Victorian Consolidated Legislation

Partnership Act 1958 - SECT 6

Rules for determining existence of partnership

6. Rules for determining existence of partnership

In determining whether a partnership does or does not exist regard shall be
had to the following rules-

(1) Joint tenancy tenancy in common joint property common property or part
ownership does not of itself create a partnership as to anything so held or
owned whether the tenants or owners do or do not share any profits made by the
use thereof.

(2) The sharing of gross returns does not of itself create a partnership
whether the persons sharing such returns have or have not a joint or common
right or interest in any property from which or from the use of which the
returns are derived.

(3) The receipt by a person of a share of the profits of a business is prima
facie evidence that that person is a partner in the business, but the receipt
of such a share or of a payment contingent on or varying with the profits of a
business does not of itself make that person a partner in the business and in
particular-

   (a)  the receipt by a person of a debt or other liquidated amount by
        instalments or otherwise out of the accruing profits of a business
        does not of itself make that person a partner in the business or
        liable as such;

   (b)  a contract for the remuneration of a servant or agent of a person
        engaged in a business by a share of the profits of the business does
        not of itself make the servant or agent a partner in the business or
        liable as such;

   (c)  a person being the spouse, domestic partner or child of a deceased
        partner and receiving by way of annuity a portion of the profits made
        in the business in which the deceased person was a partner is not by
        reason only of such receipt a partner in the business or liable as
        such;

   (d)  the advance of money by way of loan to a person engaged or about to
        engage in any business on a contract with that person that the lender
        shall receive a rate of interest varying with the profits or shall
        receive a share of the profits arising from carrying on the business
        does not of itself make the lender a partner with the person or
        persons carrying on the business or liable as such: Provided that the
        contract is in writing and signed by or on behalf of all the parties
        thereto;

   (e)  a person receiving by way of annuity or otherwise a portion of the
        profits of a business in consideration of the sale by that person of
        the goodwill of the business is not by reason only of such receipt a
        partner in the business or liable as such.