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Fenwick v. Unemployment Comp. Com. - 133 N.J.L. 295, 44 A.2d 172 (1945)

Rule:

An element of partnership is the right to share in profits. However, not every agreement that gives the right to share in profits is, for all purposes, a partnership agreement. Other factors include the obligation to share in losses, the ownership and control of the partnership property, and business and community of power in administration, and the reservation in the agreement of the exclusive control of the management of the business in one of the parties.

Facts:

Fenwick entered into an agreement with Mrs. Chesire, a receptionist, after Mrs. Chesire demanded for an increase in salary. Based on the agreement, Mrs. Chesire was to receive 20 percent of the profits at the end of the year. Fenwick retained all control of the business and its management.

Issue:

Did a partnership exist between Fenwick and Mrs. Chesire?

Answer:

No

Conclusion:

The Supreme Court reversed appellant unemployment compensation commission's finding that the receptionist was an employee. The Court reversed, holding that a partnership did not exist between Fenwick and Mrs. Chesire. The sharing of profits by Fenwick and Mrs. Chesire alone did not give rise to a partnership. The Court noted that Fenwick retained all control and management of the business, that there was no obligation to share in losses and respondent contributed all of the capital, and that upon dissolution Mrs. Chesire would receive no compensation.

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