What is the test for establishing a partnership in a restaurant?

Not surprisingly, the plaintiffs relied strongly on Khan v. Miah and similar cases in which persons who have banded together to go into business have been found to be partners even though only preparatory steps for the intended business have been taken. It is important to note the facts of these cases carefully. They were generally not concerned with the intention to enter legal relations or with sufficiency of terms, but with the statutory definition of partnership, in particular the requirement that the partners ‘carry on business’. In Khan, the two respondents and the appellant had agreed they would be partners in a restaurant business and had agreed on their respective roles in such business. They found and leased suitable premises, borrowed money for the purchase of the freehold, opened partnership bank accounts, and entered into various commitments preparatory to the opening of the restaurant. The first target date for the opening of the restaurant came and went. Problems arose among the partners, leading to a “breakdown” in the relationship, which was found to have “determined” on January 25, 1994. On that date the restaurant was not yet open. The two respondents nevertheless carried on with their preparations and opened the restaurant on February 14, 1994, before any accounts had been settled with the appellant. He sued for a half-interest in the profits and capital of the partnership.