Colorado § 7-60-106 - Partnership defined.

§ 7-60-106. Partnership defined.

(1) A partnership is an association of two or more persons to carry on, as co-owners, a business for profit and includes, without limitation, a limited liability partnership.

(2) But any association formed under any other statute of this state or any statute adopted by an authority other than the authority of this state is not a partnership under this article unless such association has been a partnership in this state prior to April 17, 1931. This article shall apply to limited partnerships except insofar as the statutes relating to such partnerships are inconsistent herewith.

Source: L. 31: p. 647, § 6. CSA: C. 123, § 6. CRS 53: § 104-1-6. C.R.S. 1963: § 104-1-6. L. 95: (1) amended, p. 778, § 2, effective May 24. L. 2004: (1) amended, p. 1422, § 69, effective July 1.

Cross references: For provisions on limited partnerships, see articles 61 and 62 of this title.

ANNOTATION

Law reviews. For article, "Partnership or LLC: Alternative to an Irrevocable Life Insurance Trust?", see 25 Colo. Law. 43 (Jan. 1996).

A partnership is formed when an agreement is entered into which clearly embodies every element necessary for the formation and creation of a partnership and when it is executed by the parties nothing further remains to be done to legally bring about a partnership relation. Roberts v. Roberts, 113 Colo. 128, 155 P.2d 155 (1945); Thompson v. McCormick, 149 Colo. 465, 370 P.2d 442 (1962).

An express agreement is not required to create a partnership; a partnership may be formed by the conduct of the parties. Stratman v. Dietrich, 765 P.2d 603 (Colo. App. 1988); In re Winden, 120 B.R. 570 (Bankr. D. Colo. 1990).

And the partnership relation continues until it is dissolved either by mutual agreement or by action of the parties or decree of court. Thompson v. McCormick, 149 Colo. 465, 370 P.2d 442 (1962).

Failure by a partner to contribute his share of capital does not necessarily negative existence of a partnership, as such failure may be waived by the other partner where, following execution of the agreement, the other partner authorizes and makes payments of profits to the noncontributing partner. Thompson v. McCormick, 149 Colo. 465, 370 P.2d 442 (1962).

An agreement providing "all profits and losses in this venture are to be borne equally by the parties", expresses a consideration in the form of mutual promises and is sufficient to bring about a partnership. Thompson v. McCormick, 149 Colo. 465, 370 P.2d 442 (1962).

And partner's liability for losses indicates right to profit. If a partnership incurs losses and there is no question but that a partner would be liable for his share of the losses under the terms of the partnership agreement, this clearly indicates that the parties intended that partner to have an equal share of the profits. Thompson v. McCormick, 149 Colo. 465, 370 P.2d 442 (1962).

Applied in Frazier v. Carlin, 42 Colo. App. 226, 591 P.2d 1348 (1979); Damrell v. Creagar, 42 Colo. App. 281, 599 P.2d 262 (1979).