Business Organization 1

Modesto, Diane Erika L.

2C

Can a corporation be a partner in partnership?

We define partnership as an arrangement in which parties agree to cooperate to

advance their mutual interests. Since humans are social beings, partnerships between
individuals, businesses, interest-based organizations, schools, governments, and varied
combinations thereof, have always been and remain commonplace. A partnership being
a juridical person by itself can, it is believed, form another form partnership, either with
private individuals or with other partnerships, there being no prohibition on that matter.
Article 1767 provides that 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. On the other hand, A corporation is a
company or group of people authorized to act as a single entity (legally a person) and
recognized as such in law. Early incorporated entities were established by charter (i.e.
by an ad hoc act granted by a monarch or passed by a parliament or legislature). Most
jurisdictions now allow the creation of new corporations through registration. Registered
corporations have legal personality and are owned by shareholders[1][2] whose liability
is limited to their investment. Shareholders do not typically actively manage a
corporation; shareholders instead elect or appoint a board of directors to control the
corporation in a fiduciary capacity. Corporations and partnerships differ in their
structures, with corporations being more complex and including more people in the
decision-making process. A corporation is an independent legal entity owned by
shareholders, in which the shareholders decide on how the company is run and who
manages it. A partnership is a business in which two or more individuals share
ownership. In general partnerships, all management duties, expenses, liability and
profits are shared between two or more owners. In limited partnerships, general

partners share ownership responsibilities and limited partners serve only as investors.
The majority view is that a corporation cannot become a partner on ground of public
policy; otherwise, people other than its officers may be able to bind it. However, a
corporation can enter into joint venture with another where the nature of that venture is
in line with the business authorized in its charter. In partnerships, the general partners
are held liable for all company debts and legal responsibilities. General partners' assets
may be taken to pay company debts. Partnerships often include partnership
agreements stating exactly what percent of the company each general partner is
responsible for, and the percent can vary from partner to partner. Corporations, on the
other hand, do not hold individuals liable for the company's debt or legal obligations.
The corporation is considered a separate entity and therefore the corporation itself is
responsible for assuming all debts and legal fees, and the shareholders are not at risk
of losing personal assets. A partnership is created by voluntary agreement of parties
while corporation is created by state in the form of a special charter or by a general
enabling law. The former has no time limit except the agreement of parties while the
latter shall exist not more than 50 years; maybe reduced but never extended. Generally,
partners acting on behalf of the partnership are agents thereof; consequently they can
bind both the firm and the partners. On the other hand, the stockholders cannot bind
corporation since they are not agents thereof.