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West Virginia Law Review

Article Title

Unintended Partnerships

Document Type

Article

Abstract

Infinite variety is possible in the agreements by which persons unite property or services in the hope of gain. As legal problems arise between associates, or between one or all of them and outsiders, the method of solution is to classify the associates as constituting some standard relation, such as partnership, co-owners, or principal and agent, and then to apply the rules of law appropriate to the relation found to exist. As there is a prima facie presumption that persons sharing profits are partners it is often necessary to decide whether or no that relation exists, and in so deciding the solution of the problem is generally apparent. This method is used in such problems as whether one is liable for the contract or torts of another; whether a creditor may levy on property held in co-ownership by the debtor and another whether property held in co-ownership is taxable to the group or to the members severally; whether the interest of an associate in real property held by the group is personal or real property; whether income is taxable to the group or to members severally; whether codebtors are subject to bankruptcy proceedings as a group; and what are the obligations between associates and the remedies for breach of such obligations. Where the entire terms of association are embodied in a writing the nature of the relation thereby created is a judicial question. If the writing is uncertain in its meaning, or if the agreement is not in writing there is a jury question as to the facts of the agreement, but a judicial question of the legal effects of the agreement. The relation of partnership is not like a corporation or a limited partnership, a relation existing de jure only after compliance with certain formalities of organization prescribed by legislation, but a common law consentual relation requiring only a voluntary agreement between the parties. Intent is controlling, i. e. intent to enter into a relation embodying the essential elements of what the law classifies as partnership. If the existence of the essential elements is doubtful the specific intent of the parties to be partners or not is of almost decisive weight. But it sometimes happens that persons are legally partners because they have agreed to a relation in terms that of partnership, although they believe their relation to be devoid of some of the obligations of partnership. The many definitions of partnership do not in themselves furnish infallible guides for discrimination and classification, but indicate the indicia of the relation to be looked for and examined in each particular state of facts. The definition of the Uniform Partnership Act is "An association of two or more persons to carry on as co-owners a business for profit." In applying this definition we have to decide in each case whether the associates have associated themselves to carry on a business, and whether they intend to carry it on as co-owners. We shall discuss separately the nature of these two elements, as they appear in a few typical recent cases.

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