The way in which profits and gain must be divided amongst the partners. Chapter 15

• Date: 01 February 2006
• DOI: 10.10520/EJC74056
• Author: H.A. Wessels
• Published date: 01 February 2006
• Pages: 129-153

Chapter 15

The way in which profits and gain must be divided

amongst the partners

Summary

1. Profits cannot be distinguished from capital in a partnership in-

volving all the assets and no distinction is made between greater and

lesser contribution by the partners. No one is enriched to a greater

extent than the other, everything is jointly owned and shared equally.

This was stated in n. 728.

2. A partnership involving all the assets can be justified by the un-

certainty of the outcome.

3. Some jurists maintain that profits should be divided into shares

proportionate to the contribution made by each partner.

5. Also amongst partners who contribute efforts.

6. Natural reason demands that he who exerted himself more should

receive a greater share of the profits.

7. Should wages received by a partner for his own work also be

shared. Socin ... declares.

9. Cravet ... declares.

10. Profits made cannot be withdrawn as long as the partnership

endures.

11. Some people hold a different view & no. 12.

13. I approve of the former opinion because the presence of gain can

only be determined once the partnership has been terminated. This

applies with even greater validity where the partnership is conducted

by an agent.

14. This point of view does not apply where there is an agreement

by the partners to withdraw the profits annually.

15. It does not apply where it is in conflict with usage.

16. It does not apply where the partnership is directed towards profits

derived from capital investment and not towards profits on profits.

Eventually profits are converted into capital.

17. It does not apply where a partner is expected to live of the

expenses of the partnership.

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18. It does not apply where one of the partners received a share

of the profits because in that case one partner cannot prejudice

the other.

19. It does not apply where one partner withdraws part of the profits

while the other being aware of this remains silent. It was explained

in no. 23. If any amount has been withdraw from the funds of the

partnership what presumption exist. Has the amount been withdraw

from the capital or from the profits.

20. If profits have been converted into capital, the withdrawal is

presumed to have been made from the capital.

21. Profits are presumed to have been withdrawn and not capital

if it is capable of withdrawal.

22. Suretyship where there are profits & no.36.

23. Interest is payable on capital withdrawn even if this takes place

with the approval of the other partner.

24. If the capital contribution by a partner is less than the amount

agreed upon he has to pay interest on the amount outstanding.

25. No request is necessary to make interest payable & no. 84.

26. The partner who conducts the business of the partnership is

considered to have given the profits to the other partners and not

part of the capital 7 no. 27, 28, 29, 30, 31 & 32.

29. Payment is presumed to have been made in the most severe

circumstances.

30. The debtor may choose in what circumstances he will pay.

31. Payment is considered to have been made in the least certain

circumstances.

32. Payment is considered to have been made for the oldest debt.

33. To determine the age of a debt one should look at the time of

payment.

34. Payment is made in respect of profits, increase and fruits and

not in respects of the capital & no.35.

36. Payment made by a partner who administered the business to

the other partner is presumed to have been derived from the profits

and not from the capital even if no part of the profits is left for the

other partner.7 no.37.

38. Both profits and capital remain in the hands if the administering

partner on dissolution of the partnership and he owes a propor-

tionate share thereof to his co-partners and no. 39.

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