CHAPTER 1 (1767-1803)

Question 1

By the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves.

Two or more persons may also form a partnership for the exercise of a profession.

Answer 1

ARTICLE 1767

Question 2

In essence, the contract of partnership is a contract of agency.

Answer 2

TRUE

Each of the partners act as an AGENT of the partnership.

Question 3

The right to choose whom a person wishes to associate itself with in partnership.

Answer 3

Principle of Delectus Personae (Choice of persons)

Question 4

Elements of Partnership

Answer 4

1. Intention to form a contact of partnership
2. Participation in both profits and losses
3. Community of interests

Question 5

Basic Features of Partnership

Answer 5

1. Voluntary agreement
2. Association for profit
3. Mutual contribution to a common fund
4. Lawful purpose or object
5. Mutual agency of partners
6. Articles must not be kept secret
7. Separate juridical personality

Question 6

Characteristics of the Contract (7)

Answer 6

1. Consensual
2. Bilateral
3. Preparatory
4. Nominate
5. Onerous
6. Commutative
7. Principal

Question 7

Perfected by mere consent

Answer 7

Consensual

Question 8

Formed by two or more persons creating reciprocal. rights and obligations

Answer 8

Bilateral

Question 9

Entered into as means to an end

Answer 9

Preparatory

Question 10

Has a special name or designation

Answer 10

Nominate

Question 11

Contributions in the form of either money, property, and/or industry must be made

Answer 11

Onerous

Question 12

The undertaking of each partner is considered as the equivalent of that of the others.

Answer 12

Commutative

Question 13

Its existence or validity does not depend on some other contract

Answer 13

Principal

Question 14

Organizing a partnership is an absolute right.

Answer 14

FALSE

It is but a privilege which may be enjoyed only under such terms as the State may deem necessary to impose.

Question 15

The partnership has a juridical 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.

Answer 15

ARTICLE 1768

Question 16

If the partnership is used by one or more partners for fraudulent, unfair, and illegal purposes, the partners CAN be held liable even if the partnership’s name was used.

Answer 16

TRUE

Question 17

Partnership as a juridical person can..

Answer 17

1. Acquire and posses property of all kinds
2. Incur obligations
   3.

Question 18

If a partnership with a capital of more than 3,000 is NOT filed with the Securities and Exchange Commission (S.E.C.), it is VOID.

Answer 18

FALSE

Under ART. 1772, it is still a partnership (juridical person) despite the non-compliance.

NOT APPLICABLE FOR IMMOVABLE PROPERTY

Question 19

A corporation is created by the state in the form of a special charter or by a general enabling law Corporation Code.

Answer 19

TRUE

Question 20

A partnership may be declared insolvent even of the partners are not.

Answer 20

TRUE

It is separate and distinct from that of each of the partners.

Question 21

Partners cannot be held liable for the
obligations of the partnership.

Answer 21

TRUE

EXCEPTION: Unless it is shown that the legal fiction of a different juridical personality is being used for a fraudulent, unfair or illegal purpose.

Question 22

A juridical personality, which is granted by the law, is a capacity to act with legal effect.

Answer 22

TRUE

May enter into contracts, acquire and possess property of all kinds in its name, as well as incur obligation and bring civil or criminal actions.

Question 23

A partnership is created through VOLUNTARY agreement of parties.

Answer 23

TRUE

Question 24

The existence of a partnership is limited.

Answer 24

FALSE

There is no time limit except agreement of partners.

Question 25

A corporation cannot exist more than 50 years (may reduce but not increase)

Answer 25

TRUE

Question 26

In a partnership, if a partner transfer his interest to a third person, the transferee does NOT become a partner unless ALL other partners consent.

Answer 26

TRUE

Principle of mutual trust and confidence: Delectus Personarum

Question 27

In a corporation, a transfer of interest makes the transferee a stockholder, even without the consent of the others.

Answer 27

TRUE

Question 28

Each partners are agents of the partnership, hence, they can bind both the firm and the partners.

Answer 28

TRUE

Question 29

The stock holders cannot bind the corporation.

Answer 29

TRUE

They are not agents thereof.

Question 30

A partner CAN sue a partner who mismanages.

Answer 30

TRUE

Question 31

A stockholder CANNOT sue a member of the board who mismanages.

EXCPETION:
In a derivative suit (corporation is the victim)

Answer 31

TRUE

Question 32

A partnership is a national of the country where it was CREATED.

Answer 32

TRUE

Question 33

A partnership becomes a juridical person from the time the contract begins.

Answer 33

TRUE
Perfected by mere consent.

Question 34

Death, retirement, insanity, civil interdiction, and insolvency can cause a dissolution in a partnership.

Answer 34

TRUE

HOWEVER, dissolution does not equate liquidation or closing of the partnership.

Question 35

In determining whether a partnership exists, these rules shall apply:

(1) Except as provided by article 1825, persons who are not partners as to each other are not partners as to third persons;

(2) 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;

(4) The receipt by a person of a share of the profits of a business 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:

(a) As a debt by installments or otherwise;

(b) As wages of an employee or rent to a landlord;

(c) As an annuity to a widow or representative of a deceased partner;

(d) As interest on a loan, though the amount of payment vary with the profits of the business;

(e) As the consideration for the sale of a goodwill of a business or other property by installments or otherwise.

Answer 35

ARTICLE 1769