Chapter 2

Study Guide
I.

II.

SECTION 1
Definitions
1) Partnership with a fixed term - the partnership has an expiration or definite
period which is
agreed by the partners
2) Subpartnership another partnership formed by a member of an existing
partnership with a third person. It a partnership separate and distinct from
the former.
3) Industrial partner it a partner whos contribution in the partnership is not
money or property but skills or services.
4) Eviction removal of possession.
5) Future partnership The perfected contract made by persons forms a
partnership in the future time. No partnership exists until the arrival of the
stipulated date or agreed time.
Discussions
1) Relations created by a contract of partnership:
- Relations among the partners themselves;
- Relations of the partners with the partnership;
- Relations of the partnership with the third persons with whom it
contracts; and
- Relations of the partners with such third persons.
2) 5 obligations of a partner with respect to property he promised to contribute:
1. To contribute at the beginning of the partnership or at the stipulated time
the money, property, or industry which he may have promised to
contribute;
2. To answer for eviction in case the partnership deprived of the determinate
property contributed; and
3. To answer to the partnership for the fruits of the property the contribution
of which he delayed, from the date they should have been contributed up
to the time of actual delivery.
4. To preserve said property with the diligence of a good father of a family
pending delivery to the partnership (Art. 1163) ; and
5. To indemnify the partnership for any damage caused to it by the retention
of the same or by delay in its contribution. (Arts 1788, 1170).
3) Requisites before a capitalist partner may be obliged to sell his interest in a
partnership to the others:
1. There is an imminent loss of the business of the partnership;
2. The majority of the capitalist partners are of the opinion that an additional
contribution to the common fund would save the business;
3. The capitalist partner refuses (deliberately not because of his financial
inability to do do) to contribute an additional share to the capital; and

4. There is no agreement that even in case of an imminent loss of the

business the partners are not obliged to contribute.
4) The appraisal value of the goods or property contributed by a partner is
required, so that the partnership will be able to know how much has been
contributed by the partners to the partnership. It may be made by the
following:
1. In the absence of stipulation, the share of each partner in the profits and
losses is in proportion to what he may have been contributed. (Art. 1797)
2. The appraisal is made firstly, in the manner prescribed by the contract of
partnership; secondly, in the absence of stipulation, by experts chosen by
the partners and according to current prices.
3. In case of immovable property, the appraisal is made in the inventory of
the said property.
5) If a partner fails or delays his obligation to deliver his contribution of the
property he will be held liable for the damages incurred from the time the
property should have been delivered. The reason is that if the partner
delivered the property on time the said contribution shouldve produce profits
already.
III. Problems
1) Yes and No. Yes because this is an exception to the general rule that a partner
is not entitled to a formal accounts of partnership affairs if a partner has been
assigned abroad. No if the partner who demands formal accounts will not use
the information gathered for partnership purposes.
2) A. If X is a capitalist partner yes but, if he is not then no.
B. This is to prevent a partner from getting information obtained by his
current partnership.
3) Yes if the managing partner acted in bad faith in executing the contract for
the partnership.
4) A. Distribution of profits and losses will be according to the partnerships
agreement if there is such agreement the profits and losses will be divided
according to capital contribution.
B. W will receive a just and equitable share for his service as an industrial
partner.
5) Yes, the stipulation is valid.

 SECTION 2
I. Definitions
1) Partners interest in a partnership this is the corresponding share in the
profits during the life of the partnership and the share in surplus after
dissolution.
2) Profit net income of the partnership.
3) Surplus excess assets of the partnership after deducting liabilities.
4) Partnership capital constant contribution of the partners at the beginning of
the partnership.
II.

Discussions
1) The property rights of a partner according to Art. 1810: 1. His rights in
specific partnership property; 2. His interest in the partnership; and 3. His
rights to participate in the management.
2) A partner who conveys all his interest in a partnership doesnt have the right
to interfere in the management; to require any information or account; or to
inspect any of the partnership books.
3) The only rights of the transferee or assignee:
1. To receive in accordance with his contract the profits accruing to the
assigning partner.
2. To avail himself of the usual remedies provided by law in the event of
fraud in the management.
3. To receive the assignors interest in case of dissolution and
4. To require an account of partnership affairs, but only in case the
partnership is dissolve, and such account shall cover the period from the
date only of the last account agreed to by all partners.
4) The extent of partners interest is only up to his share.

III. Problems
1) No, X cannot transfer his right to Y.
2) If X is already insolvent W can ask the court to attach Xs interest upon
payment of his debt.
3) Partners Y and Z may redeem their interest without causing dissolution of the
partnership.

 SECTION 3
I. Definitions
1) Pro rata liability Joint liability
2) Subsidiary liability partner become personally liable only after all the
partnership assets have been exhausted.
3) Equitable interest or title right or interest in property which is unenforceable
at law but convertible into a legal right or title.
4) Estoppel a bar which precludes a person from denying or asserting anything
contrary to that which has been established as the truth by his own deed or
representation.
II. Discussions
1) No because once a partner is dead the partnership is already dissolved.
2) Solidary liability of all partners and partnership to third person: 1. For
wrongful act or omission; 2. Breach of trust; 3. Acting within the scope of the
firms business or with the authority of his copartners.
3) Yes if he directly represent himself as a partner in an existing or non-existing
partnership and indirectly represents himself by consenting to another
representing him as a partner in an existing partnership.
4) The general rule is that a partner has a right to make all partners liable for
contract he makes for the partnership in the name and for the account of the
partnership.
III. Problems
1) Third person W can still recover 4 000 from each of the partners however, X
is entitled to credit from Y and Z the amount of 4 000 for it exceeds his
capital contribution.
2) It does not bind the partnership unless it is authorized by the other partners.
3) Yes because under the law all partner have no authority to enter into a
compromise concerning a partnership claim or liability.
4) A. Z= 22 500, Y= 22 500
B. Z= 16 875, Y = 16 875, X= 11 250