PARTNERSHIP 2.

Laws which govern

PARTNERSHIP 3. Juridical personality

 By the contract of partnership two or 4. Commencement

more persons bind themselves to
contribute money, property, or 5. Purpose
industry to a common fund, with the
intention of dividing the profits 6. Distribution of profits
among themselves. Two or more
7. Management
persons may also form a partnership
for the exercise of a profession
8. Disposition of shares
(1767)
Distinction between partnership and
Note: Since a partnership is a contract, all
voluntary association
agreement between the parties has the force
of law between the contracting parties 1. Juridical personality
(1159) provided it is not contrary to law,
moral, good custom, public order and public 2. Purpose
policy. (1306) Distinction between
partnership and Co-ownership 3. Contribution of members

1 Creation 4. Liability of members

2. Juridical personality Characteristics

3. Purpose 1. Consensual

4. Duration 2. Nominate

5. Disposal of interest 3. Bilateral

6. Power to act with third person 4. Onerous

7. Effect of death 5. Commutative

Distinction between Partnership and 6. Principal

conjugal partnership of gain
7. Preparatory
1. Parties
  A partnership may be constituted in
any form, except where immovable
property or real rights are contributed
thereto, in which case a public
instrument shall be necessary. (1771)
 A contract of partnership is void,
whenever immovable property is
contributed thereto, il an inventory of
said property is not made, signed by
the parties, and attached to the public
instrument (1773)
 Every contract of partnership having
a capital of three thousand pesos or
more, in money or property, shall
appear in a public instrument, which
must be recorded in the Office of the
Securities and Exchange
Commission.
 Failure to comply with the
requirements of the preceding
paragraph shall not affect the liability
of the partnership and the members
thereof to third persons. (1772)
Requisites
1. Valid Contract
The partnership has a judicial
personality separate and distinct
from that of each of the partners,
even in case of failure to comply
with the requirements of article
1772, first paragraph (1768).
However, Associations and societies,
whose articles are kept secret among
the members, and wherein any one of
the members may contract in his own
name with third persons, shall have
no juridical personality, (1775)
A partnership begins from the
moment of the execution of the
contract, unless it is otherwise
stipulated. (1784)
2. Lawful object or purpose (1770).
Any event which makes it unlawful
for the business of the partnership to
be carried on or for the members to
carry it on in partnership caused for
automatic dissolution of the
partnership. (1830)
EFFECTS OF UNLAWFUL
PARTNERSHIP
1. The contract is void ab initio and
the partnership never existed in the
eyes of the law
2. The profits shall be confiscated in
favor of the government
3: The instruments or tools and
proceeds of the crime shall also be
forfeited in favor of the government
4. The contributions of the partners
shall not be confiscated unless they
fall under no. 3
3.Contribution of money, property or
industry to a common fund.
Obligations with respect to contribution
to partnership capital
 1. Partners must contribute equal shares to
the capital of the partnership unless there is
stipulation to contrary. (Art 1790).
2. Partners (capitalist) must contribute
additional capital in case of imminent loss to
the business of the partnership and there is
no stipulation otherwise, refusal to do so
shall create an obligation on his part to sell
his interest to the other partners. (Art. 1791)
Requisites:
a. There is an imminent loss of the business
of the partnership
b. The majority of the capitalist partners are
of the opinion that an additional contribution
to the common fund would save the business
c. The capitalist partner refuses deliberately
to contribute (not due to financial inability)
d. There is no agreement to the contrary
RISK OF LOSS OF THINGS
CONTRIBUTED
Contributed property Loss to be borne by
Partnership Partner Specific and determinate
things which are not fungible where only the
use is contributed Specific and determinate
things the ownership of which is transferred
to the partnership
Fungible things (consumable) Cannot be
kept without deteriorating Things
contributed to be sold Things brought and
appraised in the inventory (limited to value
appraised) • If one of the Partners refused to
give contribution, the
other partner may compel him to deliver
(Specific performance) what he has
promised. The partnership is dissolved when
a specific thing which a partner had
promised to contribute to the partnership,
perishes before the delivery. (1830,4)
4. Intent to divide the profit among the
partners. (1767).
RULES FOR DISTRIBUTION OF
PROFITS AND LOSSES
DISTRIBUTION OF DISTRIBUTION OF
PROFITS
LOSSES With According
According to agreement agreement
agreement Without 1. Share of capitalist 1.
If sharing of profits agreement partner is in
is stipulated - apply
proportion to his to sharing of losses capital
If no profit sharing contribution
stipulated - losses 2. Share of industrial shall
be borne
partner is not according to capital fixed - as
may be contribution just and equitable 3.
Purely industrial under the partner not liable
for circumstances
losses
Distribution of profit and losses: (1797) a.
Profit or losses shall be distributed in
conformity
with the agreement; b. If only the share of
each partner in the profits has
been agreed upon, the share of each in the
losses
shall be in the same proportion c. In the
absence of stipulation, the share of each
partner in the profits and losses shall be in
proportion to what he may have contributed,
but the
industrial partner shall not be liable for the
losses. d. As for the profits, the industrial
partner shall receive
such share as may be just and equitable
under the circumstances. If besides his
services he has contributed capital, he shall
also receive a share in the profits in
proportion to his capital.
Designation of profit and losses 1. The
designation of losses and profits cannot be
entrusted to
one of the partners. 2. If the partners have
agreed to entrust to a third person the
designation of the share of each one in the
profits and losses, such designation may be
impugned only when it is manifestly
inequitable. In no case may a partner who
has begun to execute the decision of the
third person, or who has not impugned the
same within a period of three months from
the time he had knowledge thereof,
complain of such decision. (1798)
Nota Bene:
All partners, including industrial ones, shall
be liable pro rata with all their property and
after all the partnership assets have been
exhausted, for the contracts which may be
entered into the name and for the account of
the partnership, under its signature and by a
person authorized to act for the partnership.
 However, any parther may enter into a
separa
P contract, (1816) Any stipulation
exempting perform a partnership contract.
(1816) Any stipulat any partner against the
liability shall be void as far as is concerned.
But the stipulation is valid among the parts
(1817)
5. Established for the common benefit or
interest of the
partners. (1770) Hence, A stipulation which
excludes one or more partners from any
share in the profits or losses is void. (1799).
Note: Only the agreement as to profit and
loss is void not the partnership itself. In such
case, as if there is no agreement as to profit
and loss and the profit and loss are
distributed in accordance with capital
contribution.
Test to determine whether partnership
exists: 1. Persons who are not partners as to
each other are not partners
as to third persons; except estoppels (1825).
