Relations of Partners to Persons Dealing
with the Partnership
[§425-109] Partner agent of partnership as to partnership business. [Repealed July 1, 2000. For new provision, see below.] (1) Every partner is an agent of the partnership for the purpose of its business, and the act of every partner, including the execution in the partnership name of any instrument, for apparently carrying on in the usual way the business of the partnership of which the partner is a member binds the partnership, unless the partner so acting has in fact no authority to act for the partnership in the particular matter, and the person with whom the partner is dealing has knowledge of the fact that the partner has no such authority.
(2) An act of a partner which is not apparently for the carrying on of the business of the partnership in the usual way does not bind the partnership unless authorized by the other partners.
(3) Unless authorized by the other partners or unless they have abandoned the business, one or more but less than all the partners have no authority to:
(a) Assign the partnership property in trust for creditors or on the assignee's promise to pay the debts of the partnership,
(b) Dispose of the goodwill of the business,
(c) Do any other act which would make it impossible to carry on the ordinary business of a partnership,
(d) Confess a judgment,
(e) Submit a partnership claim or liability to arbitration or reference.
(4) No act of a partner in contravention of a restriction on authority shall bind the partnership to persons having knowledge of the restriction. [L 1972, c 17, §9; gen ch 1985]
§425-109 Formation of partnership. [Section effective July 1, 2000. For present provision, see above.] (a) Except as otherwise provided in subsection (b), the association of two or more persons to carry on as co-owners a business for profit forms a partnership, whether or not the persons intend to form a partnership.
(b) An association formed under a statute other than this part, a predecessor statute, or a comparable statute of another jurisdiction is not a partnership under this part.
(c) In determining whether a partnership is formed, the following rules apply:
(1) Joint tenancy, tenancy in common, tenancy by the entireties, joint property, common property, or part ownership does not by itself establish a partnership, even if the co-owners share profits made by the use of the property.
(2) The sharing of gross returns does not by itself establish a partnership, even if the persons sharing them have a joint or common right or interest in property from which the returns are derived.
(3) A person who receives a share of the profits of a business is presumed to be a partner in the business, unless the profits were received in payment:
(A) Of a debt by installments or otherwise;
(B) For services as an independent contractor or of wages or other compensation to an employee;
(C) Of rent;
(D) Of an annuity or other retirement or health benefit to a beneficiary, representative, or designee of a deceased or retired partner;
(E) Of interest or other charge on a loan, even if the amount of payment varies with the profits of the business, including a direct or indirect present or future ownership of the collateral, or rights to income, proceeds, or increase in value derived from the collateral; or
(F) For the sale of the goodwill of a business or other property by installments or otherwise. [L 1999, c 284, pt of §1]