• 15 Marks

BL – Nov 2011 – L1 – SB – Q5 – Partnership Law

Discussing the required minimum contents of a partnership agreement and legal considerations in a dispute.

(a) “It is not necessary for any two or more persons who intend to enter into a partnership to enter into any formal agreement. Where, however, they decide to do so, such agreements must have certain minimum contents.”

State any SIX of these minimum contents. (6 Marks)

(b) Femi and Solape entered into an agreement to contribute equal amounts to buy books. They purchased the books and shared them between themselves for sale. Subsequent to the initial purchase, however, Femi purchased books alone. Solape demanded that she share equally with Femi the profit made from the sale of the books, but Femi refused on the ground that Solape had not contributed towards the purchase of the books. Solape threatened to institute a court action for one half of the profit made on the sale of the books, claiming a partnership agreement. The written agreement between them was for sharing of the books purchased, not for sharing of the profit.

You are required to advise the parties. (9 Marks)

(a) The minimum contents of a partnership agreement include:

  1. Commencement date and duration
  2. Nature/objects of the business
  3. Place of business
  4. Capital contribution
  5. Profit-sharing ratio
  6. Termination/dissolution terms

(b) In this case, there is no valid partnership agreement to support Solape’s claim to share in the profits of the subsequent sales, as the agreement between her and Femi was specifically for the sharing of the books purchased, not the profits. Since Solape did not contribute to the subsequent purchases, she is not entitled to share in the profits. Femi has a right to retain the profits made from the books he purchased on his own. Therefore, Solape’s court action is unlikely to succeed.

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