Law on Partnership

[Essay] Assignment of right by a Limited Partner

- 1. Included in the certificate - no consent needed - 2. Not included in the certificate - consent by all partners

[Essay] The return of contribution by a Limited Partner

- this is to be indicated in the certificate, in the absence thereof a 6 months notice to all partners

[Enumeration] Dissolution and Winding up: Judicial Causes:

1. A partner has been declared insane 2. A partner becomes incapable of performing his part of the partnership contract 3. A partners has been guilty of such conduct as tends to affect prejudicially the carrying on of the business. 4. A partner wilfully or persistently commits a breach of the partnership agreement. 5. The business of the partnership can only be carried on at a loss. 6. Other circumstances render a dissolution equitable.

[Essay] Effects of Dissolution

1. Act, Insolvency or Death - Notice should be given 2. Others - no notice needed

Universal Partnerships

1. All Profits 2. All Present Property

[Essay] Participation in Management: Only one Managing Partner (Revocation of Authority)

1. Appointed prior constitution - removal needs a lawful and just cause and vote representing controlling interest 2. Appointed after constitution - removal only needs the vote representing controlling interest

[Enumeration] The following are the transaction that needs the approval of ALL partners

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 good-will 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.

[Essay] Credit to the firm the payment made by a debtor to a managing partner

1. Choice of debtor 2. Based on receipts: A. Issued in the name of the Partnership - all will be applied B. Issued in the name of the Managing partner - will be applied proportionately

[Enumeration] Particular Partnership

1. Determinate things, their use or fruits 2. A specific undertaking 3. The exercise of a profession or occupation

[Enumeration] Persons not allowed to form universal partnership (also applies to donation)

1. Husband and Wife 2. Those guilty of adultery and concubinage 3. Those guilty of the same criminal offense, if the partnership was entered into in consideration of the same.

[Essay] Effects of Conveyance of Real Property

1. If the property is in the name of the partnership and conveyance is in the name of all partners and conveyed by all partners this constitutes a valid transfer 2. If the property is in the name of the partnership or in the name of one or more partners and conveyance is in the name of the partnership or of one or more partners, conveyed by the partnership or of one or more partners this is also valid but the partnership may recover, except if the the buyer is s purchase for good faith. 3. If the property is in the name of the partnership, conveyed in the name of a partner and conveyed by a partner this will pass only the equitable interest if within the authority - if not, there will be no transfer of ownership.

[Essay] Liability of a New or Incoming Partner

1. Liability incurred prior to admission - only up to capital contribution 2. Liability incurred after admission - liable up to personal assets

[Essay] Prohibition to engage in other business

1. Limited Partner General Rule: Not allowed in any business Exception: There is a stipulation 2. Capitalist Partner General Rule: Limited only to the same industry Exception: A. Expressly stipulated B. Implied to be allowed by other partners C. During Period of Liquidation and winding up D. If he/she is only a limited partner in a partnership in the same industry

[Essay] Participation in Management: Multiple Managing partner

1. No Managing Partner may act without the consent of other 2. With specific duties - can act within his authority 3. No stipulation as to consent and no specific duties (Equal Authority). Opposition: 1. Majority of Managing partner (headcount votes) 2. Controlling interest of Managing partner in case of equal votes 3. Controlling interest of all partners, regardless if managing partner or not

[Essay] Participation in Management: No Managing partner, without the stipulation that requires the consent of all partners

1. Opposition settled thru controlling interest. Not one of them can make alteration in the immovable property of the partnership without the consent of all partners. Except: refusal by virtue of an act manifestly prejudicial to the interest of the partnership - court intervention necessary

[Enumeration] Risk borne by Partnership

1. Things contributed are fungible 2. Cannot be kept without deteriorating 3. They were contributed to be sold.

[Essay] Limited Partnership: Distribution of partnership assets:

1. Those owing to creditors other than partners 2. Those owing to the limited partners, other than capital and profits 3. Those owing to limited partners in respect of profits 4. Those owing to limited partners in respect of capital 5. Those owing to general partners other than capital and profits 6. Those owing to general partners in respect to profits 7. Those owing to general partners in respect to capital

[Enumeration] Solidary Liability of Partners resulting from

1. Torts 2. Misappropriation

Kinds of Partnership AS TO OBJECTS

1. Universal Partnership 2. Particular Partnership

[Enumeration] Dissolution and Winding up: Extra-Judicial Causes:

1. Without violation of the agreement between partners A. By Termination of the term or achievement of particular undertaking B. By express will of any partner C. By express will of all the partners D. By expulsion of any partner 2. In contravention of the agreement between the partners 3. By operation of law A. By any event which makes it unlawful for the business to continue B. When the contribution of a specific thing by a partner perishes. Except if only the usufruct is contributed to the partnership or the loss of the thing happened after contribution to the partnership C. By death of any partner D. By insolvency of any partner E. By civil interdiction of any partner

[Question] Period as to when the partner can complain about the appraisal by third person

3 months from the time he had knowledge

[Definition] Pactum Leonina

A stipulation which excludes one or more partners from any share in the profits or losses - VOID

[Question] General Rule for Risk of Loss to be borne with by:

Born by the partnership, unless there was a stipulation to the contrary.

registered with the SEC, does not affect validity of contract of partnership, but only to effect to third persons

Capital of Php 3,000 in money or property needs to be

Onerous

Characteristic of Partnership that is described as: certain contributions have to be made to become a partner

Preparatory

Characteristic of Partnership that is described as: in the sense that after it has been entered into, other contracts essential in the carrying out of its purposes can be entered into.

