach of fidiciary duties
- damages
- share in benefits
BERCO SAMEDAY EXPRESS V MC NEIL AND OTHERS
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Dissolution of partnership
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The partnership was dissolved by the withdrawal of McNeil
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The resignation requires the dissolution of the partnership
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However, the partnership agreement or dissolution agreement usually
prescribes that the remaining partners take over the business without a
formal liquidation process
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If partnership agreement does not prescribe this – formal liquidation is
required
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Present case – no dissolution agreement – based on the conduct of the
parties, Cox and Joubert acquired Mc Neil’s share in the partnership
BERCO SAMEDAY EXPRESS V MC NEIL AND OTHERS
• What needs to be done?
• Financial statements prepared, capital accounts prepared,
goodwill calculated
• Refer to Robson v Theron
BERCO SAMEDAY EXPRESS V MC NEIL AND OTHERS
• May not use information in tickler box – should be returned
• May not approach specific employees of partnership: (employees
in operations room; supervisors, managers, employees involved
in regular contact with clients
• Referred to Trego v Hunt
Resigning partner should conduct business in the same way he
would have done if he was never a partner in the previous
business
If he contacts customers of previous business – takes
unreasonable advantage
May not approach customers of the partners
T: 051 401 9111 info@ufs.ac.zawww.ufs.ac.za