Understanding Universal Partnership in Cohabitation

As a couple living together in a cohabitation relationship, it is essential to understand the concept of universal partnership in South African law. This legal construct has significant implications for the division of assets when a relationship ends. In this blog post, we will explore the concept of universal partnership and how it applies to cohabitation relationships, drawing insights from the Supreme Court of Appeal case of Butters v Mncora (203/2011) [2012] ZASCA 29, which at date of writing this blog remains the seminal case on the issue.

What is a Universal Partnership?

A universal partnership is an agreement, either explicit or tacit, between two or more parties to pool their efforts and resources for mutual benefit. In the context of cohabitation relationships, it may arise when two people live together and contribute to their shared life financially and otherwise, without a formal marriage or cohabitation agreement in place. We also highlight Five things to consider before shacking up – Cohabitation in South Africa

As you will see below in the case study, the Supreme Court of Appeal looked at three defining characteristics which must be present to prove a universal partnership, namely:

that the partnership business should be carried on for the joint benefit of both parties.
that the object should be to make a profit.

Butters v Mncora: A Case Study

In the case of Butters v Mncora, the parties were involved in a long-term cohabitation relationship. They lived together and pooled their resources for their mutual benefit. When the relationship ended, Ms. Mncora claimed a share of the assets acquired during their time together, arguing that they had entered into a universal partnership.

The court examined the following factors to determine whether a universal partnership existed between the parties:

Mutual Participation – Did the parties share in the profits and losses of the partnership? In this case, the court found that both parties had contributed to the partnership, with Mr. Butters providing financial resources, and Ms. Mncora providing domestic services.
Sharing of Profits – Did the parties share in the profits of the partnership? The court found that the parties had pooled their resources and acquired assets jointly, indicating a shared interest in the assets.
Intention to Create a Partnership – Did the parties intend to create a partnership? The court found that the parties had entered into a tacit agreement to pool their resources for their mutual benefit.

Based on these factors, the court held that a universal partnership existed between the parties, and Ms. Mncora was entitled to a share of the assets acquired during their time together.

What makes Butters v Mncora very important in South African law is that it finally solidified the position that universal partnerships may be applicable in domestic relationships. The Court summarized its findings very succinctly in paragraph 18 of the judgment by stating that:

[18] In this light our courts appear to be supported by good authority when they held, either expressly or by clear implication that:

(a) Universal partnerships of all property which extend beyond commercial undertakings were part of Roman Dutch law and still form part of our law.

(b) A universal partnership of all property does not require an express agreement. Like any other contract it can also come into existence by tacit agreement, that is by an agreement derived from the conduct of the parties.

(c) The requirements for a universal partnership of all property, including universal partnerships between cohabitees, are the same as those formulated by Pothier for partnerships in general.

(d) Where the conduct of the parties is capable of more than one inference, the test for when a tacit universal partnership can be held to exist is whether it is more probable than not that a tacit agreement had been reached.