Partnership

Question 1

Tri-level existence of partnership

Answer 1

1) Contractual relationship between and among partners
2) means of doing business through a separate juridical personality
3) Business enterprise

Question 2

Elements

Answer 2

Consent: Meeting of the minds
Subject matter: Creation of common fund to undertake a business venture
Consideration: Contribution of cash, property or industry with the goal of gaining profit

Question 3

Partnership

Answer 3

1) 2 or more persons bind themselves to contribute money, property or industry to a common fund
2) With the intention of dividing profits among themselves

Question 4

Juridical persons can:

Answer 4

1) Acquire and possess properties
2) Incur obligation
3) Bring civil and criminal actions

Question 5

When public instrument required? (Art. 1771)

Answer 5

When immovable property o real rights are contributed

Question 6

When public instrument and recording with SEC required? (Art. 1772)

Answer 6

When capital of 3K or more in money or property is had

Failure to comply won’t affect liability to 3rd persons

Question 7

When inventory, signed and attached to the public instrument required? (Art. 1773)

Answer 7

When immovable property is contributed

Question 8

Rationale behind Art. 1772

Answer 8

1) To prevent evasion of tax liability by big partnerships
2) To safeguard the public by enabling it to determine more accurately the membership and capital of
partnerships before dealing with them

Question 9

Significance of formal requirements in Art. 1772

Answer 9

1) Conclusive evidence of the partnership

2) Evidence of the agreement between parties

Question 10

Rationale behind Art. 1773

Answer 10

1) Protect 3rd persons

Question 11

Effect of non-compliance with Art. 1771 and 1772

Answer 11

Unenforceable based on Statute of Frauds

Question 12

Rank of claims against an insolvent partner

Answer 12

1) Separate creditors
2) Partnership creditors
3) Partners by way of contribution

Question 13

Kinds of partnerships

Answer 13

1) Universal
2) Particular

3) General
4) Limited

Question 14

Universal partnership

Answer 14

One where the contract of partnership encompasses either all the present properties of the partners or to all of the profits.

Question 15

Particular partnership

Answer 15

One that has for its object determinate things, their use or fruits, or a specific undertaking, or the exercise of a profession or vocation.

ex. Professional partnership and JVA

Question 16

Presumption regarding kind of partnership

Answer 16

Presumption that the parties have a particular partnership

Question 17

Solidary liable of partners when:

Answer 17

1) Any partner commits any wrongful act or omission while acting in the ordinary course of business OR When with the authority of co-partners, loss or injury is caused to another or any penalty is incurred.
2) Partner received money or property of a third person but misapplied by any partner while in the custody of the partnership

Question 18

Limited partnership

Answer 18

One or more general partners who are unlimitedly liable, with one or more limited partners, who are liable for partnership debts only to the extent of their stipulated contributions under the articles of partnership.

Question 19

Prima facie evidence of continuation of partnership

Answer 19

No settlement or liquidation and partners continue to act as they habitually acted

Question 20

Characteristics of a partnership at will

Answer 20

1) Mutual desire and consent of partners
2) Continued existence depends on constancy of that mutual resolve and partners’ capability to give it; as well as an absence of cause for dissolution
3) Any partner may dictate a dissolution at will. (Must be in good faith)

Question 21

Capitalist partner

Answer 21

Contributes money and/or property

Question 22

Industrial partner

Answer 22

Contributes industry or service

Question 23

Rule re: spouses and partnerships

Answer 23

Can’t enter into a universal partnership

Question 24

Rule re: corporations and partnerships

Answer 24

GEN: Can’t because corporations can only be controlled by their duly-appointed officers

EXC: Can enter a one so long as the power to enter into a partnership is provided in their charter

Question 25

Obligations of partners

Answer 25

1) To contribute to the common fund | 2) Debts and torts

Question 26

Remedy for a defaulting partner in the obligation to contribute

Answer 26

1) Specific performance -- seek collection and interest and damages 2) Seek dissolution

