Art 1789-1808

• ARTICLE  1789.  An  industrial  partner  cannot  engage  in  business  for  himself,  unless  the  partnership expressly  permits  him  to  do  so;  and  if  he  should  do  so,  the  capitalist  partners  may  either  exclude  him from the firm or avail themselves of the benefits which he may have obtained in violation of this provision, with a right to damages in either case.
• ARTICLE 1790. Unless there is a stipulation to the contrary, the partners shall contribute equal shares to the capital of the partnership
• ARTICLE 1791. If there is no agreement to the contrary, in case of an imminent loss of the business of the partnership, any partner who refuses to contribute an additional share to the capital, except an industrial partner, to save the venture, shall he obliged to sell his interest to the other partners.
• ARTICLE 1792 If a partner authorized to manage collects a demandable sum, which was owed to him in his own name, from a person who owned the partnership another sum also demandable, the sum thus collected shall be applied to the two credits in proportion to their amounts, even though he may have given a receipt for his own credit only;
• ARTICLE 1792. but should he have given it for the account of the partnership credit, the amount shall be fully applied to the latter. The provisions of this article are understood to be without prejudice to the right granted to the debtor by Art. 1252, but only if the personal credit of the partner should be more onerous to him.
• ARTICLE 1793 A partner who has received, in whole or in part, his share of a partnership credit, when the other partners have not collected theirs, shall be obliged, if the debtor should thereafter become insolvent, to bring to the partnership capital what he received even though he may have given receipt for his share only
• ARTICLE 1794 Every partner is responsible to the partnership for damages suffered by it through his fault, and he cannot compensate them with the profits and benefits which he may have earned for the partnership by his industry.
• ARTICLE 1794 However, the courts may equitably lessen this responsibility if through the partner’s extraordinary efforts in other activities of the partnership, unusual profits have been realized
• ARTICLE 1795 The risk of specific and determinate things, which are not fungible, contributed to the partnership so that only their use and fruits may be for the common benefit, shall be borne by the partner who owns them.
• ARTICLE 1795 If the things contributed are fungible, or cannot be kept without deteriorating, or if they were contributed to be sold, the risk shall be borne by the partnership. In the absence of stipulation, the risk of things brought and appraised in the inventory, shall also be borne by the partnership, and in such case the claim shall be limited to the value at which they were appraised
• ARTICLE 1796 The partnership shall be responsible to every partner for the amounts he may have disbursed on behalf of the partnership and for the corresponding interest, from the time the expenses are made; it shall also answer to each partner for the obligations he may have contracted in good faith in the interest of the partnership business, and for the risk in consequence of its management
• ARTICLE 1797 The profits and losses shall be distributed in conformity with the agreement. If only the share of each partner in the profits has been agreed upon, the share of each in the losses shall be in the same proportion
• ARTICLE 1797 In the absence of stipulation, the share of each partner in the profits and losses shall be in proportion to what he may have contributed, but the industrial partner shall not be liable for the losses.
• ARTICLE 1797 As for the profits, the industrial partner shall receive such share as may be just and equitable under the circumstances. If besides his services he has contributed capital, he shall also receive a share in the profits in proportion to his capital.
• ARTICLE 1798 If the partners have agreed to entrust to a third person the designation of the share of each one in the profits and losses, such designation may be impugned only when it is manifestly inequitable.
• ARTICLE 1798 In no case may a partner who has begun to execute the decision of the third person, or who has not impugned the same within a period of three months from the time he had knowledge thereof, complain of such decision. The designation of profits and losses cannot be entrusted to one of the partners.
• ARTICLE 1799. A stipulation which excludes one or more partners from any share in the profits or losses is void
• ARTICLE 1800. The partner who has been appointed manager in the articles of the partnership may execute all acts of the administration despite the opposition of his partners, unless he should act in Bad faith., and his powers is irrevocable without the just or lawful cause.
• ARTICLE 1800. The vote of the partners representing the controlling interest shall be necessary for such revocation of power. A power granted after the partnership has constituted may revoked at any time. Each partner has a right to an equal voice in the conduct of the partnership business. This right is not dependent on the amount or size of the partner’s capital contribution.
• ARTICLE 1801. If two or more partners have been intrusted with the management of the partnership without the specification of their respective duties or without the stipulation that one of them shall not act without the consent of all others, each one separately execute all acts of administration,
• ARTICLE 1801. but if anyone of them should oppose the act of each other, the decision of the majority shall prevail. In the case of tie the partners owning the controlling interest shall decide the matter. Where respective duties of two or more managing partners not specifies.
• ARTICLE 1802. In case it should have been stipulated that none of the managing partner shall act without the consent of the others, the concurrence of all shall be necessary for validity of the acts, and the absence or disability of any one of them cannot alleged, unless there is imminent danger of grave or irreparable injury to the partnership.
• ARTICLE 1803. When the manner of management has not agreed upon, the following rules shall observed: 1. All partners shall be considered agents and whatever any one of them may do alone shall bind the partnership without prejudice to the provision of article 1801
• ARTICLE 1803. 2. None of the partners may, without the consent of others, make any important alteration in the immovable property of the partnership, even if it may be useful to the partnership, but if there ids refusal of the consent by the other partners is manifestly prejudicial to the interest of the partnership, the court’s intervention may be sought.
• ARTICLE 1804 Every partner may associate another person with him in his share, but the associates shall not admitted into the partnership without the consent of all other partners, even of the partner having an associate should be a manager of subpartnership nature
• ARTICLE 1805. The partnership books shall be kept, subject to any agreement between the partners, at the principal place of the business of the partnership, and every partner shall at any reasonable hour have access to and may inspect and copy any of them
• ARTICLE 1806. Partners shall render on demand true and full information of all things affecting the partnership to any partner or the legal representative of any deceased partner or of any partner under legal disability.
• ARTICLE 1806. Duty to render information, there must be no concealment between partners in all matters affecting the partnership. Information must use only for partnership purpose. Not just on demand but partner also has duty of voluntary disclosure.
• ARTICLE 1806. However, duty to render info does notarise with respect to matters appearing in partnership books since each partner has the right to inspect those. Good faith not only requires that a partner should not make a false statement but also that he should abstain from any false concealment
• ARTICLE 1807. Every partner must account to the partnership for any benefit, and hold as trustee for it any profits derived by him without the consent of the other partners from any transaction connected with the formation, conduct, or liquidation of the partnership or from any use by him of its property.
• ARTICLE 1808. The capitalist partners cannot engage for their own account in any operation which is of the kind of business in which the partnership is engaged, unless there is a stipulation to the contrary. Any capitalist partner violating this prohibition shall bring to the common funds any profits accruing to him from his transactions, and shall personally bear all the losses.
• Capitalist Partner


