Good day,, Myself and a business partnet...

Asked by PieterV on 14-10-2019 16:35:51
Question posted in the General Law category relating to Limpopo

Good day,, Myself and a business partnet decided to rent a piece of farm land where we would farm with poultry and vegtables.

We agreed that I will handle the poultry and he will handle the vegetables, and we will split the farm rent, electricity and the worker fees 50/50.

I have put quite a lot of my savings into the renovations of the poulty housed, equipment and live stock already,amd on his side not anything to get the vegetable production up and running. This past month he did not pay his full 50% of the expences 9running cost of the farm) and I had to spend on top of my 50% to cover the full amount.

Apon questioning him about that , he said he is not sure he wants to go on with the farm and he wants out. My question is, we sighned a contract for 2 years. I went into partnership with him,because I can not afford it on my own. He told me his lawyer is drafting a letter to get out of this deal . How do I go about this, because I've spend a quite a lot to get my part up and running, and what if the owner of the farm decide to sue, because of breach of the contract?

Message from the Lawyer

Posted by Att. Patrick on 14-10-2019 17:02:25

Hi there and thank you for your question,

I am a practicing attorney based in South Africa and I will assist you with your question. Please feel free to ask as many follow up questions in order to clarify your question. If you have a new question, you must please open a new thread.

Okay, so the owner of the farm will probably only sue you if you actually breach the lease agreement. So you've said that you haven't breached it yet. That's good. But if you do breach it the owner will sue the Partnership for the rental. 

You must be aware that you are technically on the hook for the full amount of any rental. That's how a partnership works. You are liable to pay the landlord, but you then have a personal claim against your partner to be refunded for his share. If you had a company, it would be a different story.

If your partner breaches your partnership agreement, you can either cancel the partnership agreement and sue him for loses that you've suffered as a result, or you can try to hold him to the terms of the partnership agreement (in other words, use a court to force him to comply with the partnership agreement).

Either way is a fight in court. If he doesn't want to comply now with the partnership agreement, then do you really want to be in business with him?  It might be a hard decision, but you might want to try get out of the partnership agreement now and then sue him for his contributions.

What you could also do is to negotiate with the land owner and say, your partner has let you down, you've cancelled your partnership agreement, you want to try make this work by yourself, but you need the landlord to assist in halving the rental for the farm for a period of 1 year. 

Maybe a good business decision is then to cancel the whole vegetable side of the business and instead focus only on the poultry.

If you had structured a company, or a close corporation, as a vehicle to operate this business in, you would probably be in a better position now - but you unfortunately didn't. Just be aware that you are personally on the hook for all partner-related expenses.

I think that his lawyer is going to try cancel the partnership agreement to get him out of the agreement. You need to challenge this. He can't just cancel the partnership agreement. The partnership agreement needs to make provision to cancel it! You need to read your partnership agreement carefully to see what the terms of the partnership agreement are.

If there is a part of the answer which you need more advice on, or clarity please continue in this same thread instead of opening a new question.

Att. Patrick

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Answer Accepted

This answer was accepted on 15-10-2019 09:11:46

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