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PARTNERSHIP

BY: ATTY. AARON BAILEY G. SANTOS


WHAT IS A CONTRACT OF PARTNERSHIP?

Art. 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.
Two or more persons may also form a partnership for the exercise of a
profession.
CONCEPT OF PARTNERSHIP

• It is an association
• It is a legal relation
• It is an undertaking
• It is a status
• A partnership is an entity (juridical personality under Art. 1768)
• The partnership can acquire property in its own name (Art. 1774)
• It is entitled to conduct business under its name
• The partnership (not the partners) should be impleaded in an action involving a property registered
in the name of the partnership
ELEMENTS OF PARTNERSHIP

• Two or more persons bond themselves to contribute to contribute money, property or


industry to a common fund

• They intend to divide the profits among themselves


TWO KIND OF PARTNERSHIP UNDER ART 1767

• Business partnership
• General Professional Partnership
CHARACTERISTICS OF PARTNERSHIP

• Consensual
• Nominate
• Bilateral
• Onerous
• Commutative
• Principal
• Preparatory
ESSENTIAL FEATURES OF PARTNERSHIP

• There must be a valid contract


- Delectus personae

• Legal Capacity of the partners


• Partnership is a consensual contract

• Mutual contribution
• Money, Property or Industry

• The object must be lawful (Art. 1770 dissolution by judicial decree and confiscation of profits)
• Primary purpose is to obtain and divide profits among themselves
RULES APPLIED IN DETERMINING THE EXISTENCE
OF PARTNERSHIP
• Persons not partners as to each other except under Art. 1825
• Co-ownership or Co-possession
• Sharing of gross returns
• Receipt of share in the profits
DISTINGUISH PARTNERSHIP AND CO-OWNERSHIP

• Creation
• Juridical personality
• Purpose
• Term
• disposal of interest
• Effect of death
DISTINCTION BETWEEN A JVA AND PARTNERSHIP

• Joint venture is an association of two or more persons to carry out a single business
enterprise for profit and embodies several of the essential elements or characteristics of
a partnership and bear such close resemblance to it that the rights and liabilities of joint
adventures are largely governed by rules applied to partnership

• However a joint venture is not a partnership because it does not have a separate legal
personality. It can only act with the authority granted by the venture partners and there
is no agency for any of its partners.
FORMALITIES

• GR: no form required ( Art. 1771)


• Exception:
• Art. 1772 (capital of 3,000)
• Art. 1773 (contribution of immovable property)
CLASSIFICATION OF PARTNERSHIP AS TO THE
EXTENT OF SUBJECT MATTER
• Universal partnership (Art. 1777)
• UP of all present property (Art. 1778) – this implies a donation (Art. 1782 prohibition)
• UP of profits (art. 1780)

• Particular partnership (Art. 1783)


CLASSIFICATION OF PARTNERSHIP AS TO THE
LIABILITY OF PARTNERS
• General Partnership
• Limited Partnership
CLASSIFICATION OF PARTNERSHIP AS TO ITS
DURATION
• Partnership at will
• Partnership with a fixed term
• Partnership for an undertaking
CLASSIFICATION OF PARTNERSHIP AS TO ITS LEGAL
EXISTENCE
• De jure
• De facto
CLASSIFICATION OF PARTNERSHIP AS TO
REPRESENTATION TO OTHERS
• Ordinary or Real
• Ostensible or by Estoppel
CLASSIFICATION OF PARTNERSHIP AS TO PURPOSE

• Commercial or trading
• GPP
KINDS OF PARTNERS

• Capitalist • Ostensible
• General • Secret
• Limited • Silent
• Industrial • Dormant
• Managing • Original
• Liquidating • Incoming
• Partner by estoppel • Retiring
• Continuing
• Surviving
• Subpartner
IS REGISTRATION A REQUIREMENT IN ORDER THAT
A PARTNERSHIP MAY ACQUIRE PERSONALITY?
• No, that partnership has a juridical personality separate and distinct from that of each
partners, even in case of failure to comply with the requirements of Art. 1772, of the
NCC.
• If ever registration is important, it is needed for the purpose of issuance of licenses in
engaging business and merely intended to prevent fraud in taxation.
X AND Y ARE FRIENDS. X IS ENGAGED IN BUSINESS.

Y GAVE HIM THE AMOUNT OF 500,000 PESOS TO HELP


FINANCE X’S BUSINESS WITH AN AGREEMENT THAT Y
WOULD BE ENTITLED TO AT LEAST 50% OF THE NET
PROFITS AS PAYMENT OF THE AMOUNT GIVEN.

