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Law School Case Brief

Byker v. Mannes - 465 Mich. 637, 641 N.W.2d 210 (2002)

Rule:

Pursuant to Mich. Comp. Laws § 449.6(1), in ascertaining the existence of a partnership, the proper focus is on whether the parties intend to, and in fact do, carry on as co-owners a business for profit, and not on whether the parties subjectively intend to form a partnership.

Facts:

Plaintiff was doing accounting work for defendant. The two individuals talked about going into business together because they had complementary business skills--defendant could locate certain properties because of his real estate background and plaintiff could raise money for their property purchases. Plaintiff filed suit for the recovery of the money on the basis that the parties had entered into a partnership.  Specifically, plaintiff asserted that the obligations between him and defendant were not limited to their formal business relationships established by the individual partnerships and corporate entities, but that there was a "general" partnership underlying all their business affairs. In response, defendant asserted that he merely invested in separate business ventures with plaintiff and that there were no other understandings between them.

Issue:

Did the trial court err when it found that a partnership is formed by persons whose intent is to carry on as co-owners a business for profit, regardless of their subjective intention to be partners?

Answer:

No

Conclusion:

In determining whether a partnership exists, the focus is not on whether individuals subjectively intended to form a partnership, that is, it is unimportant whether the parties would have labeled themselves "partners." Instead, the focus is on whether individuals intended to jointly carry on a business for profit within the meaning of the Michigan Uniform Partnership Act, regardless of whether they subjectively intended to form a partnership.

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