## Facts

- A home-show producer (SEM) and a builders trade association (RIBA) executed a written 1974 agreement for SEM to produce RIBA-sponsored home shows, with net profits split 55% (SEM) and 45% (RIBA).
- The agreement had a fixed five-year term, renewable by mutual agreement, and permitted SEM to use RIBA’s name in promotion; RIBA agreed to sponsor and endorse only SEM-produced shows and encourage member participation.
- SEM assumed operational responsibilities, including obtaining leases, permits, insurance, and financing; SEM also agreed to indemnify RIBA for show-related losses.
- RIBA retained limited rights, including the ability to accept or reject exhibitors and to audit show income.
- Despite “partners” language in the agreement’s preamble, contemporaneous discussions indicated SEM did not intend co-ownership; SEM described its role as producing the shows and sought no ownership interest.
- The parties did not operate under a joint business name, did not file partnership tax returns, and RIBA did not share losses or capital risk.
- SEM’s contractual interest was renewed and later assigned; in 1994 Southex acquired SEM’s interest and continued producing the shows under the same basic arrangement.
- In the late 1990s, RIBA became dissatisfied and contracted with a different producer; Southex sued, claiming the relationship was a partnership (or partnership by estoppel) and that RIBA breached partner-level duties by ending the arrangement.
- After a bench trial, the district court ruled for RIBA, finding no partnership and no partnership by estoppel; Southex appealed.

## Issues

1. Whether the written agreement and course of dealing created a partnership between Southex (through SEM) and RIBA under Rhode Island law.
2. Whether RIBA was estopped from denying a partnership based on partnership terminology or representations, and Southex’s alleged reliance.

## Decision

- The First Circuit affirmed the judgment for RIBA.
- The court held that no partnership existed because the relationship lacked co-ownership characteristics, including shared losses and shared capital risk.
- The court held that Southex failed to prove partnership by estoppel because it did not show a sufficient representation of partnership status and reasonable detrimental reliance.

## Legal Principles

- A partnership under Rhode Island law is an association of two or more persons carrying on as co-owners a business for profit; the inquiry turns on the overall relationship, not labels.
- Sharing net profits is prima facie evidence of partnership, but the presumption is rebuttable, including where one party bears the capital burden and is insulated from losses.
- Isolated “partner” terminology, particularly in a preamble, does not establish a partnership when the contract structure and conduct indicate a service/production arrangement.
- Factors bearing on partnership status include intent as reflected in agreement and conduct, allocation of profits and losses, capital contributions and risk, and control/management of operations.
- Partnership by estoppel requires a representation of partnership, reasonable reliance by the claimant, and a detrimental change in position; loose terminology without proven reliance is insufficient.

## Conclusion

The court concluded that the parties’ long-running home-show arrangement was a profit-sharing production contract rather than a co-owned business, and that the record did not support estoppel because Southex did not prove a clear partnership representation and detrimental reliance.


Southex Exhibitions, Inc. v. Rhode Island Builders Ass’n, Inc., 279 F.3d 94 (1st Cir. 2002)