Business law+define a partnerships in business law+

Define a Partnerships

Partnership is a voluntary association of two or more person for carrying on a business as co-owner for profit. The formation of a partnership creates certain rights and duties among partners and with third parties. These rights and duties are established in the partnership agreement and by law. When used without a qualifier such as "limited" or "limited liability," usually refers to a legal structure called a general partnership. This is a business owned by two or more people (called partners or general partners) who are personally liable for all business debts. To form a partnership, each partner normally contributes money, valuable property or labor in exchange for a partnership share, which reflects the amount contributed. Partnerships are easy to form since no registration is required with any governmental agency to create a partnership (although tax registration and other requirements to conduct business may still apply). Although not required, it is an excellent idea to prepare a written partnership agreement between the partners to define items such as ownership percentages, how profits and losses will be divided and what happens if a partner dies or becomes disabled. Partnerships themselves do not pay federal or state income taxes; rather, profits are passed through to partners who report and pay income taxes on their personal returns.

A careful study of the literature reveals that the terms "collaboration" and "partnership" are used synonymously. Some authors (Bogo et al. (1992), Epstein and Kohn (1992) and Galinski et al. (1993), use the word "partnership" to refer to the actual collaboration between researchers and practitioners. In their view, "collaboration" is synonymous with "partnership", so they use the terms interchangeably. In some instances, even action research is considered to be a partnership. The confusion this creates is significant and we should try to make a distinction between the terms.

To eliminate any ambiguity, we need to distinguish between "partnership" and "collaboration" from the outset. The Centre for Research on Violence against Women and Children introduces a subtle nuance when it refers to collaboration between two partners as a result of cooperation during one or more stages of the research, generally at an advanced stage, and partnership to imply cooperation at every stage of the research. This distinction will be maintained throughout the rest of this paper.

In a discussion paper presented at a symposium organized by The Provincial Partnership Committee on Family Violence (Saskatchewan), Adams et al. (1994: 1) define partnership as a group of "... people working together and maintaining equal personal power." The authors state that partnership is achieved when all of the individuals involved listen, share and respect each other's opinions, knowledge and mutual differences. Go even further in describing their "collaborative model" as one that requires all research participants to be committed to an activity with equal sharing of authority right from the start. This view is echoed by Ouellet (1994: 3), who believes that partners who "collaborate" must feel equal and complementary to each other.

In defining a feminist research partnership between native rights activists and university researchers, Labrecque (1994: 1-2) describes it as a tool for empowerment which "... involves not only building knowledge on the basis of the research environment, but also concerns the relationship between the partners. This relationship typically exists prior to the actual research process." Labrecque adds that the idea of partnership in this context is a "hybrid" one that refers "... at once to constructive activity, practice in the field and joint research."

Recognizing the ambiguity of the term "partnership," a number of Quebec authors prefer to speak in terms of "interface," "... a social context where stakeholders with different agendas operate" (Couillard and Côté 1993: 30). In a review of various theories on the relationship between research and practice, Groulx (1994: 45), refers to the "research-practice interface" in which practitioners assign research categories and tools. For Deslauriers and Pilon (1994: 31), the term "partnership" describes good intentions rather than reality. They recognize, however, that the term describes a growing trend and refers to an approach based on conflict negotiation and cooperation.

The aspect of negotiation also appears in the Panet-Raymond and Bourque definition of partnership (1991: 9-10). In their evaluative action research on the relationship between community agencies and public institutions (Centre local de services communautaires, or CLSCs), they define partnership as "... an egalitarian and equitable relationship between two different kinds of groups, with different missions, activities, resources and operating methods. In this relationship, each partner makes a different contribution but both consider this contribution to be equally important. Genuine partnership, therefore, is based on respect for and mutual recognition of the contributions of the partners in an interdependent relationship." In this context, the goal of the partnership becomes "... an exchange of different kinds of services and/or resources that are recognized to be of equal importance or value by the partners involved." The same authors (1991: 10) contrast this model of partnership with "paternal-ship," in which "... relationships are unequal, and the objective is generally domination." In the entirely different context of New Zealand research (Park 1992: 582), the term "partnership" does not necessarily imply that the partners are equal but that the relationship is a joint commitment based on negotiation.

In Quebec, the concept of partnership between community and government networks is taken to imply a context in which the former negotiates with the latter. In Guay's experience (1991: 6), the purpose of this type of partnership is to integrate the community into the networks. Previous activities have led to a three-part model of partnership among institutions in the network, alternative resources (in this case, mental health resources) and community groups.

A collective work in the U.S. on "practitioner-researcher partnerships" in social services (McCartt Hess and Mullen 1995) suggests that practitioners can play an important role in knowledge building. One common element among the various definitions of partnership is the reflective practitioner model, where practitioners' experience leads them to "reflective action." Schön (1995: 18) sees the relationship between partners as "... one that builds on reflection so that researchers can help practitioners enhance the reflective process." Epstein and Kohn (1992: 19-20) take this example even further in adding concepts of what they call "practice-research" to all levels of social work. To establish a link between practitioners and researchers, they recommend incorporating research into all levels of social work decision-making in order to empower practitioners, improve practice, and avoid compromising the principles of action and ethics. According to the authors, "The social problems dealt with by the social work profession require attention from both the practice community and the education community." Coulton (1995: 21) studied partnership between a local community and university faculty. In her view, "partnerships with community organizations allow research to be guided from the outset by the vision, values, and questions of both researchers and practitioners." Finally, Blum and Associates (1995: 24) believe that partnership leads to knowledge building and inevitably to innovation.

