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BLAW212 (Partnership and Corporation) > Chapter 2: Obligations of the Partners Among Themselves > Flashcards

Chapter 2: Obligations of the Partners Among Themselves Flashcards

1
Q

When does a partnership begins?

A

A partnership begins from the moment of the execution of the contract.

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2
Q

What will happen if a partnership with a fixed term or particular undertaking continues?

A

It will turn into a partnership at will.

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3
Q

Who will be liable if a property is evicted due to legal reasons?

A

The partner who contributed the property.

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4
Q

Is demand necessary when it comes to contributions?

A

Demand is NOT necessary, the partner is already in default.

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5
Q

What is the remedy in case of failure to deliver the promised contribution?

A

Specific performance with interest and damages

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6
Q

How should goods be appraised?

A

Based on the method indicated in the articles of the partnership

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7
Q

How should goods be appraised if the contract doesn’t specify how to appraise it?

A

Experts chosen by the partners must do it. The value will be determined based on the current market price.

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8
Q

When does the obligation to pay the interest and damages if a partner fails to deliver his promised contribution arises?

A

From the moment a partner fails to deliver his contribution on the agreed date.

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9
Q

Remedy of the capitalist partners if an industrial partner engages in any other business for themselves.

A
  • Exclude the indutrial partner from the partnership.
  • May avail themselves the benefits which the industrial partner may have obtained plus damages.
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10
Q

What will happen if a capitalist partner refuses to contribute additional capital when facing an imminent loss?

A

The capitalist partner shall be obliged to sell their interest to the other capitalist partner who are willing to contribute additional capital.

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10
Q

Are capitalist partner bound to contribute additional capital?

A

GENERAL RULE: Capitalist Partners are NOT bound to contribute additional capital.

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11
Q

What happens when a partner, authorized to manage the partnership, collects a payment from someone who owes both the partner and the partnership?

A

The amount shall be proportionally applied to both debts.

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12
Q

If a partner pays only his personal debt to another partner, how should the collected sum be applied?

A

The amount must still be divided proportionally to both personal partner and the partnership.

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13
Q

In the case where a partner pays off a debt that is owed only to the partnership, where does the entire payment go?

A

The entire amount belongs to the partnership.

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14
Q

What are the conditions that must exist for a managing partner to collect debts?

A
  • Existence of at least 2 debts
  • Both sums are demandable
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15
Q

What should happen if a partner collects their share of a partnership credit while other partners have not yet received theirs, and the debtor later becomes insolvent?

A

The partner must bring the amount back to the partnership funds

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16
Q

If a partner causes damage to the partnership due to their fault or misconduct, how should this be handled?

A

The partner is responsible for the full amount of the damages.

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17
Q

Under what circumstances might a court reduce a partner’s liability for damages caused to the partnership?

A

If the partner’s extraordinary efforts lead to unusual profits for the partnership.

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18
Q

Items that can be changed with others of the same kind and quality.

A

Fungible Things

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19
Q

Who bears the risk of loss for specific and determinate things that are not fungible and contributed only the usufruct of the item to the partnership?

A

The partner who owns them

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20
Q

If a partner contributes fungible items that deteriorate or are intended to be sold, who bears the risk of loss?

A

The partnership will bear the risk of loss as there was a transfer of ownership

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21
Q

Who will bear the risk of loss for items brought into the partnership and appraised as part of an inventory?

A

The partnership bears the risk.

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22
Q

If a partnership item that was appraised in the inventory is lost or damaged, what is the limit for compensation claims?

A

The appraised value recorded in the inventory

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23
Q

What is the obligation of the partnership to every partner for every expenses and obligations they incure while managing the partnership’s affairs?

A
  • To refund the amounts disbursed by the partner plus interest from the time the expenses were made
  • To answer to each partner for obligations, he may have contracted into in good faith in the interest of the partnership, and for the risks in consequence of its management
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24
Q

How should profits be distributed among partners?

A

In accordance with the agreement

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25
Q

How should profits be distributed among partners if there is no agreement?

A

Capitalist partner
- In proportion to his contribution
Industrial partner
- Just and equitable
- Equivalent to the share of the capitalist partner with the lowest share

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26
Q

What is the status of an industrial partner concerning losses?

A

Not liable for losses

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27
Q

How should losses be distributed among partners?

A
  • Based on the agreement.
  • In case of the absence of agreement:
    1.) Based on the profit sharing ratio
    2.) Based on the capital contribution of the partners
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28
Q

What is the general rule regarding the validity of a third person designating the shares of partners in profits and losses?

A

Valid

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29
Q

Under what condition can the designation by a third person be questioned?

A

If it is manifestly inequitable

30
Q

What happens if a partner begins to execute the decision of the third person regarding profit and loss designation?

A

The decision may not be questioned

31
Q

What is the time limit for a partner to question the decision made by a third person once they become aware of it?

A

3 months

32
Q

What are the two exceptions that prevent a partner from questioning the decision made by a third person?

A
  • A partner began to execute the decision of the third person
  • A partner has not questioned the decision within three months from the time they had knowledge of it
33
Q

What is the status of a stipulation that excludes one or more partners from sharing in the profits or losses?

A

The stipulation is void but not the contract of partnership

34
Q

How shall profits and losses be distributed if a stipulation excluding partners is void?

A

Profits and losses shall be distributed as if there was no agreement, based on the partners’ capital contributions

35
Q

Can a manager’s power be taken away without a lawful reason?

A

No, the manager’s power is generally irrevocable unless there is a lawful reason.

36
Q

Under what condition can the power of a managing partner be revoked?

