Thursday, July 2, 2009

What does it take to start an Indiana partnership?

The following pretty much condenses Indiana's law on forming a partnership:

... Copenhaver v. Lister, 852 N.E.2d 50, 58 (Ind. Ct. App. 2006). To form a partnership, parties must join together to carry on a trade or adventure for their common benefit, each contributing property or services, and having a community of interest in the profits. See id. In addition, to establish a partnership relation between parties, there must be: (1) a voluntary contract of association for the purpose of sharing profits and losses, which may arise from the use of capital, labor, or skill in a common enterprise; and (2) an intention on the part of the parties to form a partnership. Id. The intention that controls in determining the existence of a relationship is the legal intention deducible from the acts of the parties. Id. The intention to form a partnership must be determined by examining all the facts of the case, and the conduct of the parties reveals their true intentions and the construction they placed upon any agreement. See id.
What may not be so clear is that the "partners" may not know that they are partners. No formal partnership agreement is required - only actions as listed above.

Which makes partnerships a bit dangerous for the unwary. See partners can be held liable for the actions of other partners even without the first partner's knowledge and all the partners' personal assets are on the line.