Universal Partnership

Universal Partnership

Today, about 60 percent of couples live together before a marriage. Some people are of the opinion that if they live together they are as good as married, which is simply not the case. There is no common law marriage in South African law and therefore the period of time that a couple spends living together does not translate into a default marriage.
The principle of a universal partnership assists cohabitees by affording them a right to a share in the property acquired during the relationship.

What is a “Universal Partnership”?

It is an express or tacit agreement between two parties, including gay and lesbian couples, who choose to live together in a permanent relationship without marrying. They share the same responsibilities and obligations of a married couple, including their present and future assets. In other words, all of their property is owned jointly during the relationship.

What are the legal consequences?

Our law does not give automatic rights to partners in a cohabitation relationship. If one of the parties dies without leaving a Will, the domestic partner is not legally entitled to inherit or to claim maintenance from the deceased’s estate. An aggrieved party would have to go to court to show that the parties were partners in a ‘universal partnership’ and that the one party owes something to the other.
The Domestic Partnership Bill 2008 seeks to establish legally recognized procedures to protect the rights and establish the obligations of the parties who are living together. The Bill is still in draft form and will become law as soon as it is gazetted and a registration infrastructure is set up and registration officers appointed.

What is the current position in law?

The requirements for an universal partnership set out in the judgment in the case ofPonelat v Schrepfer 2012 (1) SA 206 (SCA), were confirmed in the recent judgment handed down in the Supreme Court of Appeal in March 2012, in the matter betweenButters v Mncora (181/2011) [2012] ZASCA 29. In that case, the parties were not married but lived together as husband and wife for almost 20 years. The court found that during their 19 years together, the parties had formed a ‘tacit universal partnership’ entitling her to a slice of the pie when they went their separate ways.
In both cases the court held that a universal partnership did exist between the parties as each party brought something into the partnership, the partnership was carried on for their joint benefit and the object was to make a profit.

What are the benefits of entering into a Universal Partnership Agreement?

To protect a partner in a Universal partnership, a written contract should be drawn up governing the terms of the relationship and calling upon the courts to enforce the terms of the agreement.
The law does not provide any protection should you not enter into a written contract, however, legal remedies are available if you are able to prove the existence of a tacit universal partnership which is normally a difficult and expensive exercise.

What are the requirements?

A universal partnership will exist if the following essentials are present (as confirmed in the case of Pezzuto v Dreyer and Others 1992 (3) SA 379 (A):
a) That each of the partners bring something into the partnership, whether it be money, labour or skill;
b) That the partnership should be carried on for the joint benefit of the parties;
c) That the object should be to make a profit;
d) That the contract should be a legitimate one.

What are partnership assets?

It is those assets that were brought into the partnership at inception and also those that were acquired during the existence of the partnership. A partner may not alienate or use partnership assets as personal security without the other partner’s prior consent and may not entirely exclude a partner from controlling the partnership property or assets.

When does the Universal Partnership terminate?

Termination takes place in one of the following ways:
a) If one of the parties predeceases the other; or
b) By agreement; or
c) By insolvency of one of the partners.
On dissolution of the partnership, the partners can share in the partnership assets that are jointly owned, but not necessarily in equal shares.

What about children conceived out of a universal partnership?

The Children’s Act 38 of 2005 provides that the father of a child who is not married to the child’s mother, irrespective of their living arrangements, acquires responsibilities and rights. These responsibilities and rights include caring for the child, maintaining contact with the child, acting as a guardian of the child and contributing to the maintenance of the child.

Can the retirement fund of a partner become a partnership asset for division?

Partners cannot share in the pension assets of their partners on termination of the relationship, even those who are able to prove the existence of a universal partnership and a joint estate between them.
The reason is that the Pension Fund Act makes reference to a “Divorce” and a universal partnership is not a marriage and can therefore not be terminated by divorce.

Conclusion

Cohabitees are advised to instruct an attorney to draft a Universal Partnership Agreement clearly setting out the terms of their agreement in order to determine the division of their property specifically including the duty of support towards one another, the right to share in each other’s property during the relationship or with termination and to inherit from each other in terms of the rules of intestate succession.
The Universal Partnership Agreement clarifies the expectations of the partners and also serves as an early warning of future problems.
The contract may be entered into at any point during the relationship, prior to the termination of the relationship.
It is advised that a Will should be drawn up in order to govern the succession of the parties.

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