Question

37-1 Partnership Formation

Daniel is the owner of a chain of shoe stores. He hires Rubya to be the manager of a new store, which is to open in Grand Rapids, Michigan. Daniel, by written contract, agrees to pay Rubya a monthly salary and 20 percent of the profits. Without Daniel’s knowledge, Rubya represents himself to Classen as Daniel’s partner and shows Classen the agreement to share profits. Classen extends credit to Rubya. Rubya defaults. Discuss whether Classen can hold Daniel liable as a partner. (See Formation and Operation.)

Please answer in IRAC Format

The IRAC Formula. IRAC (Issue, Rule, Analysis, and Conclusion) forms the fundamental building blocks of legal analysis. It is the process by which all lawyers think about any legal problem. The beauty of IRAC is that it allows you to reduce the complexities of the law to a simple equation.

Answer 1

IRAC Format to the situation mentioned above according to Uniform Partnership Act (UPA)1997

Issue	Is Daniel liable as a partner under UPA 101(6) and UPA 202 (c)(3) for Classen without knowing Rubya entering partnership agreement with Classen and not even claiming Rubya as his partner?
Rule	UPA 101(6): A partnership is defined as an association of two or more persons to conduct, as coowners, a business for profit. UPA 202 (c)(3): The sharing of profits from a business is prima facie evidence of the existence of a partnership, unless such sharing is by means of one party receiving wages as an employee.
Analysis	As per the mentioned issue and the rule, Rubya is not a partner to Daniel as Rubya is an employee for him and just sharing of profits doesn't make her co-owner and moreover Daniel don't even know Classen who might be partner to Rubya.
Conclusion	So, here Classen cannot hold Daniel as a partner.