The Ontario Partnership Act states that a “[p]artnership is the relation that subsists between persons carrying on a business in common with a view to profit”, but that has not been incorporated. Although Z has some characteristics of a partnership, I do not think it is one for the reasons that follow.
The trade name of the business is Z and I am assuming it has not been incorporated. X and Y carry on a men’s barbershop with a view to profit. However, they hope to each profit individually, not from the partnership doing well. I do not think this is a “business in common” because the money does not go into the same place. X and Y each take home what they make, so the profits are not necessarily divided up according to the amount of the partnership they own.
The relationship of partners to each other helps determine if a business is a partnership. Partnerships are personal and exist between the people who made the partnership. X and Y are the original people who made the agreement. Partnerships are fiduciary in nature. Partners have to act in the best interest of the partnership and, when their own interests conflict with the interests of the partnership, need to put the partnerships’ interest ahead of their own. I have trouble reconciling this with the fact that X and Y each take home what they make. How does one put the needs of the business ahead of their personal needs when money made does not go towards the business, but to whoever was working that day? In a partnership, each partner has agency and can act in a way to bind the other. Since X and Y do their own advertising and promotions, procure and sell their own hair products, and pay their own taxes and percentage of the lease, it does not appear that they want one to be able to bind the other (eg: with buying or selling products, or advertising specials). Their affairs seem quite separate other than sharing a space. There is presumptive equality in sharing of profits or losses in a partnership. Since X and Y each take home what they make, they do not share profits. Lastly, partnerships can be varied by the consent of all parties. Both X and Y consented to the variations in duties and rights in their agreement, so despite the fact that Z does not have some of the characteristics of a partnership, it is possible it could be found to be one.
