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Mixing business and pleasure

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brightncheerful
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Mixing business and pleasure

#3422

Postby brightncheerful » November 10th, 2016, 6:36 pm

I don't usually concern myself with Scottish case law but the following from one of the legal sources to which I subscribe attracted my interest. (I have edited/changed the wording of the original.)

Briefly, the dispute centred around some apps developed by three former friends, A, B and C. It was alleged that a legal partnership was created, allowing for the sharing of profits between them. Over a few months, A & B made financial contributions to the development of the app, which were later returned by C. The dispute was whether there was a partnership between the friends at law.

No formal partnership agreement was drawn up among the friends. There as no evidence A & B had assumed any obligations, beyond periodic investments, No acceptance of any trading losses during the early stages of the business. No relationship of agency or the sharing of capital between the friends. No formal agreement on the sharing of profits. In other words, no proof that a partnership existed. The court found that there was no partnership in law and that instead A & B were merely investors, without a legally binding agreement on their ultimate commercial returns to call.

Whether this ruling would apply to same arrangement in England and Wales, I've no idea. Also, I don't know anything much about partnership agreements - what little I did know was years ago. What I do know however if that if you are going to help out financially with a view to profit or not then it makes sense to put the matter on a proper footing in writing, stating clearly the intention and the basis for the arrangement.

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