Commercial Partnerships and the duties associated with them

commercial partnerships

Partnership relationships and agreements may be a very complex matter, however, it is essential to set the framework thereof prior to entering into such a relationship. An essential component of such relationships are the duties associated with them. South African law has set out a list of duties which each partner in such a commercial relationship are afforded. This article shall set out those duties.

The most important aspect of a partnership is that the partnership exists with the aim of earning a profit. However, in order to achieve such a profit, partners have certain responsibilities or duties which they need to satisfy to achieve the desired outcome.  The first duty of a partner is to make a contribution to the partnership. This may be in the form of financial assistance, skills, contacts or anything else which the partners may deem necessary in order to progress the business. Such contribution would have to be reflected in the partnership agreement and a corresponding reward or profit for such contribution must be indicated, to avoid future conflict.

Another important duty which stems from a partnership is that of share in losses like the sharing of profits, it is not fair on one partner to accrue all the losses. As a result of this, it is essential for all partners to share in whatever loss is made by the partnership.

Members of a partnership may be a part thereof not only for their monetary contribution but for a certain skill or qualification which they may hold. However, such partners are not the only ones who are required to act with a certain level of care and skill. The duty to act with care and skill is a requirement of all partners. This could mean that partners not act outside of their scope of expertise as well as being knowledgeable enough to know where in the interest of efficiency it is acceptable for certain members to attend to certain matters and where it should be referred to a specific partner due to their abilities or referred to a third party. All of these decisions must be taken with the best interest of the partnership at the forefront.

An essential duty required to be acted upon by all partners is that of guarding against a conflict of interest. This is where business opportunities may arise for individual partners which may result in competitive behaviour between the individual partner against the partnership. A partner may not aim to compete with the business he or she is a partner to with the intent of achieving a financial benefit over the partnership.

These are just a few of the duties which are expected of all partners, should you require any assistance in establishing your business or formalising a partnership agreement, contact us and we will gladly assist you.


Saeedah Salie
Candidate Attorney


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