General Partnership Thomas Smithson, a house builder and small- scale property developer, decided that a certain tract of undeveloped land in Franklin, Tennes-see, would be extremely attractive for development into a real estate subdivision. Smithson contacted the owner of the property, Monsanto Chemical Company, and was told that the company would sell the property at the “ right price.” Smithson did not have the funds with which to em-bark unassisted in the endeavor, so he contacted Frank White, a co- owner of the Andrews Realty Company, and two agents of the firm, Dennis Devrow and Tem-ple Ennis. Smithson showed them a sketch map with the proposed layout of the lots, roads, and so forth. Smithson testified that they all orally agreed to develop the property together, and in lieu of a financial invest-ment, Smithson would oversee the engineering of the property. Subsequently, H. R. Morgan was brought into the deal to provide additional financing. Smithson later discovered that White had contacted Monsanto directly. When challenged about this, White assured Smithson that he was still “ part of the deal” but refused to put the agreement in writing. White, Dev-row, Ennis, and Morgan purchased the property from Monsanto. They then sold it to H. A. H. Associates, a corporation, for an $ 184,000 profit. When they refused to pay Smithson, he sued to recover an equal share of the profits. Was a partnership formed between Smith-son and the defendants? Who wins? Smithson v. White, Web 1988 Tenn. App. Lexis 221 ( Court of Appeals of Tennessee).

Though it will be difficult to prove and may be a lengthy lawsuit, I believe Smithson would win for the following reasons:

A verbal agreement can lead to formation of a partnership contract
Both the parties, in this case, Smithson and defendants had full idea about the agreement
As with a normal contract, there was an offer and acceptance. Frank White’s firm would finance the purchase (offer) and Smithson accepted on the condition he would see engineering of the property (acceptance)
Further, the agreement was made in good faith. Smithson had no idea that the defendants would go behind his back and make profit for themselves alone
The following proofs Smithson can use to prove his case
He can prove in court that he had contacted Monsanto Chemical company initially
He can show proofs of his contacts and follow-ups done with Frank White
He can present the sketch maps he had prepared with the proposed layout of the lots, roads, and so forth as proof of his groundwork

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