In some situations, based on your statements and/or conduct, the court will consider you a partner even if you have not actually entered into a partnership agreement.
Partnership by estoppel means that a person who is not technically a partner can be held liable as a general partner would be for any debts and damages owed to a third party.
Am I at Risk of Being Held Liable as a Partner?
Any person who is determined to be a partner will be liable for all partnership debts should the partnership be unable to pay its creditors. You can be held liable as a partner by estoppel if the following has occurred:
- You gave a third party the impression that you are a partner when you are really not (this can be verbally or implied by your actions), and
- That third party extended credit, goods or services to the company, based on their belief that you were in fact a partner
Generally a partner by estoppel is created when someone is:
- Taking an active role by participating in the management of the company, or
- Permitting the company to use his/her name to do business.
Should I Contact an Attorney About My Partnership Issue?
If you believe that you are not in fact involved in a partnership and someone is trying to collect from you as a partner, a business attorney with business litigation experience can represent you to protect your rights and interests.
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