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Jonathan Tobin: Defending the Right to a Jewish State

Heather Hale: Compliment your kids without giving them big heads

Megan Shauri: 10 ways you are ruining your own happiness

Carolyn Bigda: 8 Best Dividend Stocks for 2015

Kiplinger's Personal Finance editors: 7 Things You Didn't Know About Paying Off Student Loans

Samantha Olson: The Crucial Mistake 55% Of Parents Are Making At Their Baby's Bedtime

Densie Well, Ph.D., R.D. Open your eyes to yellow vegetables

The Kosher Gourmet by Megan Gordon With its colorful cache of purples and oranges and reds, COLLARD GREEN SLAW is a marvelous mood booster --- not to mention just downright delish
April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review

Equal partners who aren't

By Rabbi Dr. Asher Meir





http://www.JewishWorldReview.com | Q. When my friend and I began our partnership I anticipated our contributions would be about equal. But now I see that despite all the efforts of my partner, it is my abilities that are really responsible for our business success. Am I entitled to a larger share of the profits?

A. Partnerships are a most practical and durable form of business relationship. They have persisted in little-modified form since ancient times. When two people work together, they share risk and knowledge and take advantage of specialized abilities. The Talmud has a concise expression of the advantage of working in tandem. When explaining why a partner is not allowed to unilaterally break off the relationship before the stipulated time, even if he is willing to share in any losses, the sage Rava states succinctly: "The luck of two is better." (1)

While partnerships were known in the era of the Talmud, in later times and in particular with the flourishing of Jewish commerce in medieval times they became an immensely popular arrangement, and in the responsa literature we find a very highly developed legal theory of partnerships. One principle we find consistently is that in the absence of any explicit agreement, the assumption is that profits are shared equally. Thus we find in the Talmud:

Shmuel stated: Two people who mingled funds [for a business – even] if one invested one hundred and the other two hundred, the profits are shared equally. (2)

 

The business logic behind Shmuel's statement is that in most partnerships the efforts of the partners are a much more important contributor to success than the amount of money initially invested, so unless there is an explicit stipulation to the opposite we should assume that the intention was to split profits equally.

Naturally that doesn't mean that one partner can shirk and leisurely share in the profits of his hard-working partner. One of the great medieval authorities, the Rashba (Rabbi Shlomo ben Adret) writes that if a partner contributes only minimal efforts, this is considered a fundamental breach of the partnership agreement, and the partner is not entitled to a share of the profits. He is at most entitled to a modest salary for his efforts. (3) The opposite can also happen: if one partner invests efforts or resources that are clearly above and beyond what is called for in the agreement, he may be entitled to extra payment, in the form of salary or reimbursement, for his efforts. But he does not get an enlarged share of profits.

What all of these sources have in common is that the presumption of equal share of profits is a nearly unshakeable one, as long as there is no breach of the agreement. Even if the contributions are unequal, in money or in effort, they are either ignored or dealt with outside of the profit-sharing arrangement.

The situation you describe is common and perhaps even the norm in new businesses. When a business is founded, no one knows where the winds of commerce will blow. Who could have known, when Apple Computer was founded by two friends that in the future being a brilliant programmer and engineer like Stephen Wozniak would become virtually a standardized input, whereas being able to imagine the future of the market would become the main source of profitability? In other industries the opposite happened: the market went to people who could respond to the market with solidly designed products, not those who could anticipate the market. When you and your partner went into business together, you in effect purchased equal shares of stock; your increased contribution cannot change that reality.

On the other hand, if you really believe that your contribution is the key to your business' success, then you have the right to go off on your own. Assuming you didn't define a specific term for your partnership, it can be broken off at any time. Of course dissolving a partnership can be a complex matter; when there is a going concern typically one partner will have to buy out the other, and the valuation of the company can be as contentious as the valuation of the partners' contribution to profitability. Perhaps this is really the best course of action for you, or perhaps the prospect of having you do so will persuade your partner to make some changes in your agreement.

However, as long as you continue doing business under the original understanding, and as long as each partner continues to contribute his best efforts to advancing the business according to what was originally demanded and expected, changes in the conditions of the partnership can be made only by mutual consent of the partners.


SOURCES: (1) Babylonian Talmud, Bava Metzia 105a (2) Babylonian Talmud, Kesubos 93a (3) Responsa Rashba III 142,144 cited in Beis Yosef, Choshen Mishpat 176

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JWR contributor Rabbi Dr. Asher Meir, formerly of the Council of Economic Advisers in the Reagan administration, is Research Director of the Business Ethics Center of Jerusalem, Jerusalem College of Technology.

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