Parties who ran a business through a company contended that some of the parties breached the partnership relations when they established a competing business.
The Court rejected the claim and held that no partnership relations existed between the parties so that there has been no breach of such. Generally, the existence of a company excludes the existence of partnership relations. An exception is when from the beginning the parties contracted in order to run the business as partners. The existence of the exception has several indications: Whether the company's activity is characterized by a personal relationship between the shareholders; Is there an understanding between the shareholders about joint management of the company's business; Is it a family company, and how the parties chose to present themselves to each other and to third parties. Here, the entire joint activity was based on the company alone, there was no intention of sharing between all the involved parties and the parties never presented themselves as partners. Therefore, partnership relations did not exist between the parties and therefore the mere opening of a competing business does not constitute a breach of such relations.