MRL2601
Assignment 1
(COMPLETE
ANSWERS)
Semester 1 2024
(399703) - DUE
15 March 2024
, Question 1 Sello, Thabelo and David want to start a partnership with the aim
of selling Solar batteries. Sello intends to contribute R25 000.00 on condition
that should the partnership fail, Thabelo and David will reimburse him.
Thabelo intends to contribute his expertise as an electrician. David intends to
contribute the use of his Hilux pickup truck. They come to you for advice on
whether a partnership agreement will be valid based on what each of them
wants to contribute. Advise them fully. (In your advice, define a partnership,
deal with each contribution and conclude.) (10)
A partnership is a business structure where two or more individuals
share ownership and responsibility for the operation of a business.
It's governed by a partnership agreement, which outlines the terms
and conditions of the partnership, including each partner's
contributions, responsibilities, and the distribution of profits and
losses.
Let's analyze each contribution:
1. Sello's Contribution: Sello intends to contribute R25 000.00 to
the partnership. His condition that Thabelo and David will
reimburse him if the partnership fails raises some concerns. In
a partnership, each partner shares in the profits and losses of
the business. However, the notion of reimbursement in case of
failure might contradict this principle, as it could potentially
skew the risk-sharing arrangement unfairly. Partners typically
agree to share profits and losses in proportion to their
contributions or according to another agreed-upon formula.
Thus, Sello's condition may need to be revisited to ensure it
aligns with the principles of partnership.
2. Thabelo's Contribution: Thabelo intends to contribute his
expertise as an electrician. While this is a valuable
contribution, it's important to clarify how his expertise will be
valued and accounted for within the partnership. Typically,
expertise or skills are considered a non-monetary contribution
and may not have a direct financial value. However, they can
still be recognized and accounted for in the partnership
agreement through profit-sharing arrangements or other
means.
3. David's Contribution: David intends to contribute the use of his
Hilux pickup truck. Like Thabelo's contribution, the value of
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