A business consultant claimed to be a partner in a business venture of an industrial design company and demanded access to financial data and a share of the profits.
The Court rejected the claim regarding the existence of a partnership and held that the relationship between the parties was strictly a principal-contractor relationship and not a partnership. The definition of a "partnership" under the Israeli Partnerships Ordinance requires the existence of a relationship between persons carrying on a business in common with a view of profit. The primary tests for this include: the parties' intent to be partners; sharing of profits; participation in losses; mutual right of management and representation; and the representation of the parties as partners to third parties. In this case, the consultant received a fixed monthly fee (retainer) against invoices, but did not invest equity in the venture and did not bear the risk of loss. In this instance, although the consultant was promised a future option for partnership (which was not exercised) or bonuses from profits, this does not render him a partner in the present in the absence of the essential characteristics of managing a joint business.