IS THERE A PARTNERSHIP?
MAY HUSBAND AND WIFE ENTER INTO A
UNIVERSAL PARTNERSHIP? WHY?
OBLIGATIONS OF PARTNERS AMONG THEMSELVES

• OBLIGATION TO CONTRIBUTE
• OBLIGATION TO CONTRIBUTE MONEY, PROPERTY OR INDUSTRY
• OBLIGATION TO CONTRIBUTE ADDITIONAL CAPITAL

• FIDUCIARY DUTY
• DUTY OF LOYALTY
• DUTY OF OBEDIENCE
• DUTY OF CARE
• DUTY TO INFORM
OBLIGATION TO CONTRIBUTE MONEY

• To contribute equal shares in the capital (Art. 1790)


• A partner becomes the debtor from the moment of execution of partnership. (Art. 1788)
• He is liable to pay interest even not stipulated and damages even without demand from the
time the partner should have paid which from the execution of contract unless a different
period is stipulated. ( Art. 1786 and 1788)
• To contribute additional capital in case of imminent loss for capitalist partners in order to save
the venture. If the capitalist partner refuses to do so, he shall be obliged to sell his share or
interest to the other partners. (Art. 1791)
OBLIGATION TO CONTRIBUTE PROPERTY

• Appraisal of the goods contributed made in the manner prescribed by the contract or in
the absence of stipulation it shall be made by experts. (Art 1787)
• To deliver the thing promised as contribution, to warrant against eviction and hidden
defects. He shall be liable for the fruits thereof from the time they should have been
delivered plus damages. (Art. 1786)
FIDUCIARY DUTIES

• The relationship between partners involves trust and confidence.


DUTY OF LOYALTY

• A partner owes not to act adversely to the interest of the partnership.


• Giving preference to credit under Art. 1792 in relation to Art. 1252.
• A partner who receive his share in the partnership credit and the debtor become
insolvent is obliged to bring to the partnership capital what he receives. (Art. 1793)
DUTY OF LOYALTY – NOT TO ENGAGE IN BUSINESS

INDUSTRIAL PARTNER CAPITALIST PARTNER


• Art. 1789 – cannot engage business for • Art. 1808 – cannot engage in the same
himself, unless he is expressly permitted to line of business
do so.
• Violation – the benefit is for the account
• Violation – the benefits therefrom may be
of the partnership. The partner is
availed by the partnership or he may be
excluded from the partnership without personally liable for any loss.
waiver to his liability for damages
SECRET PROFITS

• Article 1807 – partner must account for the common benefit and must hold the profits
he derived without the consent of the partners from any transaction connected with the
affairs of the partnership or the use of its property.
DUTY OF OBEDIENCE

• Partners must adhere to the provisions of the partnership agreement and the decisions
of the partners.
DUTY OF CARE

• Partners are obliged to use the same level of care and skill that a reasonable person to
the same position would use in the same circumstances
• Diligence of a good father of a family
• Art. 1794 – a partner is liable to the partnership for any damage caused by his negligence.
He cannot compensate the damages with the profits and benefits that he earned for the
partnership. His liability may only be mitigated by his extraordinary efforts that resulted
in extraordinary profits.
RISK OF LOSS OR DETERIORATION
ARTICLE 1795

NON-FUNGIBLE FUNGIBLE
• The risk of loss is with partner who • The risk of loss is borne by the partnership,
contributed the same to the partnership – since the ownership of the property is
it is contemplated that the use of the transferred in the partnership for it being
impossible to use the things without being
property is the one being contributed
consumed or impaired.
• However if such thing is contributed and • Things contributed to be sold are of the same
the placed under the name of the nature as the above since the partnership
partnership the loss or deterioration shall cannot effect the sale without it being the
be for the account of the partnership. intended as the owner.
DUTY TO INFORM

• A partner owes a duty to inform his or her co-partners of all information regarding
partnership affairs.
• Notice to any partner is notice to the partnership except in cases of fraud committed by
or with the consent of the acting partner. – Art. 1821
• Art. 1820 – an admission or representation made by a partner within the scope of his
authority is evidence against the partnership
RIGHT OF PARTNERS

• Right to participate in the management


• Rights to partnership property
• Right to share in profits
• Right to compensation
• Right to reimbursement
• Right to information
• Right to accounting
RIGHT TO PARTICIPATE IN THE MANAGEMENT