Co-ownership or co-possession does not of
itself establish a partnership, whether such-
co-owners or co-possessors do or
do not share any profits made by the use of
the property; 3. The sharing of gross returns
does not of itself establish a
partnership, whether or not the persons
sharing them have a joint or common right
or interest in any property from which the
returns are derived;
The receipt by a person of a share of the
profits of a business 4.
is prima facie evidence that he is a partner in
the business, but no such inference shall be
drawn if such profits were received in
payment: (DRAWING) a. Debt by
installments or otherwise; b. As Rent to a
landlord or C. As an Annuity to a widow or
representative of a
deceased partner; d. Wages of an employee
e. As Interest on a loan, though the amount
of payment
vary with the profits of the business; f. As
the consideration for the sale of a Goodwill
of a
business or other property by installments or
otherwise.
at
Reason: It s not merely the sharing of
profits, but rather the sharing of them as a
co-owner of the business that makes one a
partner. Hence, the test is "Does the
recipient of profit received it as co-
owner/proprietor of the business, if the
answer is in affirmative a partnership exists.
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IS
Classifications of Partnership As to liability
of partners 1. General partnership - consists
of general partners who are
liable pro rata and subsidiarily and
sometimes solidarily with
their separate property for partnership debts
2. Limited partnership - one formed by 2 or
more persons
having as members one or more general
partners and one or more limited partners,
the latter not being personally liable
for the obligations of the partnership As to
duration 1. Partnership at will - one in which
no time is specified and is
not formed for a particular undertaking or
venture which may
be terminated anytime by mutual agreement
2. Partnership with a fixed term or particular
undertaking - the
term for which the partnership is to exist is
fixed or agreed ect to the
upon or one formed for a particular
undertaking As to extent of its subject matter
1. Universal partnership is either a.
Universal partnership of all present property
- the
property which belongs to each of the
partners at the time of the constitution of the
partnership, becomes the common property
of all the partners, as well as all the
profits which they may acquire therewith
(1779) A stipulation for the common
enjoyment of any other profits may also be
made (There must be a stipulation. e.g.
salary that may be earn by the partner); but
the property which the partners may acquire
subsequently by inheritance, legacy, or
donation cannot be included in such
stipulation, except the fruits thereof. Articles
of universal partnership, entered into
without specification of its nature, only
constitute a universal partnership of
profits. (1781) b. Universal partnership of all
profits - all that the partners
may acquire by their industry or work during
the existence of the partnership. Movable or
immovable property which each of the
partners may possess at the time of the
celebration of the contract shall continue to
pertain exclusively to each, only the usufruct
passing to the partnership. (1780)
10.
12
13
1
Note: Persons who are prohibited from
giving each other any donation or advantage
cannot enter into universal partnership The
following cannot enter in a universal
partnership: a. Between those who were
guilty of adultery or
concubinage; b. Between those persons
found guilty of the same criminal
offense (adultery or concubinage), in
consideration thereof; Between a person and
Public officer or his wife, descendants and
ascendants, by reason of his office.
(739) 2. Particular partnership - object
determinate things, their use
or fruits, or specific undertaking. or the
exercise of a
profession or vocation (1783) As to
representation to others 1. Ordinary or real
partnership - one which actually exists
among the partners and also as to 30 persons
2. Ostensible or partnership by estoppel- one
which in reality is
not a partnership but is considered a
partnership only in relation to those who, by
their conduct or omission, are
precluded to deny or disprove its existence
As to legality of existence
De jure partnership - comply all requirement
of the law 2. De facto partnership - do not
comply all requirement of the
OBI
in
law
As to publicity 1. Secret partnership - one
wherein the existence of certain
persons as partners is not avowed or made
known to the
public by any of the partners 2. Open or
notorious partnership - one whose existence
is
avowed or made known to the public by the
members of the
firm As to purpose 1. Commercial or trading
partnership - one formed for the
transaction of business 2. Professional or
non-trading partnership - one formed for the
exercise of a profession pp hot taxable
Kinds of partners
1. Capitalist partner - One who contribute
money or property -2. Industrial partner -
One contribute industry. He is not liable
for loss as between the partners but liable
pro rata as to 3rd
person. 3. Capitalist-industrial partner - One
who contribute money,
property or industry. . 4. General partner --
liable to the extent of his separate property
5. Limited partner - liable only to the extent
of his capital
contribution. Not allowed to contribute
industry. Silent partner do not participate in
the management,
 7. Continuing Partner - one who continues
the business of a
partnership after it has been dissolved by
reason of the admission of a new partner,
retirement, death or expulsion of
one of the partners 8. Surviving Partner -
one who remains after a partnership has
been dissolved by death of any partner 9.
Sub partner - one who is not a member of
the partnership
who contracts with a partner with reference
to the latter's
share in the partnership 10. Secret partner -
not known by third person 11. Dormant
partner - silent and secret 12. Ostensible
partner - participate in the management and
known by third person 13. Partners by
estoppels or nominal partner - not really
partners
but only as a result of misrepresentation to
3rd person 14. Managing partner - one
manage the partnership 15. Liquidating
partner - one who wind-up the affair of the
partnership 16. Retiring partner one who
retire in the partnership 17. Incoming partner
-- One who is admitted to the partnership
RELATIONS CREATED BY A
CONTRACT OF PARTNERSHIP 1.
Relations among the partners themselves 2.
Relations of the partners with the
partnership 3. Relations of the partnership
with 3rd persons with whom it
contracts 4. Relations of the partners with
such 3rd persons
OBLIGATIONS OF PARTNERS
A partnership begins from the moment of
the execution of the contract, unless it is
otherwise stipulated. (1784) When a
partnership for a fixed term or particular
undertaking is continued after the
termination of such term or particular
undertaking without any express agreement,
the rights and duties of the partners remain
the same as they were at such termination,
so far as is consistent with a partnership at
will. A continuation of the business by the
partners or such of them as habitually acted
therein during the term, without any
settlement or liquidation of the partnership
affairs, is prima facie evidence of a
continuation of the partnership. (1785)
Obligations with respect to contribution of
property: 1. To contribute at the beginning
of the partnership or at
the stipulated time the money, property or
industry
which he may have promised to contribute
2. To answer for eviction in case the
partnership is
deprived of the determinate property
contributed 3. To answer to the partnership
for the fruits of the property
the contribution of which he delayed, from