A

The power is irrevocable without just or lawful cause, but can be revoked with the vote of partners representing the controlling interest (Majority)

37
Q

What is the procedure to remove a managing partner without just cause?

A

Unanimity is required, including the vote of the managing partner themselves

38
Q

What happens if a partner is given managerial power after the partnership is formed?

A

This power can be revoked at any time, with or without just cause

39
Q

What is the presumption regarding the actions of a managing partner?

A

The law presumes that the manager is acting in good faith unless proven otherwise.

40
Q

If there is no agreement on management, who manages the partnership?

A

Management is vested in all partners

41
Q

How does the appointment of a manager in the articles of partnership differ from a manager appointed in other instruments?

A

The appointment in the articles provides stronger protection and is more difficult to revoke, while an appointment in another instrument is more flexible and easier to revoke.

42
Q

What happens when two or more partners are entrusted with the management of the partnership without specified duties?

A

Each partner may separately execute all acts of administration

42
Q

In the event of a disagreement among managing partners, whose decision prevails?

A

The decision of the majority shall prevail

43
Q

What occurs in the case of a tie among partners when making a decision?

A

The matter shall be decided by the partners owning the controlling interest

44
Q

Can the absence or disability of any managing partner be used to bypass the requirement for unanimous consent?

A

No, the absence or disability of any partner cannot be alleged to bypass this requirement

45
Q

What is the exception to the requirement for unanimous consent among managing partners?

A

In cases of imminent danger of grave or irreparable injury to the partnership, a managing partner may act without the others’ consent

46
Q

Does Article 1802’s requirement for unanimous consent affect third parties contracting with the partnership?

A

No, the requirement applies only to the partners themselves and does not impose any obligations on third parties

47
Q

What presumption do third parties have when dealing with a managing partner regarding authority?

A

Third parties are entitled to presume that the managing partner they are dealing with has the necessary authority and has followed the internal rules of the partnership.

48
Q

What is required for the validity of acts when it has been stipulated that none of the managing partners can act without the consent of the others?

A

The concurrence of all partners is necessary for the validity of the acts

49
Q

What happens when the partnership agreement does not specify how management should be conducted?

A

All partners are treated as agents of the partnership, meaning any partner can act on behalf of the partnership, and their actions will bind the partnership

50
Q

What is required before making significant changes to the partnership’s immovable property?

A

Consent from all partners is needed for major changes

51
Q

Can partners make significant changes to immovable property even if they believe those changes would be beneficial?

A

No, they still require the agreement from all partners before making such changes

52
Q

What can affected partners do if one partner refuses to consent to changes that are harmful to the partnership’s interests?

A

Affected partners can seek intervention from the court

53
Q

Under what condition is court intervention available to the affected partners?

A

Court intervention is available if it can be shown that the refusal to consent is detrimental to the partnership’s well-being

54
Q

Can a partner bring in another person to share in their share of the partnership’s profits and losses?

A

Yes, every partner may associate another person with them in their share but that person can’t become an official partner without the consent of all the other partners

55
Q

What must happen for the associate to be admitted as a partner into the partnership?

A

The consent of all the other partners is required for the associate to be admitted.

56
Q

An arrangement where an existing partner in a partnership brings in another person (an “associate” or “sub-partner”) to share in their own share of the partnership’s profits and losses.

A

Contract of Sub-Partnership

57
Q

Does an associate in a sub-partnership have the same rights as a full partner in the original partnership?

A

No, the associate does not have the right to make decisions or manage the partnership. They only share in the sub-partner’s portion of profits and losses.

58
Q

Where should the partnership books be kept?

A

At the principal place of business of the partnership

59
Q

Can the location of the partnership books be changed?

A

Yes, the location can be adjusted if the partners agree otherwise

60
Q

What rights do partners have concerning the partnership books?

A

Every partner has the right to access, inspect, and copy the partnership books

61
Q

A time during regular business hours or an agreed-upon time that does not interfere with the normal functioning of the partnership.

A

Reasonable Hour

62
Q

The act of deliberately hiding or withholding important information about the partnership that is required to be shared with other partners or their legal representatives.

A

Concealment

63
Q

Who can request information about the partnership?

A

Any partner, the legal representative of any deceased partner, or the legal representative of any partner under legal disability can request information

64
Q

Refers to a partner who must manage and safeguard any profits or benefits they receive from partnership-related transactions, ensuring these are held for the benefit of the partnership rather than for personal gain.

A

Trustee

65
Q

What must partners do if they receive profits without the consent of the other partners?

A

They must hold those profits as a trustee for the partnership and manage them for the benefit of the partnership

66
Q

What happens if a partner uses partnership assets for personal gain?

A

Any profits derived from the use of partnership assets must be accounted for and managed for the partnership’s benefit

67
Q

What kind of business is a capitalist partners prohibited from partaking?

A

Similar line of business as the partnership

68
Q

Effects if a capitalist partner engage in a similar line of business as the partnership.

A
  • Capitalist partner must bring any profits to the partnership
  • Must personally bear all the losses
69
Q

What is the rationale behind prohibiting capitalist partners from engaging in similar businesses?

A

It is considered unfair for a capitalist partner to engage in a similar business since they have already acquired knowledge of the partnership’s business secrets

70
Q

What can a partner do if they are wrongfully excluded from the partnership business?

A

A partner can demand a formal account if they are wrongfully excluded from the partnership business or denied possession of its property by their co-partners

71
Q

What is the general rule regarding formal accounting in a partnership?

A

GENERAL RULE: No formal accounting is demandable until after the dissolution of the partnership.

BLAW212 (Partnership and Corporation) (7 decks)

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