Partnerships

Question 1

Define a Partnership

Answer 1

Article 1767. 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.

Question 2

Is a joint venture a partnership?

Answer 2

Yes, therefore it is governed by the law on partnerships.

Question 3

Elements of a partnership

Answer 3

1. An agreement to contribute MPI to a common fund
2. Intent to divide the profit among themselves

Question 4

Characteristics of a partnership

Answer 4

Consensual
Bilateral
Nominate
Onerous
Commutative
Principal
Preparatory

Question 5

Perfection and Formalities of Contracts

Answer 5

Partnership is a consensual contract, perfected by the meeting of the minds.

Exceptions: 1. Limited Partnerships must be registered with SEC
2. Where immovable property or real rights are contributed to a partnership, a public instrument is necessary.
3. Partnerships having a capital of at least P3k shall appear in a public instrument

Question 6

Separate Obligations and Subsidiary Liability of Partners

Answer 6

1. Partners may not be held solidarily liable with the partnership. The assets of the Partnership must first be exhausted.
2. Partners are not solidarily liable. They are liable pro rata for the property contributed to it.

Question 7

Piercing the veil of separate personality

Answer 7

Partners are solidarily liable and treated as one with the partnership if they used the separate personality for Fraudulent, Unfair or Illegal purposes.

Question 8

Attribution of Acts

Answer 8

A partnership can only act through its agents

Question 9

Mutual Agency Rule

Answer 9

Every partner is an agent of the partnership for the purpose of its business. The act of any partner for apparently carrying on in the usual way which the business is conducted.

Question 10

Apparent Authority

Answer 10

When a partner has no authority to act for the business in a particular matter and the person with whom he was transacting with has knowledge of the fact that he has no authority.

Question 11

Acts of Strict Dominion

Answer 11

Requires the consent of all the partners:
1. Assignment of partnership property in trust for creditors or on the assignee’s promise to pay for the partnership
2. Disposition of the goodwill of the business
3. Any other act which would make it impossible to carry on the ordinary business of a partnership
4. Confession of a judgment
5. Entering into a compromise concerning partnership claim or liability
6. Submission of a partnership claim or liability to arbitration
7. Renunciation of a claim to the partnership

Question 12

Attribution of Knowledge

Answer 12

Notice to and knowledge of any partner of any matter relating to partnership affairs operate as a notice to or knowledge of the partnership.

Admission of a partner concerning partnership affairs binds the partnership if it was made within the scope of the partner’s authority.

Question 13

AS TO OBJECT
Universal vs Particular Partnership

Answer 13

Universal: A partnership that covers all the present property of the partners or all the profits.

**Spouses, common law spouses, persons guilty of adultery and concubinage (prior conviction is not needed), SAD of public officers are prohibited from entering into universal partnerships. This is to prevent them from giving benefits to each other.

Particular: A partnership which has for its object determinate things, their use/fruits, or undertaking or the exercise of a profession or vocation

Question 14

General vs Limited

Answer 14

General: A partnership consisting of general partners; there is no limited partner.
-General Partners are liable beyond their contribution

Limited: A partnership consisting of 1+ general partners and at least one 1 limited partner
-A limited partner is not liable beyond his contribution

Question 15

Who can be parties to a partnership?

Answer 15

Under the RCCP, now natural or juridical persons may enter into a partnership. Corporations are now expressly authorized to enter into a partnership.

Question 16

Managing Partner

Answer 16

A partner who is designated or appointed to manage the affairs of the partnership

Question 17

Ostensible Partner

Answer 17

A partner who is publicly known to be a partner

Question 18

Partner by estoppel

Answer 18

A person who is not a partner but represents himself to third persons to be a partner.

1. There is no partnership
2. A person, by words or conduct, represents himself to a third party that he or she is a partner in an existing partnership
3. the third person relies or gives credit to the representation.

Question 19

Secret Partner

Answer 19

A partner who is not publicly known to be a partner

Question 20

Liquidating Partner

Answer 20

A partner who is tasked to wind up the affairs of the partnership and to liquidate assets of the partnership upon dissolution

Question 21

Assignee

Answer 21

While a partner may assign his interest in the partnership, the assignment does not make the assignee a partner.

The Assignee CANNOT:
1. participate in the management or administration of the partnership or business or affairs
2. Require information or account of partnership transactions
3. inspect partnership books

The Assignee has the following** RIGHTS**:
1. Receive Partner-assignor’s share in the profits
2. avail remedies in case of fraud in of management
3. require an account from the date of the last account from the date of the last account agreed upon by the partners in case of dissolution
4. Ask for dissolution when: a) afterthe termination of a specified undertaking; and b) at any time if the partnership was a partnership at will when the interest was assigned

Question 22

Distinctions between Capitalist and Industry partners

Answer 22

1. C - contributes M/P
   I. - contributes I
2. C - cannot engage as the same business as the partnership
   I - Cannot engage in ANY business
3. C - Share in the profits is pro rata unless there is a stipulation
   I - entitled to just and equitable share in the profits
4. C - entitled to share in the losses
   I - not liable for the losses as between the partners; may be made liable to third parties with right to reimbursement from 3rd parties

Question 23

Duties of a partner

Answer 23

1. Loyalty - Partner who receives any money, property or profit that properly belongs to the partnership cannot retain the same
2. Duty to turn over - Every partner must account to the partnership for any benefit, and hold as trustee for it any profits derved by him without the consent of the other partners from any transaction connected with the formatiion, conduct, or liquidation of the partnership or from any use by him of its property.

Question 24

Tort Liability

Answer 24

The partners and the partnership are solidarily liable for torts.

1. There must be a wrongful act or omission by a partner
2. The partner acted in the ordinary course of business of the partnership or with authority of the other partners
3. Loss or injury was caused to a third person or a penalty is incurred

Question 25

Stages on the termination of the partnership

Answer 25

1. Dissolution
2. Winding-up
3. Termination