the date they should have been contributed
up to the time of actual
delivery 4. To preserve said property with
the diligence of a good
father of a family pending delivery to
partnership 5. To indemnify partnership for
any damage caused to it by
the retention of the same or by the delay in
its contribution
Every partner is a debtor of the partnership
for whatever he may have promised to
contribute thereto. He shall also be bound
for warranty in case of eviction with regard
to specific and determinate things which he
may have contributed to the partnership, in
the same cases and in the same manner as
the vendor is bound with respect to the
vendee. He shall also be liable for the fruits
thereof from the time they should have been
delivered, without the need of any demand.
(1786)
Effect of Failure to contribute property
promised: 1. Partners becomes ipso jure a
debtor of the partnership
even in the absence of any demand Remedy
of the other partner is not rescission but
specific performance with damages from
defaulting partner
Obligations with respect to contribution of
money and money converted to personal use
1. To contribute on the date fixed the
amount he has
undertaken to contribute to the partnership
To reimburse any amount he may have taken
from the
partnership coffers and converted to his own
use 3. To pay for the agreed or legal interest,
if he fails to pay
his contribution on time or in case he takes
any amount from the common fund and
converts it to his own use To indemnify the
partnership for the damages caused to it by
delay in the contribution or conversion of
any sum for his personal benefits
A partner who has undertaken to contribute
a sum of money and fails to do so becomes a
debtor for the interest and damages from the
time he should have complied with his
obligation. (1788) The same rule applies to
any amount he may have taken from the
partnership coffers, and his liability shall
begin from the time he converted the amount
to his own use. Unless there is a stipulation
to the contrary, the partners shall contribute
equal shares to the capital of the partnership.
(1790) Art. 1791 - If there is no agreement
to the contrary, in case of an imminent loss
of the business of the partnership, any
partner who refuses to contribute an
additional share to the capital, except an
industrial partner, to save the venture, shall
he obliged to sell his interest to the other
partners. Art. 1792 - If a partner authorized
to manage collects a demandable sum which
was owed to him in his own name, from a
person who owed the partnership another
sum also demandable, the sum thus collected
shall be applied to the two credits in
proportion to their amounts, even though he
may have given a receipt for his own credit
only; but should he have given it for the
account of the partnership credit, the amount
shall be fully applied to the latter. The
provisions of this article are understood to
be without prejudice to the right granted to
the other debtor by article 1252 (Application
for payment), but only if the personal credit
of the partner should be more onerous to
him.
an
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all
rep
und Eve
bend
Obligation of managing partners who
collects debt from person who also owed the
partnership 1. Apply sum collected to 2
credits in proportion to their
amounts 2. If he received it for the account
of partnership, the whole
sum shall be applied to partnership credit
Requisites: 1. The partner who collects is
authorized to manage and
actually manages the partnership 2. The
person owed him and the partnership 3. The
partner issues a receipt in his own name
only. 4. The claim of the partnership and the
partner are both due
and demandable.
trans liqui prop Any part
Art. 1793.- A partner who has received, in
whole or in part, his share of a partnership
credit, when the other partners have not
collected theirs, shall be obliged, if the
debtor should thereafter become insolvent,
to bring to the partnership capital what he
received even though he may have given
receipt for his share only.
Obligation of partner who receives share of
partnership credit 1. Obliged to bring to the
partnership capital what he has
received even though he may have given
receipt for his
share only ABC 90 D Requisites: A3 1.300
a. A partner has received in whole or in part,
his share of
the partnership credit b. The other partners
have not collected their shares c. The
partnership debtor has become insolvent
Every partner is responsible to the
partnership for damages suffered by it
through his fault, and he cannot compensate
them with the profits and benefits which he
may have earned for the partnership by his
industry. However, the courts may equitably
lesser this responsibility is through the
partner's extraordinary efforts in other
activities of the partnership, unusual profits
have been realized. (1794) ret out on
becne The risk of specific and determinate
things, which are not fungible, contributed
to the partnership so that only their use and
fruits may be for the common benefit, shall
be borne by the partner who owns them. If
the things contribute are fungible, or cannot
be kept without deteriorating, or if they were
contributed to be sold, the risk shall be borne
by the partnership. In the absence of
stipulation, the risk of the things brought and
appraised in the inventory, shall also be
borne by the partnership, and in such case
the claim shall be limited to the value at
which they were appraised. (1795) The
partnership shall be responsible to every
partner for the amounts he may have
disbursed on behalf of the partnership and
for the corresponding interest, from the time
the expense are made; it shall also answer to
each partner for the obligations he may have
contracted in good faith in the interest of the
partnership business, and for risks in
consequence of its Management. (1796)
Every partner may associate another person
with him in his share, but the associate shall
not be admitted into the partnership without
the consent of all the other partners, even if
the partner having an associate should be a
manager. (1804) The partnership books shall
be kept, subject to any agreement between
the partners, at the principal place of
business of the partnership, and every
partner shall at any reasonable hour have
access to and may inspect and copy any of
them. (1805) Partners shall render on
demand true and full information of all
things affecting the partnership to any
partner or the legal representative of any
deceased partner or of any partner under
legal disability. (1806) Every partner must
account to the partnership for any benefit,
and hold as trustee for it any profits derived
by him without the consent of the other
partners from any transaction connected
with the formation, conduct, or liquidation
of the partnership or from any use by him of
its property. (1807) 7 Any partner shall have
the right to a formal account as to
partnership affairs: (1809) a. If he is
wrongfully excluded from the partnership
business or possession of its property by his
co-partners;
If the right exists under the terms of any
agreement; C. When any partner must
account to the partnership from
profit derived by him without the consent of
other
partners (1807); d. Whenever other
circumstances render it just and
reasonable.
MANAGEMENT OF THE PARTNERSHIP
RIGHTS AND OBLIGATIONS WITH
RESPECT TO MANAGEMENT Partner is there is imminent danger of grave or
Power of managing Vote of partners irreparable injury
appointed
to partnership
partner
If 1. All partners are refusal of Manner
is representing manager in the irrevocable
without controlling articles of just/lawful agents management not
cause; interest necessary partnership
Revocable only to revoke power of the partner

