General Partnership Formation

Question 1

What is a partnership?

Answer 1

An association of 2 or more persons to carry on as co-owners a business for profits
* NO formalities to becoming general partnership (e.g., no filing, writing, etc.)

Question 2

How is a general partnership formed?

Answer 2

As soon as 2 or more people associate to carry on as co-owners a business for profit
* Anyone capable of entering into binding K may be a partner–if no capacity, liable only for extent of capital contribution, but partnership not void; will continue to exist until steps taken to dissolve it

Question 3

What determines whether a partnership exists?

Answer 3

Look to intent of parties–if intended to carry on business as co-owners, partnership even if there was not intent
* Lookg for sharing profits, which raises a presumption of partnership

Question 4

Examples of behavior that does not create a presumption of a partnership

Answer 4

• Title to property held in joint tenancy or in common
• Parties designate relationship as partnership (must actually share in profits)
• Venture undertaken by parties requires extensive activity to buy a building or rental apartments that must be managed (this is MORE likely partnership activity than contributing $100k each to buy shares in company that manages real estate)
• Sharing of gross returns