Also known as: société en participation · joint venture · undisclosed partnership
Written by attorneys · grounded in primary & secondary sources — see below
A contractual arrangement among two or more parties to pursue a specific business objective while sharing profits, losses, and control without creating a separate legal entity. The arrangement confers authority on participants to act as partners or associates in the common enterprise.
Sapphire Holdings seeks to expand into renewable energy projects. Its board authorizes participation in a societe en participation with Stonehaven Properties to develop a solar farm. The arrangement allows Sapphire to act as an associate in the venture under its corporate powers.
Sterling Manufacturing appoints its officer Steven Silva to serve in a societe en participation formed with Silverline Industries. The corporation purchases insurance protecting Silva against liability arising from his role in the venture.
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Sedima alleges that Imrex used a societe en participation to conduct a pattern of mail fraud in their import business. The court examines whether the venture relationship supplies the enterprise element for the civil RICO claim.
Meinhard and Salmon formed a societe en participation to lease and renovate a hotel. When Salmon secretly obtained a new lease on adjoining property, the court imposed fiduciary duties arising from the joint venture relationship.
Michelle and Lee formed a societe en participation through their nonmarital cohabitation agreement. Upon separation the court enforces their oral understanding to share property acquired during the venture.
Alcoa and Essex entered a societe en participation for aluminum production with a price adjustment clause. When market conditions changed the court interprets the clause to preserve the parties' original risk allocation.
No. The arrangement remains a contractual relationship among the participants. Each party retains its separate legal status while sharing profits, losses, and control over the common enterprise.
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Yes. Corporate statutes expressly authorize a corporation to act as a partner, member, or associate in any joint venture or other entity, including a societe en participation.
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Participants owe each other duties of loyalty and disclosure with respect to matters within the scope of the venture. A secret opportunity arising from the relationship belongs to the venture, not to the individual participant.
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A societe en participation need not register or file formation documents. It exists solely by contract and does not confer limited liability or perpetual existence unless the participants separately agree to those features.
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…into the conduct of the parties to determine whether that conduct demonstrates an implied contract, agreement of partnership or joint venture, or some other tacit understanding between the parties. The courts may also employ the doctrine of quantum meruit, or equitable remedies such as constructive or resulting trusts, when…