when in bad faith Partner manifestly

Power is revocable appointed partnership agreed upon

any time for any manager after cause
constitution of partnership 2 or more persons
Each may execute In case of entrusted with
all acts of opposition, management of
administration decision of partnership
majority shall without
prevail; In case specification of
Unanimous consent required interest for
alteration of partnership, immovable
property
intervention may be sought
Gene When all th one o prejud partne impor
even conse intere (180 Ana busin partn Exce
aband haver 1. A

of tie, decision of duties/stipulation 01 2. I

partners owning that each shall not 3.

controlling act w/o the other's 4.

interest shall consent 5.

prevail Stipulated that Concurrence of all of /

Absence or none of the necessary for the
prejudicial
disability of any managing partners validity
of acts one cannot be shall act w/o the
6. 7. No a shall restr

alleged unless consent of others

court's
App
8 and what
ma
The partner who has been appointed
manager in the articles of partnership may
execute all acts of administration despre the
opposition of his partners, unless he should
do faith; and his power is irrevocable
without just or lawul cause. The vote of the
partners representing the interest shall be
necessary for such revocation of power. A
power granted after the partnership has been
construiau may be revoked at any time.
(1800) If two or more partners have been
intrusted with the management of the
partnership without specification of them
respective duties, or without a stipulation
that one o shall not act without the consent
of all the others, each may separately
execute all acts of administration, but of
them should oppose the acts of the others,
the decis the majority shall prevail. In case
of a tie, the matter sh decided by the partners
owning the controlling (1801) Monty
cunohy perer In case it should have been
stipulated that none of the managing
partners shall act without the consent of the
o the concurrence of all shall be necessary
for the validity of the acts, and the absence
or disability of any one of the cannot be
alleged, unless there is imminent danger of
grave or irreparable injury to the partnership.
(1802) A must When the manner of
management has not been agreed upon,
the following rules shall be observed: (1803)
a All the partners shall be considered agents
any one of them may do alone shall bind the
partners
without prejudice to the provisions of article
1801. b. None of the partners may, without
the consent of the
others, make any important alteration in the
immovable property of the partnership, even
if it may be useful to the partnership. But if
the refusal of consent by the other partners is
manifestly prejudicial to the interest of the
partnership, the court's intervention may be
sought.
General Rule: When the manner of
management has not been agreed upon, all
the partners shall be considered agents and
whatever any one of them may do alone
shall bind the partnership, without prejudice
to the provisions of article 1801. However,
none of the partners may, without the
consent of the others, make any important
alteration in the immovable property of the
partnership, even if it may be useful to the
partnership. But if the refusal of consent by
the other partners is manifestly prejudicial to
the interest of the partnership, the court's
intervention may be sought. (1803) An act
of a partner which is not apparently for the
carrying on of business of the partnership in
the usual way does not bind the partnership
unless authorized by the other partners.
Except when authorized by the other
partners or unless they have abandoned the
business, one or more but less than all the
partners have no authority to (GARCI CA) .
1. Assign the partnership property in trust
for creditors or
on the assignee's promise to pay the debts of
the partnership; 2. Dispose of the goodwill
of the business; 3. Do any other act which
would make it impossible to carry
on the ordinary business of a partnership; 4.
Confess a judgment; 5. Enter into a
compromise concerning a partnership claim
or
liability; 6. Submit a partnership claim or
liability to arbitration; 7. Renounce a claim
of the partnership. No act of a partner in
contravention of a restriction on authority
shall bind the partnership to persons having
knowledge of the restriction. (1818)
Appointment of managing partner 1.
Appointment in the article of incorporation
(1800) a. Execute all act of administration
despite opposition of
his partners except he acted in bad faith. b.
His power is irrevocable without just or
lawful cause. c. Partners representing
controlling interest shall be
necessary for revocation of power.
2. Other appointment a. Revocable at any
time, with or without just or lawful
cause
Two or more partners have been intrusted
with the management Art. 1801
Article 1802 Without specification of their
respective duties Without a stipulation that
one of There is stipulated that them shall not
act without the none of the managing
consent of all the others
partners shall act without
the consent of the others Rule:
Rule: a. Each one may separately la. The
concurrenc
execute all acts of all shall be necessary
administration,
concurrence of
for the validity of the
b. But if any of them should
acts. oppose the acts of the b. The absence or
others, the decision of the disability of any
one majority shall prevail.
of them cannot be c. In case of a tie, the
matter alleged, unless there
shall be decided by the is imminent danger
partners owning the
of grave or controlling interest.
irreparable injury 10 the partnership
Prohibition against engaging in business
Capitalist partner (1808) Industrial partner
(1789) Camot engage in same kind of
Industrial partner cannot business in which
the engage in business for partnership is
engaged except himself (any business) is
