Be Weary Of Implied Partnerships

This month, the Nevada Supreme Court ruled on the "partnership by estoppel" doctrine, and the implication is that a party may be held liable as if she/he/it were partners with another in numerous circumstances.

Partnership by estoppel in Nevada is based on a Depression-era (1931) statute, NRS 87.160.  To summarize, the statute provides that, as long as certain conditions are met, a person may incur partnership liability where that person is held out as a partner, and another person gives credit to the purported partnership after believing the representation.

In the recent In re Cay Clubs case, the Nevada Supreme Court held that partnership liability may be imposed when there is a representation of a joint venture.  The Supreme Court also held that consent required to impose partnership liability may be "manifestly expressed" or may be fairly implied from conduct.  The Court also held that the extension of "credit" contemplated in the statute is broader