John Bickley frequently ate lunch at a Mexican restaurant where Carlos Mendez an

Question

John Bickley frequently ate lunch at a Mexican restaurant where Carlos Mendez and Jose Manuel worked. Bickley told Mendez and Manuel that the business where he worked, a motorcycle repair shop, was going out of business, and he suggested that they might want to help him open a new motorcycle repair shop. The three men signed a 2-year lease on a building for the shop. Mendez and Manuel paid the security deposit and first month's rent for the building. They also gave Bickley some money, when he asked for it, to buy inventory for the shop and get it ready for business. Soon after the shop opened, Mendez and Manuel asked for keys to the building. Bickley refused to give them keys. They asked to see his receipts and invoices; he refused. They asked to work at the shop; he refused. They demanded a written agreement with Bickley about the money they had given him; he refused. They hired a lawyer, who sent a demand letter on their behalf to Bickley. Bickley did not respond. Eventually Mendez and Manuel filed suit against Bickley for a return of the funds they had given him. Bickley counterclaimed for "breach of contract by his partners."

Did the three men have a partnership? Discuss whether a partnership was created under the Revised Uniform Partnership Act.

Explanation / Answer

Partnership meaning:

A partnership is an arrangement in which two or more individuals share the profits and liabilities of a business venture. Various arrangements are possible: all partners might share liabilities and profits equally. There may or may not be a written agreement governing the partnership,

The Revised Uniform Partnership Act (RUPA) is a model statute that dictates how partnerships should be set up and organized, as well as what the rights and duties of each of the partners should be. It is, as the name suggests, a revision of the Uniform Partnership Act (UPA), and has been adopted by almost every state.  

RUPA gives partners much more discretion in determining how their partnership will operate than the UPA did, by allowing the partnership agreement to be the main authority over each of the partners. RUPA also provides fall-back rules for any provisions that are left out of the partnership agreement.

RUPA governs Limited Liability Partnerships (LLPs) and General Partnerships, but not Limited Partnerships. Limited Partnerships are not  considered real partnerships under RUPA, so they are not subject to any of RUPA's restrictions.

RUPA made a number of changes to the old rules governing partnerships.  It created partner "dissociations," which allow a partner to withdraw from the partnership without causing a dissolution of the remaining partnership.  

Most importantly, RUPA says that the partnership agreement (not partnership law) creates the rights and duties of the partners. The partners are free to include or exclude various rights in their agreement, although they are prohibited from doing the following:

Thus we can say that a partnership was created under the Revised Uniform Partnership Act.

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