  contribute money or property or both to the common fund
• Industrial Partner


  contribute only their industry or labor to the common fund
• Capitalist Industrial partner

  contribute money or property and industry or both and industry to the common fund
• Capitalist Partner

  1. contributes money or property
  2. cannot engage in the same kind of business in which the p'ship is engaged (EXC: stipulation authorizing him)
  3. shares in the profits accdg. to agreement, if none, in proportion to his contribution
  4. agreement as to losses if any, if none, agreement as to profits (EXC: no agreement as to profits and losses, in proportion to his contribution)
• Industrial Partner

  1. contribute his industry
  2. cannot engage in business for himself (EXC: if permitted)
  3. shares in the profits is accdg to agreement, if none, shall receive share as may be just and equitable
  4. agreement as to losses if any (EXC: no agreement, not liable for losses)
• Remedies of capitalist partners against industrial partner engaged in business for himself

  1. may exclude him from the p'ship + damages
  2. may avail the benefits which he may have obtained + damages
• Obligation of capitalist p'ner to contribute addtl. capital

  GR: they are not bound to contribute additional capital ?

  EXC:

  1. Stipulation
  2. In case of imminent loss to save the venture, If they refuse, they shall be obliged to sell their interest to the other capitalist partners who are willing to contribute additional capital
• Principle of Fiduciary Relationship


  Contract of partnership is governed by this principle, that is trust and confidence
• Rationale of 1792

  To prevent furtherance of partner's personal interest to the detriment of the partnership. Not applicable to non-managing partners.