there is stipulation
except if there is
stipulation Reason: To avoid conflict of
Reason: Industrial partners interest
must devote his entire
industry to the partnership Violation
Violation: 1. Bring to the common I.
Exclude him from the
funds any profits accruing to him from his 2.
Avail themselves of transactions
the benefits which he 2. Shall personally
bear all may have obtained the losses
Damages, in either case.
firm
Property Rights of a Partner (1810) The
property rights of a partner are: 1. His rights
in specific partnership property
A partner is co-owner with his partners of
specific partnership property. (1811)
Equal right with his partners to possess
specific partnership property for partnership
purposes but not for any other purpose
without the consent of his partners. Not
assignable except in connection with the
assignment of rights of all the partners in the
same property Not subject to attachment or
execution, except on a claim against the
partnership. But partnership property can be
attached for partnership debt.
Not subject to legal support 2. His interest in
the partnership - A partner's interest in the
partnership is his share of the profits and
surplus. (1812)
A conveyance by a partner of his whole
interest in the partnership does not of itself
dissolve the partnership, or, as against the
other partners in the absence of agreement.
Right of the assignee: Entitles the assignee
to receive in accordance with his contract
the profits to which the assigning partner
would otherwise be entitled.
Assignee has no right: a. To interfere in the
management or administration of the
partnership business or affairs; b. To require
any information or account of partnership
transactions, c. To inspect the partnership
books; • In case of fraud in the management
of the partnership,
the assignee may avail himself of the usual
remedies. In case of a dissolution of the
partnership, the assignee is entitled to
receive his assignor's interest and may
require an account from the date only of the
last account agreed
to by all the partners. (1813) His right to
participate in the management (n)
Right of partner's creditor (1814) Without
prejudice to the preferred rights of
partnership creditors, on due application to a
competent court by any judgment creditor of
a partner, the court may charge the interest
of the debtor partner with payment of the
unsatisfied amount of such judgme debt with
interest thereon; and may then or later
appoint a receiver of his share of the profits,
and of any other money due or to fall due to
him in respect of the partnership, and make
all other orders, directions, accounts and
inquiries which the debtor partner might
have made, or which the circumstances of
the case may require. The interest charged
may be redeenied at any time before
foreclosure, or in case of a sale being
directed by the court, may be purchased
without thereby causing a dissolution: 1.
With separate property, by any one or more
of the partners.
or
2. With partnership property, by any one or
more of me
partners with the consent of all the partners
whose interests are not so charged or sold.
ic
ric
for
hent
on a
erty
the
Rule on conveyance of real property (by any
partner or an partners) Conveye Title of
Execu Passing of title/Right of d by
real ted in the partnership property the
name of
Title passes to the buyer Partnershi Partne
Any
but the Partnership may
rship partner
recover Exception: 1. Conveyance was in
the usual way of business, except when the
buyer has knowledge of the partner lack of
authority. Real property was transferred to
3rd
person in good faith. Any
Partnershi | Partne Passes the equitable
partner
interest of the partnership provided the
conveyance was in the
usual way of business. By
One or | One or Title passes to the buyer Passes all their rights in such property
partners more but more but the Partnership
may whose not all but not recover name title No
partner all Exception: stands (no right partne
1. Conveyance was in of partner

the usual way of partnershi partner

business, except partne

when the buyer has disclose) rer

knowledge of the partner lack of IS

authority, 2. Real property was pa

transferred to 3rd D

person in good faith Partner One or Partne D

Passes the equitable more or rship/
Obligation of the partners with regards to
p interest of the all the artner partnership, third person
provided the partners, Own act is one within
An admission or representation made by any
the or in a name third
partner concerning partnership affairs within
authority of the partner. (usual way of the scope of his authority is evidence against
business) the partnership. (1820) Notice to any partner
of any matter relating to partnership affairs,
and the knowledge of the partner acting in
the particular matter, acquired while a
person in trust for the partnershi partner or then present to his mind, and the
knowledge of any other partner who
Not reasonably could and should have
communicated it to the acting partner,
par rep operate as notice to or knowledge of the
partnership. (1821) Exception: In case of
All
fraud on the partnership, committed by or
with the consent of that partner. All partners
All
and the partnership are solidary liability for
All everything chargeable to the partnership.
(1824) 1 a. Any wrongful act or omission of liable to such person, whether the
any partner acting in the ordinary course of representation has or
the business of the partnership or
has not been made or communicated to such
an with the authority of co-partners, loss or person. Partnership liability result 1. When
injury is all the members of the existing partnership

dist caused to any person, not being a consent to the representation. 2. Liable as
partner in the though he were an actual member of the

diss partnership, or any penalty is incurred, partnership No partnership liability result 1.

