What is an implied partnership in a business dispute?

Full question:

My husband and I are in the process of getting a divorce. I inherited my grandmother's business in 1998. I could not get a loan in my name to upgrade the business, so my husband agreed to co-sign with me. I paid the loan off without his help in 2006. He never paid a cent on the loan. Now, he is in the process of filing a lawsuit against me indicating he was an implied partner in the business. I have proof that I paid off the loan myself. My divorce attorney could not find any information on the meaning of an implied partnership. Can you help me?

• Category: Partnerships
• Date: 04/07/2025
• State: Tennessee

Answer:

A business partnership is typically based on a contract where two or more people agree to share in the profits and losses of a business. This contract can be express (written or oral) or implied through conduct. An implied partnership may arise if someone receives a share of profits, but this does not apply if the profits are payment for a debt, wages, rent, or similar arrangements.

Determining if a partnership exists can be complex, as courts consider various factors and the totality of circumstances. No single fact is definitive, and the absence of a written agreement does not rule out a partnership. Evidence can include transactions, conduct, and declarations from the parties involved.

Key indicators of a partnership include sharing profits and losses. However, simply sharing gross revenue or co-owning property does not automatically create a partnership. Courts may also look at tax returns, financial statements, and testimony from professionals to assess the relationship.

In your situation, since you have documentation proving you paid off the loan independently, this could support your case against the claim of an implied partnership. Each case is unique, so it’s important to consult with your attorney about the specific facts and evidence in your situation.