Legalese 2009 (Week 42)


partnership – a contract where two or more persons bind themselves to contribute money, property or industry to a common fund, with the intention of dividing the profits among themselves. (Civil Code, art. 1767).


ARTICLE 1769. In determining whether a partnership exists, these rules shall apply:

(1) Except as provided by article 1825, persons who are not partners as to each other are not partners as to third persons;

(2) Co-ownership or co-possession does not of itself establish a partnership, whether such-co-owners or co-possessors do or do not share any profits made by the use of the property;

(3) The sharing of gross returns does not of itself establish a partnership, whether or not the persons sharing them have a joint or common right or interest in any property from which the returns are derived;

(4) The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but no such inference shall be drawn if such profits were received in payment:

(a)      As a debt by installments or otherwise;

(b)     As wages of an employee or rent to a landlord;

(c)     As an annuity to a widow or representative of a deceased partner;

(d)     As interest on a loan, though the amount of payment vary with the profits of the business;

(e)      As the consideration for the sale of a goodwill of a business or other property by installments or otherwise. (Civil Code)


Article 1769 lays down the rules for determining whether or not an association is a partnership. The issue as to whether a partnership exists is a factual one. Where circumstances taken individually may be inadequate to provide the intent to form a partnership, the collective effect of these circumstances may be such as to support a finding of the existence of the parties’ intent. (see Comments and Cases on Partnership, Agency and Trust, p. 30-31 [2005]).


A, B and C contributed money to buy a sweepstakes ticket for the purpose of dividing equally the prize should they win. Did they form a partnership? (see Comments and Cases on Partnership, Agency and Trust, p. 34 [2005]).