What is a partnership by estoppel?

A partnership by estoppel refers to a legal doctrine that holds a non-partner liable as if they were a partner due to their misleading conduct or representations that lead others to believe they are a partner. This typically occurs when a person behaves in a way that suggests they are part of a partnership, or they allow others to believe that they are associated with a business as a partner, even though they are not formally recognized as such.

The essence of this concept lies in protecting third parties who rely on the representation of partnership. It prevents an individual from denying partnership status when their actions or statements have led third parties to assume that a partnership exists. Therefore, the implications of a partnership by estoppel are significant in matters of liability and the ability of third parties to seek recourse against those who misrepresented their partnership status.

This understanding highlights the importance of clear representations in business dealings and reinforces the idea that actions can have legal consequences, especially in contexts where third parties might depend on those actions for their own commitments or transactions.