Existence Of A Business Partnership Under Texas Law

In Texas individuals and entities form partnerships for a myriad of reasons. The typical way of forming a partnership is of course the formation and execution of a partnership agreement pursuant to the Texas Revised Partnership Act.

However, sometimes individuals or entities form business relationships in haste or begin working together without a partnership agreement. On other occasions, individuals shake hands over an agreement to "partner up" together in business. This can however, open the door to future litigation if the partnership terms are somehow misunderstood or changed.

From a legal standpoint it is always better to formulate a binding written partnership agreement, which spells the creation, income, expense and even dissolution of the partnership itself when the time comes.

Texas Revised Partnership Act (TRPA), lists five factors to be considered in determining whether a partnership has been formed. This determination should be made by examining the totality of the circumstances in each case, with no single factor being either necessary or sufficient to prove the existence of a partnership. Whether a partnership exists must be determined by an examination of the totality of the circumstances. Evidence of none of the factors under the Texas Revised Partnership Act will preclude the recognition of a partnership, and even conclusive evidence of only one factor will also normally be insufficient to establish the existence of a partnership under TRPA. However, conclusive evidence of all five factors establishes a partnership as a matter of law.

In other words, the more factors showing a business partnership under the TRPA, the more likely that a court of law would agree that there is or was a partnership. Better to consult with a partnership attorney and business lawyer before entering into such partnerships, joint ventures or any other business relationship.