Question 27

Obligations of non-partners

Answer 27

1) When in estoppel | 1) When public is made to believe that one is a partner when in fact, is not

Question 28

When shall partnership bear risk of things contributed

Answer 28

When goods: 1) Are fungible 2) Cannot be kept in a condition without deteriorating 3) Are contributed to be sold

Question 29

Remedy if industrial partner engages in business

Answer 29

1) Exclude him from firm | 2) Avail of benefits he may have obtained

Question 30

Doctrine of unlimited liability

Answer 30

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 in the name and for the account of the partnership, under its signature and by a person authorized to act for the partnership. = Pro rata and subsidiary

Question 31

Conditions for solidarity liability with partnership to apply

Answer 31

1) Act was done pursuant to a partnership business | 2) Partner doing it has authority

Question 32

Defense against solidary liability

Answer 32

1) Not done in ordinary course of business | 20 3rd party had knowledge (bad faith)

Question 33

Property rights of a partner

Answer 33

1) Specific partnership property 2) interest in the partnership 3) Right to participate in management

Question 34

Rule regarding authority

Answer 34

GEN: Every partner is an agent of the partnership and he is allowed to carry out acts in the usual way of business EXC: When the partner has no authority in that particular matter OR the person he's dealing with has knowledge that he has no authority

Question 35

Doctrine of apparent authority

Answer 35

A third party dealing with a juridical entity is allowed to rely upon the validity and enforceability of contracts entered into with an officer or representative who has been by practice endowed with apparent authority to act for the juridical person.

Question 36

When will partnership not be liable

Answer 36

1) Person acting had no authority | 2) 3rd person knew the acting partner had no authority

Question 37

Rights of a partner

Answer 37

``` Management right Co-ownership Equity interests Participate in profits and obligation to share in loss Reimbursed To associate another To inspect books To demand full information and accounting To dissolve the partnership ```

Question 38

Obligations to third parties

Answer 38

``` Bound by authorized acts of partners Repay disbursement of partners Bound by admission or representation Bound by notice to partner Liability for loss or injury Misapplication of funds ```

Question 39

Dissolution

Answer 39

Change in the relation of the partners caused by any partner ceasing to be associated in the carrying on

Question 40

Termination

Answer 40

All matters relating to the enterprise have been completed

Question 41

Causes of dissolution

Answer 41

(1) Without violating the agreement - Termination of the term/undertaking - express will of any partner acting in good faith (no term) - Express will of all partners who haven't assigned rights - Expulsion of any partner from the business bonafide (2) In contravention to the agreement, by express will at any time (3) Any event making business unlawful (4) Specific thing promised to be contributed perishes where no right of ownership was passed to the partnership (5) Death of a partner (6) Insolvency of a partner/partnership (7) Civil interdiction of a partner (8) Decree of court

Question 42

Dissolution divided into

Answer 42

(1) ipso jure | (2) Court decree

Question 43

Particular rule of limited liability

Answer 43

GEN: A partner may be bound personally to liabilities with third parties in good faith BUT liabilty is limited-- liability will be satisfied out of partnership assets WHEN: 1) Partner is unknown to the 3rd party 2) Partner is unknown and inactive in partnership affairs; partnership's reputation can't by any degree be connected to him

Question 44

Winding up

Answer 44

Process of settling business affairs after dissolution. It concludes after complete liquidation of the partnership business enterprise

Question 45

Limited partnership

Answer 45

A partnership of two or more persons having as members on or more general partners and one or more limited partners

Question 46

Rights of limited partners

Answer 46

1) Limited liability 2) Return of his contributions 3) Share in the profits and compensation by way of income 4) Assign his equity interest 5) HAve the oartnership books kept and inspect and copy them 6) Have on demand true and full information of all things affecting the partnership & a formal account 7) Dissolution and winding up

Question 47

Compensation by way of income

Answer 47

Arrangement wherein distribution of profits is done on a regular or periodic basis

Question 48

Obligations of a limited oartner

Answer 48

1) Property and money supposed to be contributed by him (as trustee) 2)