Compare and contrast these three scenarios. Whichones are partnerships? Explain. Which are notpartnerships? Explain.
Daniel is the owner of a chain of shoe stores. He hires Rubya tobe the manager of a new store, which is to open in Grand Rapids,Michigan. Daniel, by written contract, agrees to pay Rubya amonthly salary and 20 percent of the profits. Without Daniel’sknowledge, Rubya represents himself to Classen as Daniel’s partnerand shows Classen the agreement to share profits. Classen extendscredit to Rubya. Rubya defaults.
Patricia Garcia and Bernardo Lucero were in a romanticrelationship. While they were seeing each other, Garcia and Luceroacquired an electronics service center, paying $30,000 apiece. Twoyears later, they purchased an apartment complex. The property wasdeeded to Lucero, but neither Garcia nor Lucero made a downpayment. The couple considered both properties to be owned “50/50,”and they agreed to share profits, losses, and management rights.When the couple’s romantic relationship ended, Garcia asked a courtto declare that she had a partnership with Lucero. In court, Luceroargued that the couple did not have a written partnershipagreement.
Karyl Paxton asked Christopher Sacco to work with her interiordesign business, Pierce Paxton Collections, in New Orleans. At thetime, they were in a romantic relationship. Sacco was involved inevery aspect of the business—bookkeeping, marketing, and design—butwas not paid a salary. He was reimbursed, however, for expensescharged to his personal credit card, which Paxton also used. Saccotook no profits from the firm, saying that he wanted to “grow thebusiness” and “build sweat equity.” When Paxton and Sacco’spersonal relationship soured, she fired him. Sacco objected,claiming that they were partners.
