A partnership is two or more persons who operate as joint owners of a business and may form even if the parties do not intend to operate as a partnership. Oregon's laws determine the circumstances in which a partnership may exist. Circumstances may include contributing assets, sharing losses, or profit sharing.
Oregon law does not require a partnership to be registered to transact business, however any assumed business name should be registered with the Secretary of State. A partnership may be subject to additional licensing requirements and separate registrations with tax authorities. It is important that partners create a partnership agreement that addresses accounting considerations, salaries for working partners, distribution of profits, buy-sell provisions, dissolution provisions, and agreements to not compete. It is the partnership agreement that governs the relationship between the partners.
A partner can act on behalf of other partners concerning partnership matters, this includes liability for those actions. “A partnership is liable for loss or injury caused to a person, including a partner, . . . as a result of a wrongful act or omission or other actionable conduct of a partner acting in the ordinary course of business of the partnership or with authority of the partnership.” ORS 67.100(1). It is important that the partnership agreement address the potential liabilities that individual partners may expose the partnership to. In some situations, an individual partner may be required to act as a guarantor for the debts or judgments of a partnership. Maintaining appropriate insurance can help to mitigate the liability that may be imposed on the partnership as a whole and individual partners.
In Oregon, partners have equal rights when it comes to managing and conducting business. Partners share equally in profits and losses and may receive reimbursement for payments made on behalf of the partnership, however, property obtained by the partnership does not belong to individual partners. A partner's rights and obligations exist unless a partnership agreement creates a different arrangement. There are multiple considerations when it comes to creating a partnership agreement and a lawyer should be consulted to explore the multiple considerations which go into a comprehensive agreement. This is especially true if one partner will act as a manager.
A partnership may create multiple opportunities for conducting business and sharing risks. It should be a consideration for any group contemplating operating a business for profit.