Business Partnerships


A. A business partnership is the result of the bonding together of various individuals, groups, or entities, for the mutual purpose of conducting business; towards which the parties involved invest money, goods or services.

B. There are various forms of investments, e.g. providing the premises wherein the business affairs will be conducted, allowing the use of a privately owned trademark, or by providing professional expertise toward the success of the business.

C. In the absence of any agreement to the contrary, all members are considered equal principals, regardless of the disparity of the amounts each may have invested.


  1. There is a dispute amongst the earlier authorities, whether a mere verbal agreement to participate in a partnership is sufficient to create a contractual obligation to this effect.

For example, several people met together and agreed that any profits generated by any of their endeavors were to be shared equally amongst themselves. However, no contract was drawn up to this effect, nor was any symbolic token of execution performed.

The rule in this case is that none of the principals may refuse to comply with the agreement, and the other principals can force him to share with them any profits he already earned. However, if the dissenting principal retained any of the profits which he earned subsequent to his retraction, the court will not be able to enforce division of these profits.

  1. Even according to the authorities who rule, that there is legal substance to a verbal partnership agreement, this however, is limited to cases where there was a clear assent to the terms. But where, for example, one person spoke to a friend about forming a mutual partnership, and the friend merely remained silent, this silence is not interpreted as a sign of agreement.