• Art. 1803 – all partners are considered managers, none of them can make important
alterations without the consent of other partners even if it would be useful to the
partnership.
• Art. 1800 – appointed manager in the articles of incorporation may execute all acts of
administration despite opposition of other partners, unless he is in BF, his appointment as
such is irrevocable without just or lawful cause and the vote of controlling interest is
necessary for such revocation. If the appointment is after the constitution of the
partnership it may be revoked at will.
TWO OR MORE MANAGERS UNDER ARTICLE 1801

• If there are two or more managers without designation of their specific task all of them
may execute all acts of administration.
• However if there is a stipulation none of them shall act without the consent of other
managers it is necessary to obtain concurrence of all even one of them is suffering from a
disability or absence unless there is imminent danger of grave or irreparable injury – Art.
1802
• The opposition to such act must be decided by the majority.
• In case of tie decision shall be made by partners owning the controlling interest.
UNANIMOUS APPROVAL UNDER ART. 1818

• Assign partnership property in trust for creditors or on the assignee’s promise to pay the
debts of the partnership
• Dispose of goodwill of business
• Do any other act which would make it impossible to carry on the ordinary business of a
partnership.
• Confess a judgment
• Enter into a compromise or arbitration for partnerships claim or liability
• Condone or renounce partnership’s claim
RIGHTS TO PARTNERSHIP PROPERTY

• Art. 1810 – rights in specific partnership property , his interest in the partnership, to
participate in the management.
• A partner is considered as a co-owner with his partners for specific partnership
property and he enjoy the same right as to possession and use without altering its
purpose without the consent of all partners.
• However this interest cannot be made to answer for legal support and may not be
assigned except in connection with the assignment of rights of all partners in the same
property. The partner’s right may not also be attached or executed for his personal
liability. (Article 1811)
SHARE IN THE PROFITS AND LOSSES

• A stipulation which excludes on or more partners from any share in the profits or losses is void – art.
1799 in relation to Art. 1797, 1816 and 1817
• Art. 1797 – distribution in accordance with the partnership agreement or if in case the share in the
profits is the only agreed upon the share in the losses shall be in the same proportion. In the absence of
stipulation pro-rata to their capital contribution.
• Art. 1816 – all partners including the industrial partner should be liable with all their property and after
the partnership assets have been exhausted for all contracts entered into validly by the partnership or
persons authorized by the partnership acting within the bounds of his authority. Any stipulation against
liability is void except between the partners shall be void under Art. 1817.
• Art. 1812 – partner’s interest in the partnership is his share of the profits and surplus.
IS A PARTNER’S SHARE ASSIGNABLE? ART. 1813 – A
PARTNER’S WHOLE INTEREST IN THE PARTNERSHIP MAY
BE ASSIGNED.

RIGHTS ACQUIRED RIGHTS NOT ACQUIRED


• rights to share in the profits • Right to interfere in the management
• right to surplus upon dissolution • Right to information or account
• limited right to account from the last • Right to inspect books
account agreed by all partners.

Except when a retiring partner assign his rights in the partnership to a remaining partner, the latter will
acquire all rights.
ART. 1814 – CHARGING OF PARTNER’S INTEREST IN
THE PARTNERSHIP
• Charging order – order of the court charging the interest of the debtor partner in the
partnership for payment of the unsatisfied amount of such judgment debt with interest
thereon.
• Appointment of receiver – to receive partner’s share in the profits, make all other orders,
directions, inquiries and account which the debtor partner might have made or the
circumstances may require.
• Pre-emptive rights – the remaining partners have the right to redeem the partner’s interest.
The redemption may be effected; a. with separate property, by one or more of the partners;
or b. with partnership property by one or more of the partners with the consent of all
remaining partners.
RIGHT TO COMPENSATION

• Generally, the partners are not entitled to compensation. They are only entitled to
compensation if the partnership agreement so provides.
RIGHT TO REIMBURSEMENT

• Art. 1796 – the partnership shall be responsible to every partner for amounts he may
have disbursed on behalf of the partnership and for corresponding interest from the time
the expenses are made, or for obligations he may have contracted in good faith in the
interest of partnership business and for risk in consequence of management.
RIGHT TO INFORMATION

• The partners shall have the right to inspect and copy the partnership books at any
reasonable hour. (Art. 1805)
• The partners on demand shall disclose or voluntary inform other partners or legal
representatives of a deceased or disabled partner, matters that are affecting the
partnership. (Art. 1806)
RIGHT TO ACCOUNTING

