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Jacob rents farmland from Davis and pays Davis a part of the profits from the crop...

Jacob rents farmland from Davis and pays Davis a part of the profits from the crop in rent. Is Davis a partner? What if Davis offers suggestions on what to plant and when? Now is he a partner?

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Answer #1

A partnership is a form of business where two or more people agree to operate in a business together and to share its profits and liabilities.

In this case, Jacob is paying rent to Davis out of the profits earned and not a share of profit for his contribution to the business. Davis is not sharing the liabilities of the business ie if the business makes a loss, Davis won't be bearing the loss. Therefore, he is not a partner in the business.

Even if he advises Jacob on what to plant and when, it is a goodwill gesture and should not be construed as a form of partnership. Unless explicitly specified, Davis, here, is just trying to help Jacob by offering his advice on the plantation. Therefore, he still cannot be considered a partner in the business.

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