To Partner or Not to Partner

ASchlossberg
July 20, 2017

Plaintiff in Hammond v. Smith, NYLJ 1202792787736, at *1 (App. Div. 4^th Dept. 2017) appealed the dismissal of his complaint which sought damages for breach of an alleged oral partnership. Since there was no written agreement, the court was compelled to consider extraneous factors — the parties’ intent, whether there was joint control and management of the business, whether the parties shared both profits and losses and whether the parties combined their property, skill or knowledge. Based on evidence presented, the Hammond court found that the parties had attempted to reach an agreement but never intended to become partners; that defendant had “sole control and management of the business” because almost all of the employees were hired by defendant, defendant reimbursed plaintiff for the one employee that plaintiff had hired and defendant paid the bills, established relationships with vendors, developed management protocols, directed all engineering decisions and leased the office space; and that plaintiff conceded that financial transactions were handled through a bank account belonging to defendant. Noting that “shared losses are an essential element of any partnership agreement,” the Fourth Department further affirmed dismissal based on plaintiff’s concession that he neither made any capital contributions nor shared in the business venture’s losses and that his contribution was limited to “time, effort, good will and expertise.” While a written agreement is not necessary to establish a partnership in New York State, parties’ rights often are more disputed where no executed writing exists.

The Law Office of Aaron M. Schlossberg, Esq., P.L.L.C.

(This writing is for general information purposes only, should not be construed as legal advice and does not establish an attorney-client relationship)

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ASchlossberg

Managing Member at The Law Office of Aaron M. Schlossberg, P.C.

Aaron Schlossberg focuses on complex commercial and insurance coverage matters involving corporate clients, entrepreneurs and individual policyholders. Mr. Schlossberg drafts and negotiates high-level contract documents and appears frequently in state and federal courts throughout New York State. Mr. Schlossberg earned his Bachelor of Arts Degree in English from The Johns Hopkins University and his Juris Doctorate Degree from the George Washington University Law School. Mr. Schlossberg gained invaluable insight during his post-graduate judicial clerkship and significant experience as an associate with two midtown Manhattan law firms prior to founding the Law Office of Aaron M. Schlossberg, P.C. in June 2012. Mr. Schlossberg is a published author and a seasoned presenter. He is fluent in Spanish, conversational in French and has basic knowledge of Mandarin Chinese and Hebrew. Mr. Schlossberg is a member of the New York State Bar Association and is admitted to the following courts: New York State, Eastern and Southern Districts of New York, United States Court of Appeals for the Second Circuit.