• Any partner shall have the right to formal account as to partnership affairs;
• When he is wrongfully excluded from partnership business or possession of its property
• If stipulated
• As to profits held by other partners as trustee under Art. 1807
• For just and reasonable cause
LIABILITY OF PARTNERS TO THIRD PARTIES

• Mutual agency rule – every partner is an agent of the partnership for the purpose of its
business (Art. 1818 1st sentence).
• Liability based on contract entered into by a partner acting within the scope of his
authority.
KINDS OF AUTHORITY

• Express authority – expressly granted orally or in writing


• Implied authority – authority implied from the express power granted or by customs or
practice in the industry
• Apparent authority – an act of the partner for apparently carrying on in the usual way of
business of the partnership.
CONVEYANCE OF REAL PROPERTY – ART. 1819

• Sale or mortgage by a partner is binding if it is in the exercise of his authority.


• If the title is in the name of partnership but the sale is in the partner’s name, equitable
title will be transferred to the buyer if the sales was made within the authority of the
partner.
• Buyer in good faith and for value is always protected
• Ratification by the partnership of the act of a partner even not made within the scope of
his authority will made the partnership liable.
TORT LIABILITY – LIABILITY FOR WRONGFUL ACT
OR OMISSION OF A PARTNER
• Partnership liability under Article 1822 and 1823 – the partnership is liable to third
persons who are injured by the torts committed by a partner;
• In the ordinary course of business
• With authority
• Misappropriation of funds received within the scope of his authority or in the ordinary course
of business
The liability of partners are solidary with partnership for all claims under article 1822 and 1823
LIABILITY OF INCOMING PARTNER

• He is liable for partnership’s obligation before the time he was admitted as a partner as if
he is already a partner when such obligations were incurred. However his liability
extends only up to his capital contribution unless there is a stipulation to the contrary.
DISSOLUTION, WINDING-UP AND TERMINATION
OF PARTNERSHIP
• Dissolution – the change in the relation of the partners caused by any partner ceasing to
be associated in the carrying of the business.
• Winding-up – the administration of the assets of the partnership for the purpose of
terminating the business and discharging the obligation of the partnership.
• Termination – end of process of winding-up of the partnership.
KINDS OF DISSOLUTION

• Judicial (art. 1830 par 8 in re Art. 1831)


• Extrajudicial (Art. 1830 par. 1-7)
• Act of one or more partners (Art. 1830 par. 1 and 2)
• By operation of law (Art. 1830 par. 3- 8)
• In violation of the partnership agreement
• Without violation of the partnership agreement
BY ACT OF ONE OR MORE PARTNERS WITHOUT
VIOLATION OF THE PARTNERSHIP AGREEMENT
• By the termination of a definite term or particular undertaking specified in the agreement
• By express will of any partner, who must act in good faith, when it is a partnership at will
• By express will of the partner who have not assigned their interest or suffered them to
be charged either before or after the termination of the term or particular undertaking
• By expulsion of any partner from the business bona fide in accordance with such power
conferred by the agreement between the partners
IN CONTRAVENTION OF THE PARTNERSHIP
AGREEMENT
• Any partner who where in the circumstances do not permit a dissolution may still ask for
the dissolution by his express will at any time.
DISSOLUTION BY OPERATION OF LAW

• Illegality of the partnership’s business


• When a specific thing which a partner had promised to contribute and such thing
perishes before delivery or in any case by the loss of thing when the ownership of thing
is retained by the partner.
• Death of any partner
• Insolvency of any partner
• Civil interdiction of any partner
JUDICIAL DISSOLUTION

• A partners has been declared insane in any judicial proceeding or shown to be of unsound mind
• A partner becomes in any other way incapable of performing his part of the partnership contract
• A partner has been guilty of such conduct as tends to affect prejudicially the carrying of the business
• A partner willfully or persistently commits a breach of the partnership agreement or otherwise conducts
himself in matter relating to the partnership business that is not reasonably practicable to carry on the
business in partnership with him
• The partnership business can only be carried at a loss
• Other circumstances render a dissolution equitable
RIGHT OF PURCHASER TO FILE COURT ACTION

• The purchaser of a partner’s interest may file an action for dissolution;


• After the termination of the specified term or undertaking
• At any time when it is a partnership at will or when a charging order was issued
WRONGFUL DISSOLUTION

