Shabbat Parashat Lech Lecha 5784

P'ninat Mishpat: Compensation for Transfer of Business to One Partner – part II

Case: The plaintiff (=pl) and the defendant (=def) started a business that provides therapy for children. According to their agreement, def, who has a similar center elsewhere, was responsible for the finances and infrastructure (e.g., payment from parents and kupat cholim, paying workers, insurance, purchases, upkeep). Pl was to serve as a therapist, be in charge of day-to-day operations, interact with parents and workers, and plan events. The business and grounds rental were in def’s name. Pl and def were supposed to get small salaries and then split profits equally after reaching “the point of balance.” After three years, the level of acrimony brought them to separate, and beit din oversaw the transfer of the business to pl, with compensation due to def. This installment deals with the validity of the written agreement and the status of pl as a partner.

Ruling: A one-page agreement between the sides maps out the rights and the responsibilities of the two. Pl claims that the document is binding even though it was not signed. Def contradicted himself on the matter at different junctures of the adjudication. 

Beit din finds that the document is binding. All agree that that it had been drawn up by def and that there was no other basic written agreement. When, two years into the business, a financial advisor needed to learn about the workings of the business, def showed him this document. Def also used it as a source to learn matters that supported his case, and so def agrees that it was not just passing ideas jotted down.

Such an agreement need not be signed, as no document is necessary. The Rama (Choshen Mishpat 176:3) says that partners for joint work do not need a kinyan, and oral agreement is binding. This is all the more so when there was not just commitment to future joint work but rather that the two actually worked together, as beginning work is itself a kinyan (Ramban, Bava Batra 9a). According to def, that there is no partnership but that pl is just a senior worker, work agreements are certainly made binding by the beginning of work (Shulchan Aruch, CM 333:1).

According to pl, the two are partners, and therefore pl only has to compensate def for giving her the second half of the business. Def argues that pl cannot be a partner, since everything external was done in def’s name, and he made all of the financial investments.

Fundamentally, beit din agrees with pl. The facts that the heading of the agreement is “Partnership Agreement” and that the profits were to be split 50-50 are among several indications that the two were partners. There are many different types of partnerships, differing concerning what each one brings to helping the business as well as how they will be rewarded. Since def is in charge of the technical elements, payments, and infrastructure, it is not surprising that all the external contracts are in his name. Regarding investment, the great discount in salary that pl gave to the business is also an investment and risk.

Next time we will see the machloket between dayanim on the extent of the partnership.   

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