the partnership the is liable therefor to the He is liable pro rata with the other persons,
same extent as the partner so if any, so

acting or omitting to act. (1822) Pleno mog consenting to the contract or representation
maken wrespongok What b. Where one as to incur liability, otherwise separately.
partner acting within the scope of his
to
apparent authority receives money or
property of a third person and misapplies it; Partnership is liable
(1823, 1) Where the partnership in the
course of its business receives money or Liabilities in estoppel
property of a third person and the money or
All partners consented representation
property so received is misapplied by any
partner while it is in the custody of the
partnership.
No existing partnership & all person who
(1823,2) Partnership by estoppels When a
represented those represented consented;
person represents himself or consent to
himself & all those who Not all partners of
another to another representing him to
existing made representation liable
anyone (he is an agent of the persons
partnership consents to pro-rata/jointly
consenting to such representation) as a
representation No existing partnership & not
partner in an existing partnership, he is
all / Person who represented represented
liable to a. Any such persons to whom such
consented;
representation has been
himself liable & those who None of partners
made. b. The representation was made in a
in existing made/consented partnership
public manner, he is
consented

representation separately
to
liable
A person admitted as a partner into an
existing partnership is liable for all the
obligations of the partnership arising before
his admission as though he had been a
partner when such obligations were
incurred, except that this liability shall be
satisfied only out of partnership property,
unless there
is a stipulation to the contrary. (1826) • The
creditors of the partnership shall be
preferred to
those of each partner as regards the
partnership property. Without prejudice to
this right, the private creditors of each
partner may ask the attachment and public
sale of the share of the latter in the
partnership assets. (1827)
lend here DISSSOLUTION Dissolution is
change in the relation of the partners caused
by any partner ceasing to be associated in
the carrying on as distinguished from the
winding up of the business. (1828) On
dissolution the partnership is not terminated,
but continues until the winding up of
partnership affairs is completed. (1829)
is
the
‫קור‬
of
Automatic dissolution (1830) Judicial
dissolution
(1831) 1. Without violation of the 1. A
partner has been
agreement between the declared insane in
partners:
any judicial a. By the termination of the
proceeding or is
definite terin or shown to be of particular
undertaking unsound mind; specified in the
2. A partner becomes agreement;
incapable b. By the express will of
performing his part
any partner, who must of the partnership act
in good faith, when contract: no definite
term or 3. A partner has been
particular is specified; guilty of such C. By
the express will of all conduct as tends to
the partners who have affect prejudicially
not assigned their the carrying on of interests
or suffered
the business, them to be charged for 4. A
partner willfully their separate debts, or
persistently either before or after the
commits a breach termination of any of the
partnership specified term or agreement, or
particular undertaking; otherwise SO d. By
the expulsion of any conducts himself in
partner from the matters relating to business
bona fide in the partnership accordance with
such a business that it is power conferred by
the not reasonably agreement between the
practicable to carry partners
on the business in 2. In contravention of the
partnership with
agreement between the him; partners, where
the 5. The business of the circumstances do
not permit partnership can
a dissolution under any other only be carried
on provision of this article. by
at a loss; the express will of any 6. Other
partner at any time;
circumstances Any event which makes it
render a dissolution unlawful for the
business of
equitable. the partnership to be carried on
the application of on or for the members to
the purchaser of a carry it on in partnership
partner's interest under When a specific
thing which article 1813 or 1814: a partner
had promised to 1. After
the contribute to the partnership, termination
of the perishes before the delivery; specified
termor in any case by the loss of the
particular thing, when the partner who
undertaking contributed it having At any
time if the reserved the ownership
partnership was a thereof, has only
transferred partnership at will. to the
partnership the use or when the interest
enjoyment of the same; but was assigned or
the partnership shall not be when the
charging dissolved by the loss of the order
was issued. thing when it occurs after the
partnership has acquired the ownership
thereof,
Death of any partner; 6. Insolvency of any
partner or
of the partnership; Civil interdiction of any
partner,
5.
Effect of dissolution General Rule:
Dissolution terminates all authority of any
partner to act for the partnership: (1832)
Exception: 1. By any act appropriate for
winding up partnership affairs or
completing transactions unfinished at
dissolution; By any transaction which would
bind the partnership if dissolution had not
taken place, provided the other party to the
transaction: a. Had extended credit to the
partnership prior to
dissolution and had no knowledge or notice
of the
dissolution; or b. Though he had not so
extended credit, had nevertheless
known of the partnership prior to
dissolution, and, having no knowledge or
notice of dissolution, the fact of dissolution
had not been advertised in a newspaper of
general circulation in the place (or in each
place if more than one) at which the
partnership business was
regularly carried on. Liability of a partner
shall be satisfied out of partnership assets
alone when such partner had been prior to
dissolution 1. Unknown as a partner to the
person with whom the
contract is made; and 2. So far unknown and
inactive in partnership affairs that
the business reputation of the partnership
could not be said to have been in any degree
due to his connection with it.
1. With respect to the partners, a. When the
dissolution is not by the act, insolvency or
death of a partner, or b. When the
dissolution is by such act, insolvency or
death
of a partner, each partner is liable to his co-
partners for his share of any liability created
by any partner acting for the partnership as
if the partnership had not been dissolved
unless: (1833)
1. The dissolution being by act of any
partner, the
partner acting for the partnership had
knowledge of
the dissolution, or 2. The dissolution being
by the death or insolvency of
a partner, the partner acting for the
partnership had
knowledge or notice of the death or
