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 San Jose Business & Commercial Law Blog

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Paul Johnson is an associate with Diemer & Wei specializing in civil litigation, bankruptcy, and real estate litigation. Prior to joining Diemer & Wei, Paul practiced at a litigation boutique firm in Los Angeles working on business litigation, contract disputes, and personal injury cases. Paul received his J.D., with a Specialization in B...usiness Law from the University of California, Los Angeles School of Law, where he served as Co-Chief Managing Editor of the Pacific Basin Law Journal. While in law school he interned at the California Attorney General’s Office, the San Francisco District Attorney’s Office, and for Associate Justice John L. Segal of the California Court of Appeals. Learn more about Paul J. Johnson, Esq. here. More

How Small Partnerships End in California

How Small Partnerships End in CaliforniaThe California Corporations Code requires founders to follow specific procedures and file specific forms before the entity comes into existence. For example, articles of incorporation must be filed with the Secretary of State in order to create a corporation. In contrast, a general partnership can be formed without any document at all.

A partnership is formed when two or more individuals co-own a business for profit. Cal. Corp. § 16101 (9). No writing at all is required to form a partnership. However, written partnership agreements are often created by the partners and this article discusses one reason why a partnership agreement is important.

For example, Sallie and Juan open a bakery shop together in downtown San Jose. Sallie buys all the groceries, pays for them and hires the staff. Juan gets up early, bakes everything and stocks the display windows. Together Sallie and Juan help customers and man the cash register. At the end of each day, they split the proceeds after costs are paid. They are clearly doing business together in their San Jose bakery. Even without a written partnership agreement or the intent to form a partnership, they have.

However, one day Sallie tells Juan that she has to move out of state to care for an elderly relative. Sallie leaves San Jose for Reno the next day. Juan no longer has a partner.

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