• A partner who wrongfully terminates the partnership in contravention of the partnership


agreement may be held liable for damages by the innocent partners.
• Marjorie Tacao vs. Court of Appeals (Gr. No. 127405 October 4, 2000)
RESCISSION OF PARTNERSHIP CONTRACT ON THE
GROUND OF FRAUD OR MISREPRESENTATION
• The party entitled to rescind is entitled to;
• To a lien or right of retention to partnership property after satisfying the partnership
creditors for any purchase of right in the partnership or for capital contribution or advances.
• Right of subrogation for any partnership liabilities paid by him
• Right of indemnification for all debts and liabilities of the parnership
EFFECT OF DISSOLUTION ON AUTHORITY

• Terminated mutual agency


• The dissolution is binding even without notice if the dissolution is not due to any act,
death or insolvency of the partner. (art. 1832)
• If the dissolution is due to any act, death or insolvency of a partner, notice should be
given to the partners. If a partner who did not receive any notice enters into a contract
in the course of partnerships business the contract is binding on all partners.
PARTNERS AUTHORITY TO BIND PARTNERSHIP
AFTER DISSOLUTION
• Acts to wind up the affairs of the partnership
• Contracts with creditors without notice (actual or constructive)
• Creditor before dissolution – must be given actual notice
• Creditor after dissolution – he has known the partnership before dissolution, he has no actual
knowledge or notice of the fact of dissolution and he has no constructive notice of the
dissolution.
CONTINUATION OF PARTNERSHIP AFTER
DISSOLUTION – ART. 1840
• Creditors of the dissolved partnership are also creditors of the continuing partnership
• New partner is admitted or when a partner retires and assigns his rights in the partnership to third
persons or other partners, if the business is continued without liquidation.
• When one of the partners retires and assigns his rights to the remaining partners
• When one partner dies or retired which dissolves the partnership without any assignment but with
the consent of the legal representative of the deceased partner or the retired partner
• When all the partners/representative assigns their rights in the partnership to one or more persons
who promises to pay the debt of the partnership
• When any partner wrongfully causes dissolution and the remaining partners continue with the
business without liquidation
• When a partner is expelled and the remaining partners continue the business without liquidation
WINDING UP AND DISTRIBUTION OF ASSETS

• Winding-up – the process of liquidating the partnership’s assets and distributing the
proceeds to satisfy claims against the partnership.
PRIORITY IN THE DISTRIBUTION OF PARTNERSHIP’S
ASSETS
• Those owing to creditors other than partners
• Those owing to partners other than for capital and profits
• Those owing to partners in respect to capital
• Those owing to partners in respect to profits/suprlus
WHEN A PARTNER BECOME INSOLVENT

The claims against his property shall be exhausted in the following order:
• Those owing to separate creditors
• Those owing to partnership creditors
• Those owing to partnership by way of contribution
LIMITED PARTNERSHIP

A limited partnership is one formed by two or more persons under the provisions of the
following article, having as members one or more general partners as such shall not be
bound by the obligations of the partnership. ( Art. 1843)
FORMATION

• Art. 1844
• Sign and swear to a certificate
• File for record the certificate in the SEC
• A limited partnership is formed if there has been a substantial compliance in good faith.
GROUND FOR CANCELLATION AND AMENDMENT
OF CERTIFICATE (ART. 1864)
• Cancellation
• When the partnership is dissolved or all limited partners cease to be such

• Amendments
• There is a change in the name of the partnership or in the amount or character of
contribution of any limited partner
• A person is substituted as a limited partner
• Additional limited partner is admitted
• A person is admitted as a general partner
• A general partner dies, retires become insolvent, insane or is sentenced with civil interdiction
and the business is continued under ART. 1860
• Change in the character of the business
• False or erroneous statement in the certificate
• There a change in the stipulated term
• A time is fixed for dissolution or return for contribution but the same is not reflected in the
in the certificated
• The members desire to change in order to accurately reflect their true agreement
CONTRIBUTION

• Only cash or property but not service


• Liability for unpaid contribution
• For the difference between his actual and and the stated contribution in the certificate
• For unpaid contribution which is agrred in the certificate in the future time and on the condition
stated in the certificate
RETURN OF CONTRIBUTION

A limited partner may rightfully demand the return of his contribution


• Upon dissolution
• When date specified in the agreement for the return has arrived
• After he has six months notice in writing to all other members, if no time is specified in
the certificate either for dissolution or return of contribution
CONDITIONS FOR THE RETURN

• All liabilities of the partnership, except liabilities to general and limited partners on the
account of their contributions, have been paid or there remains property of the
partnership sufficient to pay them
• Consent of all partners is had, unless it can be rightfully demanded
• The certificate is cancelled or so amended to reflect the withdrawal or reduction
NAME

• Must include the word “Limited” or “ltd.”


