Partnership Status of Joint Ventures in Colorado

• Publication year: 1995
• Pages: 2553

24 Colo.Law. 2553 Colorado Lawyer 1995.

1995, November, Pg. 2553. Partnership Status of Joint Ventures in Colorado

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2553

Vol. 24, No. 11, Pg. 2553

Partnership Status of Joint Ventures in Colorado

by George E. Reeves

Whether a particular business association is a joint venture or a partnership (or, as will be seen later, whether it is a nonpartnership joint venture or a partnership joint venture) may have legal consequences, particularly with regard to acquiring and dealing with property in the name of the business association. Before considering the differences between joint ventures and partnerships, it is appropriate to consider the relationship between joint ventures and partnerships.

There is a diversity of opinion in Colorado as to whether a joint venture is a partnership. Three views have been expressed:

1) joint ventures are partnerships;(fn1)

2) some joint ventures are partnerships;(fn2) and

3) joint ventures are not partnerships.(fn3)

This article examines the authorities on which these views are based and determines which view most nearly represents the present state of the law in Colorado.

Joint Ventures Are Partnerships

In some cases, Colorado courts have said that a joint venture is merely a type of partnership(fn4) or a partnership formed for a limited purpose(fn5) or, what is perhaps equivalent, that the substantive law of partnership applies to joint ventures.(fn6) Various provisions of the Uniform Partnership Act have been applied to joint ventures(fn7) or have been used to determine whether a joint venture exists.(fn8)

In several cases, the courts have acknowledged that the distinction between a partnership and a joint venture was not a factor in the decision,(fn9) and in most of the cases, the issue was not whether the business association in question should be characterized as a partnership or a joint venture, but whether such an association, be it a partnership or a joint venture, existed at all,(fn10) or, given the existence of the partnership or joint venture, whether a party was in fact a partner or venturer.(fn11)

Some Joint Ventures Are Partnerships

The position that all joint ventures are partnerships is inconsistent with CRS § 38-30-166, a provision of the Colorado real property law. As originally enacted in 1977, this section provided that on recording an affidavit setting forth the name of the joint venture and the names and addresses of all the joint venturers, a joint venture could acquire, convey, encumber, lease and otherwise deal with property in the name of the joint venture.

CRS § 38-30-166 was enacted in response to a 1973 article in The Colorado Lawyer(fn12) which first noted that although at common law a partnership, being an unincorporated association, could not acquire real property in its partnership name, "[t]he Uniform Partnership Act changed all this," citing the predecessor to CRS § 7-60-108(3) The article then stated that it was uncertain whether a joint venture was or was not a partnership, and concluded that "[e]ven though good argument can be advanced that a joint venture is an entity, all doubt could be removed by legislation authorizing... joint ventures to acquire and convey title to real property in the business name."

As noted in the article, the predecessor to CRS § 7-60-108(3) of the Uniform Partnership Law authorized the conveyance in the partnership name of real property acquired in the partnership name and, although not noted in the article, the predecessor to CRS § 7-60-110(1) authorized any partner to make such conveyance. However, rather than bring joint ventures within the scheme already established for partnerships in §§ 7-60-108 and 110, the legislature created a separate and different scheme for acquiring and dealing with property in the name of a joint venture.

As originally enacted, CRS § 38-30-166 seems to have been based on the assumption that at least some, and perhaps all, joint ventures were not partnerships, because if all joint ventures were partnerships, the legislation would have been wholly unnecessary. Furthermore, if all joint ventures were partnerships, § 38-30-166, as originally enacted, could be applied to conveyances by joint ventures only...