At common law, there are two basic forms of partnership: Under the common law, the members of a corporation are personally liable for the debts and obligations of the corporation. Forms of partnership have developed that can limit the liability of a partner. Suppose three people have decided to start a partnership to run a car dealership. Able is contributing $250,000. Baker will bring the building and space in which the company will operate. Carr provides his services; he will direct the dealership. If two or more persons clearly own a business – including capital assets, contracts with employees or agents, a source of income and debts incurred in the name of the operation – a partnership exists. A more difficult question arises when two or more people own property together. Do they automatically become partners? The answer may be important: if one of the owners injures a stranger during the business activity relevant to the property, he could sue the other owners if there is a partnership. An agent may bind a partnership to contracts and other obligations by its shares on behalf of a partnership. Of course, when an agent acts on behalf of a partnership or other corporation, the corporation is bound by the actions and decisions of that agent. A third party dealing with an agent of a company can rely on the agency relationship and enforce the commitments made by the agent – even if the agent has made stupid or selfish decisions on behalf of the company.
If the agent acts under his authority, the partnership is tied to actions, no matter how stupid they may be. 10. What types of partnerships do not have an agreement regarding the duration of the partnership? As we saw earlier in this chapter, a partnership is not limited to a direct link between people, but can also include a connection between other entities such as corporations or even partnerships themselves. A joint venture – sometimes referred to as a joint venture, co-adventure, joint venture, joint venture, union, group or pool – is an association of people who perform a specific task until it is completed. Essentially, a joint venture is a “temporary partnership.” In the United States, the use of joint ventures with railroads began in the late 1800s. Throughout the mid-twentieth century, joint ventures were common in the manufacturing sector. In the late 1980s, they increasingly appeared in the manufacturing and service sectors, as companies sought new competitive strategies. They are aggressively advertised on the Internet: “Joint ventures are in place, and if you don`t use this strategic weapon, there`s a chance that your competitors will use it to their advantage or use it soon. maybe against you! (Scott Allen, “Joint Venturing 101,” About.com Entrepreneurs, entrepreneurs.about.com/od/beyondstartup/a/jointventures.htm). As a risk avoidance tool, the joint venture allows two or more companies to pool their different skills so that no one has to “learn the ropes” from the start; no one needs all the capital to start the business.
Partnership rules generally apply, although the relationship of the venturers is closer to the relationship of a specific organization than to a general relationship, as indicated in Chapter 38 “Relationship between the client and the intermediary”. The venturers are trustees of one another. Although no formalities are required, employees usually sign an agreement. The joint venture does not need to have a group name, although it may have one. .