insolvency. 2. With respect to persons not
partners, the partnership is in no
case bound by any act of a partner after
dissolution: a. Where the partnership is
dissolved because it is unlawful
to carry on the business, unless the act is
appropriate for
winding up partnership affairs; or b. Where
the partner has become insolvent; or c.
Where the partner has no authority to wind
up
partnership affairs, except by a transaction
with one who
1. Had extended credit to the partnership
prior to
dissolution and had no knowledge or notice
of his
want of authority; or 2. Had not extended
credit to the partnership prior to
dissolution, and, having no knowledge or
notice of his want of authority, the fact of
his want of authority has not been advertised
in the manner provided for advertising the
fact of dissolution.
ner
The dissolution of the partnership does not
of itself discharge the existing liability of
any partner (1835) Exception: A partner is
discharged from any existing liability upon
dissolution of the partnership by an
agreement to that effect between himself, the
partnership creditor and the person or
partnership continuing the business; and
such agreement may be inferred from the
course of dealing between the creditor
having knowledge of the dissolution and the
person or partnership continuing the
business. The individual property of a
deceased partner shall be liable for all
obligations of the partnership incurred while
he was a partner, but subject to the prior
payment of his separate debts. (ibid) Where
a partnership contract is rescinded on the
ground of the fraud or misrepresentation of
one of the parties thereto, the party entitled
to rescind is, without prejudice to any other
right, entitled: (1838) 1. To a lien on, or
right of retention of the surplus of the
partnership property after satisfying the
partnership liabilities to third persons for
any sum of money paid by him for the
purchase of an interest in the partnership and
for any capital or advances contributed by
him; 2. To stand, after all liabilities to third
persons have been
satisfied, in the place of the creditors of the
partnership for any payments made by him
in respect of the
partnership liabilities; and 3. To be
indemnified by the person guilty of the fraud
or
making the representation against all debts
and liabilities of the partnership
LIMITED PARTNERSHIP Members one or
more general partners and one or more
limited partners.
General Partner/partnership
Limited
partner/partnership 1. General partner 151.
Limited partner's personally liable for the
liability extends only partnership obligation
to his capita
contribution 2. When management has not 2.
Limited partner has
been agreed upon, all no share in the
general partner have equal right in the
management of
management of a
limited partnership the partnership. General
partner may 3. Limited partner must
contribute
money, property or industry
contribute money or contribute property but
not
industry General partner is a proper 4.
Limited partner is not party to proceeding by
or
a proper party against a partnership
to proceedings by or
against a partnership. partner may 5.
Limited partner name appear in the firm
name
must not appear in the
firm name General partner cannot 6.
No prohibition engage in a business which
case of Limited is of the kind of business
partner in which the partnership is engage
Retirement, death, insanity 7. Do not the
same or insolvency of general effect,
executor or partner dissolves the
administrator shall partnership
have all the rights of a limited partner for a
the purpose of setting
his estate. 8. Can be constituted in 8. Must
follow all the whatever form
requirement of the law for limited
partnership 9. Composed of all general 9.
Composed of at least partner
one general partner and at least one
limited partner 10. No need to include in the
10. Must include in the
partnership name the word partnership name
the "LTD"
word "LIMITED" or
"LTD" 11. When the interest of one 11.
When the interest of
of the general partner is the limited partner
is charged, his interest may charged, the
interest be redeemed with separate may be
redeemed
with the separate property of one or more
or; partnership property partners
of any
general partner, but property with the
consent
may not be redeemed with partnership
property. (1862)
A.ge the subjc liabil partn partn writte the si
partne the author (1)
of all partners whose interest is not so
charged or sold. (1814)
(2)
General Rule: The limited partners as such
shall not be bound by the obligations of the
partnership.(1843)
(3)
Exception: . The name of the partnership
failed to add the word "Limited"
or "Ltd" • Failure to file the article of co-
partnership to the SEC full rangert
The contributions of a limited partner may
be cash or property, but not services. (1845)
The surname of a limited partner appear in
the partnership name unless: (1) It is also the
surname of a general partner, or (2) Prior to
the time when the limited partner became
such, the business has been carried on under
a name in which his surname appeared.
(1846) Climent na A limited partner takes
part in the control of the business
(1848) Right of General partner Right of
limited
partner (Art. 1851) 1. The partnership books
shall A limited partner
be kept subject to any shall have the same
agreement between the rights as a general
partners, at the principal place partner to: of
business of the partnership, (1) Have and
every partner shall at any partnership books
reasonable hour have access kept at the
principal to and may inspect and copy place
of business of any of them. (1805)
the partnership, and Partners shall render on
at a reasonable hour demand true and full to
inspect and copy information of all things
any of them; affecting the partnership to (2)
Have on any partner or the legal demand
true and full representative of any deceased
information of all partner or of any partner
things affecting the
under legal disability. (1806) partnership,
and a 3.. Any partner shall have the formal
account of
right to a formal account as to partnership
affairs partnership affairs:
whenever a. If he is wrongfully
circumstances render excluded from the
it just and reasonable; partnership business
or and possession of its property 1 (3) Have
by his co-partners;
dissolution and b. If the right exists under
winding up by decree the terms of any
of court. agreement;
A limited partner c. As provided by article
shall have the right to 1807;
receive a share of the d. Whenever other
profits or other circumstances render it
compensation by way
just and reasonable. of income, and to the
A.general partner shall have all return of his
the rights and powers and be contribution,
(1851) subject to all the restrictions and
provided that after liabilities of a partner in a
such payment is partnership without limited
made, whether from partners. However,
