How many websites and marketing materials have you seen that identify a company’s suppliers and other vendors as “partners”? Does this mean that the company actually intends to communicate that it has formed a legal partnership with the named suppliers and vendors? In most cases, probably not. So, why would a company describe its vendors as its “partners”?
In some cases, the message may actually be directed to the businesses named as partners. In game-theoretic terms, companies naming others as their partners are signaling their commitment to the relationship. In other cases, the signaling may be directed outward to the customers. The message is “do business with us because we have credible and trustworthy suppliers”.
Last Friday, I discussed the Nevada Supreme Court’s recent decision in In re Cay Clubs, 130 Nev. Adv. 14 (2014) interpreting Nevada’s partnership by estoppel statute, NRS 87.160. After concluding that the statute applies when the subject of the representation is a joint venture, the Court considered the propriety of the trial court’s grant of summary judgment in favor of the defendants.
Parol Evidence Rule
The defendants argued that the parol evidence rule barred the plaintiffs from relying on evidence of a purported partnership because they had signed agreements containing an integration clause. The Court reviewed the clause and found that it was silent about the existence of a partnership. Thus, the parol evidence rule did not bar evidence regarding the representation of a partnership or a joint venture. This suggests that had the clause explicitly negated any reliance on representations of partnership, the result would have been different.
In determining that a genuine issue of material fact existed, the Nevada Supreme Court pointed to various marketing materials, including the following statements on a website: “a partnership of . . . professionals” and that the “strategic partner[s]” included the defendants. The plaintiffs also alleged that the marketing materials described the defendants’ relationship as a “partnership in excellence”. The Court also cited the used of the Defendants’ logo. While the Court didn’t hold that these statements created a partnership by estoppel, the fact that they could create a triable issue of fact should be of concern.