• The surname of the limited partner cannot appear in the firm name unless;
• It is a surname of a general partner
• Prior to the time when the limited partner became such, the business carried on under a
name in which his surname appeared.
• Violation = liability as a general partner
MANAGEMENT

• Only general partners in the limited partnership can exercise the right to management
• When a limited partner takes part in the control or management of the business he shall be
liable as a general partner
RESTRICTIONS ON THE POWER OF THE GENERAL
PARTNER
• The general partners have no authority to do the following acts unless there is a written
consent or ratification from the limited partners:
• Do any act in contravention of the certificate
• Do any act that would make it impossible to carry on the ordinary business of the partnership
• Confess a judgment
• Possess partnership property or assign their rights in specific partnership property for other than
partnership purpose
• Admit a person as a general partner
• Admit a limited partner unless the right to do so is given in the certificate
• Continue the business with partnership property on the death, retirement,insanity,civil interdiction
or insolvency of a general partner unless the right to do so is given in the certificate
RIGHTS OF THE LIMITED PARTNERS

• Right to inspect books


• Right of accounting
• Have dissolution or winding up by decree of court
• A limited partner shall have the right ot receive a share in the profits or other
compensation by way of income, and to return of his capital contribution as provided in
art 1856 and 1857
SHARE IN THE PROFITS AND LOSSES

• A limited partner may receive from the partnership the share in the profits or the
compensation by way of income stipulated in the certificate
• The share cannot be paid if the liabilities of the partnership is in excess of their assets
except liabilities to partners on account of their capital contribution
MISTAKEN BELIEF THAT ON IS A LIMITED PARTNER

• Without prejudice to the provisions of Article 1848, a person who has contributed to
the capital of a business conducted by a person or partnership erroneously believing that
he has become a limited partner in a limited partnership, is not, by reason of his exercise
of the rights of a limited partner, a general partner with the person or in the partnership
carrying on the business, or bound by the obligations of such person or partnership,
provided that on ascertaining the mistake he promptly renounces his interest in the
profits of the business, or other compensation by way of income.
LOANS TO PARTNERSHIP

• A limited partner also may loan money to and transact other business with the partnership,
and, unless he is also a general partner, receive on account of resulting claims against the
partnership, with general creditors, a pro rata share of the assets. No limited partner shall in
respect to any such claim:
• (1) Receive or hold as collateral security and partnership property, or
• (2) Receive from a general partner or the partnership any payment, conveyance, or release
from liability if at the time the assets of the partnership are not sufficient to discharge
partnership liabilities to persons not claiming as general or limited partners.
• The receiving of collateral security, or payment, conveyance, or release in violation of the
foregoing provisions is a fraud on the creditors of the partnership.
ASSIGNMENT OF INTEREST

• Substituted limited partner – a person admitted to all the rights of a limited partner
when he has died or assign his interest in the partnership
• All members consents thereto
• If the assignor is empowered with such right in the certificate
• There must be a proper amendments of the certificate

• A SLP has all the rights and powers and subject to all the restrictions and liabilities of
the assignor except those liabilities which he was ignorant at the time he became a a
limited partner and which could not be ascertained from the certificate.
DISSOLUTION

• Retirement, death, insolvency, insanity or civil interdiction of a general partner


• Except when the general partners continue the business under a right to do so as stated in
the certificate with the consent of all partners

• At the instance of the limited partner


• He rightfully but unsuccessfully demands the return of his contribution
• The other liabilities of the partnership have not been paid, or the partnership property is
insufficient for their payment as required by the first paragraph, No. 1, and the limited partner
would otherwise be entitled to the return of his contribution.
PREFERENCE OF CREDIT

• (1) Those to creditors, in the order of priority as provided by law, except those to limited
partners on account of their contributions, and to general partners;
• (2) Those to limited partners in respect to their share of the profits and other
compensation by way of income on their contributions;
• (3) Those to limited partners in respect to the capital of their contributions;
• (4) Those to general partners other than for capital and profits;
• (5) Those to general partners in respect to profits;
• (6) Those to general partners in respect to capital.