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Universal Partnerships

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Universal Partnerships

If two people are co-habiting with no written agreement in place, and they end their relationship; each individual will walk away with only the assets they brought into the relationship and/or purchased during the its course.

However, our law does allow parties who were never legally married to share in each other’s assets at the time of termination of the relationship if a so-called “universal partnership” can be proven.

One of the leading cases dealing with universal partnerships is that of Pezzutto v Dreyer and Others.

According to the Pezzutto case, a universal partnership will exist if the following are present:

  • Each of the partners brings something into the partnership;
  • The business is carried on for the joint benefits of the parties;
  • The object of the partnership should be to make a profit;
  • The contract should be a legitimate one.

In a recent case, that of Ponelat v Schrepfer, the parties lived together for many years and were involved in activities for their joint benefit. The court confirmed the principles as set out in the Pezzutto case.

The court found in the Ponelat case that there was indeed a universal partnership. All of the requirements as set out above in the Pezzutto case were present to prove a universal partnership. Each party brought something into the partnership, the partnership was carried on for their joint benefit and the object was to make a profit.

The universal partnership is a useful mechanism created by the courts to allow a cohabitee to share in assets at dissolution of the relationship. It comes to the rescue of a partner left with nothing at the dissolution of the relationship.

Divorce and the distribution of assets of a universal partnership

One of the earlier decisions dealing with universal partnerships is that of Isaacs v Isaacs.

At the time of ‘marriage’ the parties had no assets. During the 28 years they lived together ten children were born. The Defendant had spent most of his ‘married’ years involved in business activities, and the Plaintiff had spent most of her time looking after the household and the welfare of the children.

At the ‘dissolution’ of the ‘marriage’ the Plaintiff claimed a half share of the fixed property. The Plaintiff averred that there was a tacit partnership between the parties covering all their undertakings in which she contributed equally with the Defendant in respect of labour and skill and that accordingly the property was a partnership asset to which she was entitled to half on dissolution.

The Defendant on the other hand denied that there was ever any partnership between them, and maintained that the asset was solely the product of his labour and business ventures. He did not deny that to some small degree the Plaintiff from time to time assisted him in his different undertakings, but he denied that her contributions were in any way comparable with his and stated that in so far as she did assist him in his ventures she acted as his wife and a member of the family, and not as his partner.

After deliberation, the Court found that a tacit, universal partnership had existed between the parties. One could not draw an inference on the fact that the Plaintiff’s intention was to work for her ‘husband’ and to assist him to accumulate an asset for himself which he could dissipate at his pleasure.

The Court found further that the object of the partnership was to provide for the household, and that the labours of the Plaintiff in the home in part, if not entirely, formed part of her contribution to the partnership.

The Court held that they both had an equal share and that it was impossible to discern that the Defendant had contributed more than the Plaintiff.

This decision is interesting as it lays the foundation for many other cases in the future involving the ‘universal partnership’.

Ryan Speight
Candidate Attorney


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