Unmarried couples residing together? Take note of these possible implications:" />
We have had may queries regarding the legal implications of living with your Partner and treating your finances as if you were married.
A common-law marriage is an informal marriage created by habit and repute. This is when couple is seen as married once they have been residing together as a married couple for a number of years, without actually tying the knot.
In South Africa, there is no such thing as a common-law marriage. If you wish for the financial consequences of a marriage to be applicable during your relationship and, more importantly, upon divorce, then you would have to say the I do’s.
If you are not legally married, civilly or customarily, your partner may have no claim to your assets and vice versa, and, there is no maintenance obligation between the Partners.
However, it can sometimes happened that there are jointly owned assets, that the Parties have ventured into business together or, that an agreement was reached for one party to take care of the household/children whilst the other was given the opportunity to build up their respective and/or joint financial standings.
An express or tacit agreement may cause a universal partnership to exist between the two partners. There may be proprietary consequences linked to the separation, and, the dissolution of the partnership. Naturally, this separation is not regulated by the same laws as that of a married couple.
If the Parties agree that a universal partnership came to exist, or, should a court decide that it does exist, then one Party may have a claim against the assets of the other Party.
If no Partnership came to be, neither Party would have any claim against the other’s assets and each party would walk away with what they have acquired. This includes all assets, liabilities profits and losses.
Once the existence of a universal partnership has been decided, or, decaled by a court, the second question would be, how to dissolve the partnership and divide such assets of the partnership.
In order to determine whether a universal partnership exists, certain legal requirements must be satisfied, and these requirements are much the same as those for an ordinary business partnership. However, it must be noted that universal partnerships will differ from couple to couple and, importantly, not all contributions have to be financial in nature and there does not have to be a formal written agreement.
In Ponelat v Schrepfer 2012 (1) SA 206 (SCA) it was held that a universal partnership exists if the necessary requirements for its existence are met regardless of whether the parties are married, engaged or cohabitating.
The requirements for a universal partnership are as follows:
- That each of the partners contribute something to the partnership, whether it be financially, physically, time, energy, or skill;
- That the partnership should be carried on for the joint benefit of the parties; and
- The object is for each party to be enriched by the partnership. (See: Pezzutto v Dreyer 1992 (3) SA 379 (A) at 390.)
The dissolution of the universal partnership and the proprietary consequences thereof may be agreed upon between the Parties upon separation. The Court may be approached to determine same if the Parties are unable to agree on the specifications of the separation. In this regard, the Court will have regards to the agreement giving rise to the Universal Partnership when considering the fate of the assets forming part of the Universal Partnership. The agreement may be tacit or expressed.
There are two kinds of universal partnerships
Societas Universorum Bonorum
An example of this Partnership is found in Butters v Mncora 2012 (4) SA 1 (SCA) where the parties lived together as husband and wife for nearly 20 years. The court found that a universal partnership came into existence between the parties in that Ms Mncora shared in the benefits of Mr Butter’s financial contribution (income of the business conducted by him) and he shared the benefits of her contribution to the maintenance of their common home and the raising of the children. As such, this partnership includes the non-profit making part of family life
Societas Universorum quae ex quaestu veiunt
This partnership is confined to commercial undertakings where the Parties agree that all they may acquire from every kind of commercial undertaking, shall be partnership property. An example of this Partnership is found in Fink v Fink and Another 1945 WLD 226 at 228 where our courts found that universal partnerships existed between spouses only in respect of certain commercial enterprises and not all their property.
When there is no expressed agreement regarding the existence of a partnership and how same will be dissolved, a tacit agreement may be found in the Parties’ words or in their conduct during the relationship.
In McDonald v Young 2012 (3) SA 1 (SCA) at 11 it was held that: ‘In order to establish a tacit contract, the conduct of the parties must be such that it justifies an inference that there was consensus between them. There must be evidence of conduct which justifies an inference that the parties intended to, and did, contract on the terms alleged.’
If you are of no intention to enter into a lawful marriage or, if same is not on the cards for anytime soon, it would be best to have a formal written universal partnership agreement. This agreement should specify your intentions regarding your respective and/or joint assets and liabilities. It will also specify how these assets and liabilities will be dealt with upon your separation. This will minimise the risks of your actions, or lack thereof, being interpreted as something other than your intentions.