Forming a Partnership

Question 1

Partnership definition

Answer 1

Association of two or more LEGAL persons who carry on a FOR-PROFIT BUSINESS as CO-OWNERS

Question 2

Who may form partnership

Answer 2

Individual OR company

Question 3

Requirements for ‘legal person’ to form partnership?

Answer 3

1) anything with legal capacity to contract
2) not incapacitated people (minors, intoxicated, etc)
3) includes legal entities like corporations in addition to humans

Question 4

Is intent to form partnership required?

Answer 4

NO, just intent to 1) carry on business as co-owners 2) for profit

Question 5

Is intent to form corporation required?

Answer 5

YES (unlike partnership)

Question 6

How is presumption of partnership established?

Answer 6

When two or more persons share profits

Question 7

When does presumption of partnership NOT apply (5 exceptions)?

Answer 7

1) Payment of debt
2) interest payments
3) rent
4) wages
5) goodwill

Question 8

How to know if two people share control?

Answer 8

Usually, control of DIFFERENT SPHERES of activity

Must give actual shared control, not just impression of shared control

Question 9

If a lender is repaid with business profits, is lender a partner?

Answer 9

NO