Legal Question in Business Law in California

Re: Expenses of a partnership that is not formed on paper

A partnership doesn't require a written agreement. Partnerships can and often do result from oral agreements or even from the actions of the parties without much agreement at all, written or spoken. All that is required to create a partnership is two or more persons acting together for a business purpose with an intent to share the profits.

In this particular situation, it looks as though your best defense to further liability lies in the possibility that no business venture was ever undertaken; that the activities never got beyond the point of exploring a business possibility. However, opening a bank account usually requires the prospective business to have gone far enough to select a name, apply for a taxpayer identification number, and receive initial capital contributions ... all of which would be evidence that the business had been launched.

Where and by whom communications were handled is not particulary significant.

I would advise giving written notice to the "partner" and anyone the "partner" has dealt with that you have withdrawn from the partnership, if any ever existed, and will not be liable for any of its debts. Get your name off the bank account, but do not take any partnership funds.

Your position in court, if sued, is not necessarily very strong. You have the power to withdraw from a partnership at any time (if there was one) but you may also have some obligations on account of the "partnership," either to the "partner" or to persons with which it has done business.

The outcome in small claims court may depend upon facts not given in your question, the quality of the evidence and testimony, and/or the judge's attitude and knowledge of partnership law.

Re: Expenses of a partnership that is not formed on paper

the problem is there was nothing in writing giving specifics of the rights, duties and libilities of the parties --- the partnership is valid even though there is no written agreement --- the facts you have given are too limited to give you a difinitive answer --- i would ask for full and complete accounting, checks, reciepts and all written documention for all monies expended -- without knowing the amout invlved i would advise you to see an attorney to protect yourself from now on against further liablities and too see if you can get any of your money back and what actions you may take to protect yourself