1.Malvis, Nokuthula and Clara decide to form a partnership. They wish to engage in the business of moulding, making, and selling bricks. They agree that Malvis will contribute his newly acquired brick making machines for the purpose of producing bricks. Nokuthula who is a certified brick maker will contribute his skill of making bricks, whilst Clara would provide the land or premise and facility upon which to establish the brick making business. They further agree that Malvis will receive 30% of the profits, Nokuthula will receive 20% of the profits and Clara will receive 50% of the profits. Due to the current economic challenges including lack of reliable electricity supply, volatile rand and liquidity, the business fails and has a net loss of R1000 000.

Question

1.Malvis, Nokuthula and Clara decide to form a partnership. They wish to engage in the business of moulding, making, and selling bricks. They agree that Malvis will contribute his newly acquired brick making machines for the purpose of producing bricks. Nokuthula who is a certified brick maker will contribute his skill of making bricks, whilst Clara would provide the land or premise and facility upon which to establish the brick making business. They further agree that Malvis will receive 30% of the profits, Nokuthula will receive 20% of the profits and Clara will receive 50% of the profits.  Due to the current economic challenges including lack of reliable electricity supply, volatile rand and liquidity, the business fails and has a net loss of R1000 000.

With reference to the essentialia of a partnership agreement, discuss whether a valid partnership was established between Malvis, Nokuthula and Clara. In your answer consider how the issue of liability will be dealt with

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The essentialia of a partnership agreement include a valid agreement between two or more parties, a common goal or objective, the intention to make a profit, and the sharing of profits and losses. From the scenario provided, it can be inferred that there was a valid partnership agreement between Malvis, Nokuthula, and Clara. They all agreed to contribute something towards the partnership and share the profits and losses in a predetermined ratio.

Malvis contributed his newly acquired brick making machines, Nokuthula contributed his skill of making bricks, and Clara provided the land or premise and facility for the business. These contributions meet the requirement of a valid partnership agreement. Additionally, they all had a common goal to engage in the business of moulding, making, and selling bricks to make a profit.

However, the issue of liability needs to be considered in the establishment of a valid partnership. Partnerships have unlimited liability, which means that the partners are personally liable for the debts and obligations of the business. This means that if the business fails, the partners are responsible for paying off any debts or obligations using their personal assets.

In the scenario provided, the business failed and had a net loss of R1000 000. This means that the partners are liable for the debt incurred by the business. Therefore, if the assets of the business are not enough to cover the debt, the partners will have to use their personal assets to pay off the debt. This means that Malvis, Nokuthula, and Clara will be held personally liable for the debt incurred by the partnership.

In conclusion, a valid partnership was established between Malvis, Nokuthula, and Clara based on the essentialia of a partnership agreement. However, the issue of liability needs to be considered, as the partners are personally liable for the debts and obligations of the business.