Opinion ID: 2581167
Heading Depth: 2
Heading Rank: 1

Heading: Elements of a Joint Venture

Text: ¶ 15 More than thirty years ago, we laid out the essential elements of a joint venture in Bassett v. Baker, 530 P.2d 1, 2 (Utah 1974). The parties must combine their property, money, effects, skill, labor and knowledge. As a general rule, there must be [1] a community of interest in the performance of the common purpose, [2] a joint proprietary interest in the subject matter, [3] a mutual right to control, [4] a right to share in the profits, and [5] unless there is an agreement to the contrary, a duty to share in any losses which may be sustained. [1] Id. Whether a joint venture exists is ordinarily a question of fact. Strand v. Cranney, 607 P.2d 295, 296 (Utah 1980); see also Rogers v. M.O. Bitner Co., 738 P.2d 1029, 1032 (Utah 1987). A court must therefore look at the facts of the case and determine whether there is evidence to support each of the five elements of a joint venture. [2] ¶ 16 The only element at issue in this appeal is the fifth element: a duty to share in the losses. The duty to share losses is an important element of a joint venture. Indeed, loss sharing is a critical distinction between an investment-type relationship  in which the first four elements may be present, but investors have no duty to share in the losses beyond the amount of their investment  and a joint venture relationship. For this reason, a contract not to share losses weighs heavily against partnership because it is so inconsistent with the standard partnership form. Bromberg and Ribstein on Partnership, § 2.07(d)(2) (Supp.2006); see also McCulley Fine Arts Gallery, Inc. v. X Partners, 860 S.W.2d 473, 479 (Tex.Ct.App. 1993) (Generally, the absence of a provision to share losses indicates the lack of intent to create a partnership.).