Legal Updates

Participation in managing a business is a necessary condition for recognizing a person as a partner, but it is not a sufficient one

September 4, 2018

Two family members ran a printing press together. When one of them asked to leave the business, the other refused to pay him any amount.

The Court held that there was a partnership between the parties and that there is a right to distribute some of the partnership's assets. A partnership is the joint management of a business for profit. Each partner is entitled to cancel the partnership and then after the partnership's debts are discharged to third parties and after the partners' debts are removed from the partnership, the remaining assets will be distributed among the partners according to their share of the profits. In order to examine the existence of a partnership, the intentions of the parties will be examined, inter alia; the way the parties presented themselves to others; the period in which the business relationship existed; the manner of division of management powers and the power of influence over the business; the contribution of each to the assets of the business; their participation in profits and more. Here there was participation in the management and profits and the parties even invested a lot of money in the business and therefore there were partnership relations although in the tax authority only one of the parties appeared and the business' lease was in his name.