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! The above cases presuppose that the things (15) If the partners have agreed to entrust to a
contributed have been delivered actually or third person the designation of the share of each
constructively to the partnership; before delivery, the one in the P/L, such designation may be impugned
risk of loss is borne by the partner only when it is manifestly inequitable. In no case
! If the loss is due to the fault of any partner, shall be may a partner who has begun to execute the
liable for damages decision of the third person, or who has not
impugned the same within a period of 3 months
(13) The partnership shall be responsible to every from the time he had knowledge thereof, complain
partner for the amounts he may have disbursed on of such decision
behalf of the partnership and for the The designation of P/L cannot be entrusted to
corresponding interest, from the time the expenses one of the partners
are made
It shall also answer to each partner for the ! The article follows the general rule in contracts that
obligations he may have contracted in good faith in the fulfillment of a contract cannot be left to the will
the interest of the partnership business, and for of one of the contracting parties alone.
risks in consequence of its management ! The partner in the 1st paragraph is guilty of estoppel
or to have given his consent or ratification to the
Responsibility of the Partnership to partners: designation
1. To refund amounts disbursed plus the ! The reason for short period of 3 months to impugn is
corresponding interest from the time expenses are to forestall any paralyzation in the operation of prtship
(16) A stipulation which excludes one or more ! His power is revocable only:
partners from any share in the P/L is void -upon just and lawful cause
-upon the vote of the controlling interest
Types of such stipulations:
1. Stipulation generally void, but partnership Appointed after constitution of partnership
subsists ! He may be revoked at any time for any cause
P/L shall be apportioned as if there were no Reason: revocation is not founded on a change of will
stipulation of the partners; appointment not being a condition of
the contract
2. Stipulation, a factor to show no partnership ! It should be noted that the provision is applicable to
exists a partner only not a stranger.
When parties expressly stipulate that there is ! A partner is not entitle to compensation for his
no liability for losses services other than his share of the profits
By nature of contract, it is clear that a party
did not intend to share in losses
Effect of failure to contribute property promised Reason for applying payment to partnership credit
Liability of partner for fruits of property in case of Obligation of partner who receives share of
delay partnership credit
Liability of guilty partner for interest and damages Compensation of damages with profits earned for
partnership by guilty partner
Forms of Contribution
-Money
-Property
-Industry
! A partnership must have a firm name under which it ! GR: a partner has the right to make all partners
will operate liable for contracts he makes for the partnership in the
! A firm name is necessary to distinguish the name and for the account of the partnership
partnership from the individuals composing it and EXP: partner may enter into separate undertaking in
other partnership his name for the partnership
! Such firm name must be registered with the Bureau
of Commerce (now DTI) ! A partner may assume a separate undertaking with
! Firm name: a third party in his name to perform a partnership
-individual partner contract or make himself solidarily liable on a
-surnames of all partner partnership contract.
-surname of one or more of the members with the ! The partner is personally bound by his contract even
addition ‘and Company’ if only the partnership is show to have derived
-individual names wholly distinct from the names benefits from it
of any of the members ! the debts and obligations of the partnership are, in
substance, also the debts and obligations of each
! Firm name should not be identical with or individual member of the firm.
deceptively similar to a name which was previously ! The liability to creditor is pro rata and subsidiary
adopted by any other entity, or interfere with the ! Pro rata, in law, means equally or jointly and not
rights of others, or is contrary to law proportionately: pro-rating is based on the number of
! Partnership cannot continue to use in its firm name partners and not on the amount of their contributions
the names of deceased partners ! Liability of one of the party that cannot be enforced
! In the choice of a firm name, no false, misleading or (if he, for example, left the country) or condoned by
assumed name shall be used. the creditor cannot increase the liability of the other
! The continued use of the name of a deceased partner partners
is permissible provided that the firm indicates in all ! It is subsidiary because the partners become
communications that said partner is deceased personally liable only after all the partnership assets
! Persons who include their names in the firm (but not have been exhausted (unless a particular partner
being partners) do not acquire the rights of a partner, assumes a separate obligation to perform partnership
but under 1815 (estoppel), they shall be subject to the contract or make himself solidarily liable on the
liability of a partner insofar as third persons without contract)
notice are concerned. ! GR: Industrial partner also has to pay, but he can
! Art 1815 (estoppel) does not cover: recover the amount he has paid from the capitalist
-third persons who represents himself to be a partners
partner (1825) EXP: unless there is an agreement to the contrary.
-limited partner who allows his name to be ! Neither on principle of law or justice can the
included in the firm name (1846) industrial partner be relieved from liability to third
-a person continuing the business of a partnership persons for debts of the partnership
after dissolution, uses the name of dissolved ! The inability of a partnership to pay a debt to a third
party does not necessarily mean that business has restriction.
been operated at a loss. ! In the absence of an agreement to the contrary, all
! Industrial Partners partners have equal rights in the management and
-losses: exempted conduct of the partnership business; each partner has
-liability to third persons: not exempted the implied authority to do all things necessary to
carry out the ordinary business of the partnership.
(3) Any stipulation against the liability laid down ! Each partner is regarded as both a principal and an
in the preceding article shall be void, except as agent
among the partners ! Apparent authority is based on the doctrine of
estoppel
! GR: A stipulation among the partners contrary to the ! The relation of partners to third persons is thus
pro rata and subsidiary liability is void as it affects the founded on the doctrine of mutual agency
rights of third persons ! Limitations upon the authority of any one of the
EXP: it is valid and enforceable only as among the partners are not binding upon innocent third persons
partners who have the right to assume that every general
! They must each pay an equal amount; then, as to partner has power to bind the partnership especially
their liking, subsequently rearrange the amount paid those partners acting with ostensible authority
among themselves. ! Third persons are not bound to ascertain whether or
not the partner with whom the transaction is made has
(4) Every partner binds the partnership, unless the the consent of the other partners; his knowledge is
partner acting: enough that he is contracting with a partner
-has no authority to act for the partnership in ! Third parties should not assume that a partner has
the particular matter; AND unlimited authority.
-the person with whom he is dealing has ! Generally, a partner has no authority to do the acts:
knowledge of that he has no such authority -assign property in trust for creditors
An act of a partner which is not apparently for -dispose goodwill
the carrying on of business of the partnership in -other acts which would make it impossible to
the usual way does not bind the partnership unless carry on the ordinary business
authorized by the other partners; abandoned the -confess judgment
business. -enter into compromise
One or more, but less than all (not all) -submit a partnership claim to arbitration
partners have no authority to: -waive a claim of partnership
1. Assign the partnership property in trust for
creditors or on the assignee’s promise to pay the ! When a third party deals with a partner who has no
debts of the partnership express, implied, or apparent authority, the
2. Dispose of the goodwill of the business partnership is not liable for his acts unless the other
3. Do nay othr act which wold make it partners ratify or are estopped (has knowledge of
impossible to carry on the ordinary business of a transaction) from asserting the partner’s lack of
partnership authority
4. Confess a judgment
5. Enter into a compromise concerning a 2 Requisites in order that the partnership will not be
partnership claim or liability liable:
6. Submit a partnership claim or liability to 1. The partner so acting has, in fact, no authority;
arbitration 2. The third person knows that the acting partner
7. Renounce (waive) a claim of the partnership has no authority
Except when authorized by the other partners
or unless they have abandoned the business.