(a) If a person, by words or conduct, purports to be a partner, or consents to being represented by another as a partner, in a partnership or with one or more persons not partners, the purported partner is liable to a person to whom the representation is made, if that person, relying on the representation, enters into a transaction with the actual or purported partnership. If the representation, either by the purported partner or by a person with the purported partner's consent, is made in a public manner, the purported partner is liable to a person who relies upon the purported partnership even if the purported partner is not aware of being held out as a partner to the claimant. If partnership liability results, the purported partner is liable with respect to that liability as if the purported partner were a partner. If no partnership liability results, the purported partner is liable with respect to that liability jointly and severally with any other person consenting to the representation.

(b) If a person is thus represented to be a partner in an existing partnership, or with one or more persons not partners, the purported partner is an agent of persons consenting to the representation to bind them to the same extent and in the same manner as if the purported partner were a partner, with respect to persons who enter into transactions in reliance upon the representation. If all of the partners of the existing partnership consent to the representation, a partnership act or obligation results. If fewer than all of the partners of the existing partnership consent to the representation, the person acting and the partners consenting to the representation are jointly and severally liable.

(c) A person is not liable as a partner merely because the person is named by another in a statement of partnership authority.

(d) A person does not continue to be liable as a partner merely because of a failure to file a statement of dissociation or to amend a statement of partnership authority to indicate the partner's dissociation from the partnership.

(e) Except as otherwise provided in Subsections (a) and (b), persons who are not partners as to each other are not liable as partners to other persons.

History: Laws 1996, ch. 53, § 308.

Partnership by estoppel. — Former Section 54-1-16 NMSA 1978 extended liability beyond the common-law test of reliance so that when one has by acts or consent to the acts of others allowed or caused the general community to believe that he or she is a partner, then that individual is such by estoppel even though this particular creditor may not have heard the representation. This relieves the creditor of the task of proving that he actually knew of such representation and makes the representation itself an offense without the added factor of reliance. However, this test demands that the representations have been made in a "public manner" at the time that credit was extended so that at that time it was general community knowledge even though the representations might not have been communicated to this particular creditor. Gilbert v. Howard, 1958-NMSC-069, 64 N.M. 200, 326 P.2d 1085.

The statutory tests for partnership by estoppel require (1) that credit must have been extended on the basis of partnership representations; or (2) that the alleged partner must have made or consented to representations being made in a public manner, whether or not such representations were actually communicated to the person extending credit. Anderson Hay & Grain Co. v. Dunn, 1970-NMSC-050, 81 N.M. 339, 467 P.2d 5; Gilbert v. Howard, 1958-NMSC-069, 64 N.M. 200, 326 P.2d 1085.

As defendant conducted himself so as to induce appellant to deal with him in the belief that he was a partner, by so doing he created a partnership by estoppel. Anderson Hay & Grain Co. v. Dunn, 1970-NMSC-050, 81 N.M. 339, 467 P.2d 5.

Under former Section 54-1-16 NMSA 1978 (repealed in 1997), relating to partnership by estoppel, reliance upon a purported partner's representations was required to establish that person's liability for credit extended to the partnership; reliance was established by creditor's testimony that it would not have extended the credit but for the purported partner's misrepresentation of himself as a partner in the venture. Cheesecake Factory, Inc. v. Baines, 1998-NMCA-120, 125 N.M. 622, 964 P.2d 183.

Partnership intent implied. — It is immaterial that the parties do not designate the relationship as a partnership, or realize that they are partners, for the intent may be implied from their acts. Anderson Hay & Grain Co. v. Dunn, 1970-NMSC-050, 81 N.M. 339, 467 P.2d 5.

Consent can be implied by conduct. Therefore, holding out as a partner may be construed from acts and conduct and it is sufficient if the course of conduct is such as to induce a reasonable and prudent man to believe that which the conduct would imply. Anderson Hay & Grain Co. v. Dunn, 1970-NMSC-050, 81 N.M. 339, 467 P.2d 5.

Evidence of partnership. — Codefendant by conduct, actions and words, furnished substantial evidence of partnership with other codefendants. Anderson Hay & Grain Co. v. Dunn, 1970-NMSC-050, 81 N.M. 339, 467 P.2d 5.

Am. Jur. 2d, A.L.R. and C.J.S. references. — 59A Am. Jur. 2d Partnership § 142 et seq.

68 C.J.S. Partnership §§ 21, 31.