No partnership clause
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Boilerplate Anatomy™
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Standard fare on dreary commercial contracts, the “no partnership” covenant is designed to stop merchants inadvertently stumbling into relationships with which they have joint and several liability for not only their own acts and omissions, but those of their counterparty.
In the classic partnership, each party is liable, in full, for any losses incurred or brought about by any of the other partners when acting on behalf of the enterprise. The moral of the story is “don’t go into partnership with bankrupts, morons or psychopaths” — this isn’t bad life advice generally, come to think of it — and so sticking it in a commercial contract which on its face does no such thing does no real harm beyond offending the sensibilities of those with a passion for elegant minimalism in their contracts. The JC rehearses it frequently, but cannot say it enough: contracts are about what are proposing to do to, and with, each other, not what you are not. The resting assumption of all commercial life, encapsulated by the JC’s own pithy Latinism primis attende ad ceram tuam — first, mind your own business — is that you are not doing anything to, or with, your neighbour unless, in return for valuable consideration, you have signed a piece of paper promising to.
So if your industry is, for example, merely buying your counterparty’s silence, you should be on safe ground. For the thing is this: either your NDA, on its face, does not even pretend to set up the sort of dynamic that could be regarded as a partnership— why would me giving you confidential information do that? — in which case you don’t need the clause, or it does, in which case you shouldn’t have it, and trying to pretend what is in fact a partnership is not will cause you more trouble than it is worth.
Accidental partnerships
While partnerships can arise inadvertently, their general characteristics — profit sharing, common ownership of property and contribution of capital, joint management of the enterprise — are a world away from the terms of the average arm’s length commercial contract, but it is still worth pausing to consider whether that fee arrangement you are proposing to pay based on net revenue isn’t traying you closer to joint venture ground.