PARTNERSHIPS AND JOINT VENTURES

A partnership is defined by most state laws as an association of two or more persons to conduct, as co-owners, a business for profit. No formalities are required. In fact, in some cases, people have been held to be partners even though they never had any intention of forming a partnership. For example, if you lend a friend some money to start a business and the friend agrees to pay you a certain percentage of whatever profit is made, you may be your friend’s partner in the Organizing Your Business • eyes of the law, even though you take no part in running the business. This is important, because each partner is subject to unlimited personal liability for the debts of the partnership. Each partner is also liable for the negligence of another
partner and of the partnership’s employees when a negligent act occurs in the usual course of business. A joint venture is a partnership for a limited or specific purpose, rather than one that continues for an indefinite or specified time. For example, an arrangement whereby two or more persons or businesses agree to build a single house and sell it for profit is a joint venture. An agreement to develop numerous properties over a period of time is a partnership.