Legal Updates

Parties that present themselves as partners and behave so will be deemed partners

October 13, 2016

An immigrant from Eritrea wanted to start a business of a drinks bar in Jerusalem, but due to the lack of legal status in Israel cooperated with an Israeli who was registered as the leasee of the property and the parties ran the business together for about 4 years. Later the Israeli claimed that the business was solely hers and the Eritrean immigrant was merely and employee who received a percentage of revenues from customers brought and she terminated his employment. The Court held that a partnership is the management of a business together when another law does not apply (such as when a company is incorporated). A contract under which an employee receives a part of the profits as remuneration does not make the employee a partner. To decide whether a partnership exists a Court will conduct a series of tests such as the parties intent to be partners; Presentation to the public of the parties as partners; Participation in the assets and the lease of the business; Equal right to manage the business and charge each other on matters of business; The parties’ participating in the business profits and the duration of the relationship. In this case the evidence showed that the parties presented themselves as partners and ran the business together. Therefore, the Court held a partnership exists and ordered full accounts to be delivered and a distribution of profits