Nominate

Characteristic of Partnership that is described as: it is designated by a specific name and there are specific rules applicable only to it

Bilateral or Multilateral

Characteristic of Partnership that is described as: it is entered into between two or more persons

Consensual

Characteristic of Partnership that is described as: it is perfected by mere consent or the meeting of minds between parties

Principal

Characteristic of Partnership that is described as: its existence does not depend on the existence of another contract.

1. Inventory of the said property, signed by parties 2. Inventory to be attached to the public instrument

Contribution of an Immovable property to a partnership needs the following requirements: failure to comply will render the contract to be VOID

[True/False] Exemption of one of the parties to share in the losses is valid to third parties

FALSE: Void as to third parties, valid to partners

[True/False] The designation of losses and profits can be entrusted to one of the partners

FALSE: cannot

[Essay] Right of a Limited partner to demand return of contribution

General Rule - Cash Exceptions - Other than cash if the right is given under the certificate

[Essay] Redemption of interest assigned

General partner - property of other partners or the partnership Limited partner - separate property of general partner

[Essay] Partner's obligation to pay damages caused to the partnership due to his fault

General rule: cannot be reduced Exception: if unusual profits have been obtained due to the transaction.

Delectus Personae

It means: pertains to the right to choose who to associate with

Affectio Societatis

It means: the desire to formulate an active union with people among who there exist mutual confidence and trust

[Essay] Participation in Management: No Managing partner, with stipulation that requires the consent of all partners

No act shall be constituted without the concurrence of all partners

[TRUE/FALSE] Contributions such as sum of money will be demandable without the need for demand, delay will cause the partner interest and damages

TRUE

[True/False] Co-ownership or co-possession does not of itself establish a partnership, whether such co-owners or co-possessors do or do not share in any profits made by the use of the property

TRUE

[True/False] Have dissolution and winding up by decree of court

TRUE

[True/False] In a Universal Partnership of All Present Property, Property which the partners may acquire subsequently by inheritance, legacy, or donation cannot be included in such stipulation, except the fruits thereof

TRUE

[True/False] Limited partner cannot be an industrial partner

TRUE

[True/False] Right to reimbursement - corresponding interest accrues from the time the expense was made

TRUE

[True/False] 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 form which the returns are derived.

TRUE

[True/False] The substitution does not release the original partner from liability to the partnership for those liabilities of which the substitute was ignorant and which could not be ascertained from the certificate during assignment.

TRUE

[True/False] The word "Limited" or "LTD" is to be included in the name

TRUE

[True/False] A person may be a general partner and a limited partner in the same partnership, provided that this fact is stated in the certificate

TRUE: General partner to third parties, Limited partner to other partners

[True/False] In case of imminent loss, industrial partners are not liable to contribute additional share to the capital

TRUE: as a general rule.

[True/False] A Limited partnership that has not filed registration (sign and swear) with the SEC will have unlimited liability

TRUE: at least substantial compliance

[True/False] A partner's right in specific partnership property is not assignable

TRUE: except in connection with the assignment of rights of all the partners in the same property

[True/False] Right to compensation exists only when there is an agreement or stipulation granting such right

TRUE: general rule, no compensation

[True/False] Every partner is a debtor of the partnership for whatever he may have promised to contribute thereto

TRUE: liable for fruits and interest from the date stipulated to deliver, without the need for demand as provided by the law.

[True/False] A limited partner may loan money and to transact business with the partnership, but he cannot receive or hold as collateral security any partnership property

TRUE: regarded as rescissible contract-fraud of creditor: accion pauliana

1. As a debt by installment or otherwise 2. As wages of an employee or rent to a landlord 3. As an annuity to a widow or representative of a deceased partner 4. As interest on a loan, though the amount of payment vary with the profits of the business 5. As the consideration for the sale of a goodwill of a business or other property by installments or otherwise.

The receipt by a person of a share of the profits of a business is a prima facie evidence that he is a partners in the business, except:

Articles of partnership, entered in to without specification of its nature is treated as?

Universal partnership of all profits.

[Definition] Apparent Authority

a partner who has apparent authority carries on the usual business of the partnership even though this is beyond is authority, requisites include: that the third person lacks knowledge of his authority for the transaction to be valid.

[Definition] Limited Partnership

constitutes at least one Limited partner and at least one General partner

Ostensible Partner

direct opposite of a dormant partner, or one who participates in the management and is known to third parties as a partner

Nationality of a partnership?

it is derived from the nationality of the partners representing controlling interest.

Silent Partner

one who does not participate in the management of the partnership

Incoming Partner

one who is admitted to the partnership after it has already been constituted.

Dormant Partner

one who is both a silent and secret partner

Secret Partner

one who is not known to third persons as a partner

Managing Partner

one who undertakes the management of the partnership

Liquidating Partner

one who undertakes the winding-up of partnership affairs after its dissolution

All Profits

only the use of the asset ang contributed sa partnership, the naked title of the properties still remains with the partner and not of the partnership. All profits earned by the partners regardless if it was derived from partnership assets or own ventures will be shared among partners.

[Essay] Preference as to Limited partner

to be indicated in the certificate

All Present Property

use and ownership will be transferred to the partnership and only the profits derive from those said property will be the only profits to be shared among the partners.