What is the test for establishing a business partnership?

California, United States of America


The following excerpt is from Eng v. Brown, 21 Cal.App.5th 675, 230 Cal.Rptr.3d 771 (Cal. App. 2018):

"The question of the existence of a partnership depends primarily upon the intention of the parties ascertained from the terms of the agreement and from the surrounding circumstances. [Citations.] Ordinarily the existence of a partnership is evidenced by the right of the respective parties to participate in the profits and losses and in the management of the business. [Citations.] In ascertaining the intention of the parties, where they have entered into a written agreement, such intention should be determined chiefly from the terms of the writing. [Citation.] While the question of whether a partnership exists is to be determined from the nature of the relation agreed upon rather than the name which the parties have given to it, some weight must be given to the language of the parties themselves. [Citations.] It is the intention as evidenced by the terms of the agreement, and not the subjective or undisclosed intention of the parties that controls." ( Constans v. Ross (1951) 106 Cal.App.2d 381, 386-387, 235 P.2d 113.)

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