A partnership is a business that has between 2 and 20 partners who own the business together. If two or more people want to start a partnership, they should sign a written agreement. A lawyer should prepare this. The agreement must include these points:

• What happens to the assets of the business, for example, the tools and the furniture, if the partnership ends
• How the partners will share the profits, for example, one partner works every day and another partner only works three days a week; they would not want to share the profits equally because the one partner has worked more days than the other
• What happens if one of the partners wants to leave the partnership
  (See: What Are the Requirements for a Contract?)

Every time a new partner joins, the partners must sign a new agreement. Like a sole trader, the law does not recognise a difference between the partnership’s assets and debts and the assets and debts of the partners themselves. Not only that, but the law does not recognise a difference between different partners’ assets and debts.

For example, Nomonde’s business partner Vuyani builds a house and does not pay the builder. The builder takes him to court to get his money. The court can take the tools and furniture of the partnership and sell them to give the builder his money. The court can do this because there is no difference between Vuyani’s assets and debts and the assets and debts of the partnership. So Vuyani’s debts are also the debts of the partnership. If Vuyani cannot pay the builder, the builder can get his money from the partnership. Nomonde would be able to go to court to get the money back from Vuyani, but it is expensive to pay lawyers to take a case to court and it takes a long time before the court will hear her case.

If Vusi, decides to run Cool Leathers as a partnership, he must refer to the business in any business dealings as ‘Vusi Mahlangu t/a Cool Leather’.