Most of the authors we surveyed did not necessarily set out to define partnership. Some discuss the nature of the relationship between partners or suggest statements of principle. This gives us information on the basic assumptions and the philosophy underlying the concept, but we need to look more closely at what partners themselves think of their partnership experience.

The definitions of partnership that emerged from interviews with representatives of women's groups, researchers and research professionals are fairly consistent with what we found in our literature review. In fact, the main differences are mainly a question of semantics rather than ideas. The vocabulary used does contain some subtle but significant distinctions, however.

While representatives of women's groups emphasized "commitment" and "complementary relationships" when speaking of partnerships, researchers preferred to speak in terms of "joint participation in a research project." It goes without saying that the term "commitment" has a much stronger connotation with regard to team unity and cohesiveness than the term "participation."

It is interesting to note that representatives of women's groups included the important aspect of sharing knowledge and decision-making in their definition of partnership, while none of the researchers raised this issue.

Partnership Taxation

Like a sole proprietorship, a partnership has only one level of taxation. A partnership is a tax-reporting entity, not a tax-paying entity. Profits pass through to the owners and are divided in accordance with what is specified in the partnership agreement. There are no restrictions on how profits are allocated among partners as long as there is economic reason, so there is latitude in allocating income according to which partners have the best tax rates.

Liability

While pass-through taxation is an advantage, owners of a partnership have unlimited personal liability. In general, each partner in a partnership is jointly liable for the partnership's obligations. Joint liability means that the partners can be sued as a group. Several liability means that the partners are individually liable. In some states, each partner is both jointly and severally liable for the damages resulting from the wrongdoing of other partners, and for the debts and obligations of the partnership.

Three rules for liability in a partnership are:

1. Every partner is liable for his or her own actions.
2. Every partner is liable for the actions of the other partners.
3. Every partner is liable for the actions of the employees of the business.

As an example to illustrate liability in a partnership, suppose there is a partnership formed by partners A, B, and C. If partner A accidentally runs over somebody while driving on a personal trip to the grocery store one weekend, then A alone has unlimited personal liability. If partner A accidentally runs over somebody while making a delivery for the partnership, then A still has unlimited personal liability, but all three partners would be jointly and severally liable. If the victim wins a judgement of $1 million against the partnership, and only partner B has the money, then B would have to pay the judgement. Partner B could assert a right of contribution against partner A, but if A has no money it would not be worth the effort. If an employee of the partnership, employee E, accidentally runs over somebody during the course of work, then the partnership is liable since the employer is responsible for the actions of an employee within the scope of business. If the accident happened while the employee stopped for something personal, then the employer would not be responsible (frolic and detour).

Case: Salmon and Meinhard

Facts
Salmon wanted to lease some property in New York. The lease was to run from 1902 to 1922. He formed a partnership with Meinhard who put up 50% of the money. Salmon would be the active manager and would pay Meinhard 40% of the profits for the first five years, and 50% thereafter. In 1922 the lease was up for renewal and the owner of the property, speaking only with Salmon, offered to make some adjacent property available. Salmon signed a lease for the property on behalf of his own firm, Midpoint Realty Company, of which Meinhard was not an owner. Salmon had not told Meinhard anything about the new lease or even the possibility of a new project.

Issue
Meinhard claimed that Salmon had a fiduciary duty to provide him the opportunity to participate in the deal.

Holding

The court ruled in favor of Meinhard

Reasoning
The new deal was an extension of the old one. While Salmon did not act in bad faith, he had a fiduciary duty to Meinhard.

As one person put it, "a partnership is just like a marriage."

General partnership

An ordinary partnership can operate under the name the of any one or more of the partnership or under a fictitious business name. If the partnership operates under a fictitious name, it must file a fictitious business name statement with the appropriate government agency and publish a notice of the name in a newspaper of general of the circulation where the partnership does business. The name selected by the partnership cannot indicate that it is a corporation an cannot be similar to the name used by any existing business entity.

Formation of a general partnership

A business must meet four criteria to qualify as a partnership, its must be an association of two or more person, carrying on a business, as co-owner and for profit. Partnership a are voluntary associations of two more or more person. All partner must be agree to the participation of each co-partner. A person cannot to be forced to be a partner or to accept another person as a partner. A business a trade, an occupation, or a profession must be carried on. The organization or venture must be have a profit motive in order to qualify as a partnership, even though the business does not actually have to make a profit.

A general partnership may be formed with little or no formality. Co-ownership of a business is essential to create a partnership. The most important factor important factor in determining co-ownership is whether the parties share the business profits and management responsibility.

Receipt of partnership may be formed with little or no formality. Co-ownership of a business is essential to create a partnership. The most important factor in determining co-ownership is whether the parties share the business’s profits and management responsibility. Receipt of a share of business profits is prima facie evidence of a partnership because non-partnership usually are not given the right to share in business’s profits.

The condition in partnerships

Each form of partnership is unique and it is difficult to generalize without taking the context into account (Park 1992: 589). However, while a partnership model must be tailored to the problems and available resources of those concerned (Epstein and Kohn 1992: 355), some conditions always apply. These may be established beforehand as principles or models for action, or they may emerge as key principles after the experience has been evaluated.

There are two sets of conditions for the success and overall effectiveness of a partnership. Some pertain to the individuals concerned, their interrelationships, and the skills and professional experience of each. Others relate more to the many organizational factors that come into play at each stage of the research, when decisions are being made about the subject matter, work assignments, the quality of communication, the way the results will be used, the allocation of time and funds, and so forth.