without the property of the written consent
or ratification of partnership or that of the
specific act by all the limited a general
partner, the partners, a general partner or all
of partnership assets are the general partners
have no in excess of all authority to:
liabilities of the (1) Do any act in
partnership except
contravention of the liabilities to limited
certificate;
partners on account (2) Do any act which
would of their contributions
make it impossible to and to general carry
on the ordinary partners (1856). business of
the partnership; Confess a judgment against
the partnership; Possess partnership
property, or assign their rights in specific
partnership property, for other than a
partnership purpose; Admit a person as a
general partner; Admit a person as a limited
partner, unless the
right so to do is given in the certificate;
Continue the business with partnership
property on the death, retirement, insanity,
civil interdiction or insolvency of a general
partner, unless the right so to do is given in
the certificate. (1850)
A person may be a general partner and a
limited partner in the same partnership at the
same time, provided that this fact shall be
stated in the certificate. I to becoh, but not A
person who is a general, and also at the same
time d limited partner, shall have all the
rights and powers and be subject to all the
restrictions of a general partner, except that,
in respect to his contribution, he shall have
the rights against the other members which
he would have had if he were not also a
general partner. (1853) Allowable
transaction of limited partner (not also
general partner) a. Loan money to the
partnership b. Transact other business with
the partnership, c. Received a pro rata share
of the assets with the general
creditors (if he is not also a general partner)
Prohibited transactions a. Receive or hold as
collateral security and partnership
property, or b. Receive from a general
partner or the partnership any
payment, conveyance, or release from
liability is at the time the assets of the
partnership are not sufficient 10 discharge
partnership liabilities to persons not
claiming
as general or limited partners The receiving
of collateral security, or payment,
conveyance, or release in violation of the
foregoing prohibition is a fraud on the
creditors of the partnership. (Reason 3rd
persons enjoy preferential rights insofar as a
partnership assets are concerned) (1854) A
limited partner may receive from the
partnership the share of the profits or the
compensation by way of income stipulated
for in the certificate. (provided that
Partnership assets > All outside liabilities)
(1856) Where there are several limited
partners the members may agree that one or
more of the limited partners shall have a
priority over other limited partners as to the
return of their contributions, as to their
compensation by way of income, or as to
any other matter. If such an agreement is
made it shall be stated in the certificate, and
in the absence of such a statement all the
limited partners shall stand upon equal
footing. (1855) Requisites for return of
contribution of limited partner. (1857) a. All
liabilities of the partnership, except
liabilities to
general partners and to limited partners on
account of their contributions, have been
paid or there remains property of the
partnership sufficient to pay them; The
consent of all members is had, unless the
return of the contribution may be rightfully
demanded under the provisions of the
second paragraphs; and
e certificate is cancelled or so amended as to
set forth the withdrawal or reduction. Return
of contribution of limited partner as a matter
right - Limited partner may rightfully
demand the return his contribution: (1857) a.
On the dissolution of a partnership, or b.
Arrival of the date specified in the certificate
for its
b.
return; After he has six months' notice in
writing to all other members, if no time is
specified in the certificate, either for the
return of the contribution or for the
dissolution of
the partnership. . Liability of limited partner
to the partnership (1858)
For the difference between his contribution
as actually made and that stated in the
certificate as having been
made, and b. For any unpaid contribution
which he agreed in the
certificate to make in the future at the line
and on the
conditions stated in the certificate Liability
limited partner as trustee - A limited partner
is considered as trustee for the partnership. a
Specific property stated in the certificate as
contributed
by him, but which was not contributed or
which has
been wrongfully returned, and b. Money or
other property wrongfully paid or conveyed
to him on account of his contribution.
Requisites for waiver or compromise a.
Consent of all members; b. It does not affect
the right of a creditor of a partnership
who extended credit or whose claim arose
after the filing and before a cancellation or
amendment of the
certificate, to enforce such liabilities. A
limited partner's interest is assignable.
(1859) An assignee, who does not become a
substituted limited partner, has no right to
require any information or account of the
partnership transactions or to inspect the
partnership books; he is only entitled to
receive the share of the profits or other
compensation by way of income, or the
return of his contribution, to which his
assignor would otherwise be entitled. (Right
are similar to those of a person to whom a
partner conveyed his whole interest in the
partnership)
•-
A substituted limited partner - is a person
admitted to all the rights of a limited partner
who has died or has assigned his interest in a
partnership Requisites when assignee
become substituted limited partner a. All the
members consent thereto or if the assignor,
being
thereunto empowered by the certificate,
gives the
assignee that right. b. An assignee becomes
a substituted limited partner when
the certificate is appropriately amended in
accordance
with article 1865. C. The certificate as
amended must be registered in the
SEC
The retirement, death, insolvency, insanity
or civil interdiction of a general partner
dissolves the partnership, unless the business
is continued by the remaining general
partners: (1) Under a right so to do stated in
the certificate, or (2) With the consent of all
members. (1860) On the death of a limited
partner his executor or administrator shall
have all the rights of a limited partner for the
purpose of setting his estate, and such power
as the deceased had to constitute his
assignee a substituted limited partner. The
estate of a deceased limited partner shall be
liable for all his liabilities as a limited
partner. (1861)
•
Liabilities of the partnership shall rank in
order of payment General partnership (1839)
Limited partnership (1863) a. Thoso owing
to creditors a. Those to creditors, in the other
than partners;
order of priority as