LEGAL ASPECTS MODULE 3

• PARTNERSHIP - A contract wherein 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.
• A "partnership" is treated as an artificial being created by law with a legal personality separate and distinct from its partners.
• General Professional Partnership - Two or more persons may also form a partnership for the exercise of a profession.
• ELEMENTS OF A PARTNERSHIP

  1. There is meeting of the minds
  2. To establish a common fund
  3. Intention of making profits (or losses),split between the contracting parties
• ESSENTIAL FEATURES:

  1.There must be a valid contract.

  2. The parties must have the legal capacity to enter into the contract.

  3. There must be a mutual contribution of money, property, or industry to a

  common fund.

  4. There must be a lawful object.

  5. The purpose or primary purpose must be to obtain profits and divide the

  same among the parties.
• A juridical personality is an organic unit resulting from a group of

  persons or mass or property to which the state grants or recognizes

  personality and capacity to hold patrimonial rights independent of

  those of component members.
• delectus personae principle- which states that no one can become a partner in a partnership without the consent of all partners.
• A partnership agreement is built on trust and confidence.
• WHO MAY BE PARTNERS

  A universal partnership cannot be formed by people who are prohibited from giving each other any donation or

  advantage.

  2. Persons suffering from civil interdiction.

  3. Persons who are unable to consent to a contract

  a.Minors

  b. people who are insane

  c. deaf-mutes who are unable to write
• TYPES OF PARTNERS

  • GENERAL PARTNER
  • LIMITED PARTNER
• CAPITALIST— one who contributes money or property to the common fund
• INDUSTRIAL—one who contributes only his industry or personal service
• MANAGING—one who manages the affairs or business of the partnership
• CONTINUING - continues the business of a partnership after it has been dissolved by reason of the admission of a new partner, retirement, death or expulsion of one of the partners
• SECRET—one who takes active part in the business but is not known to be a partner by outside parties
• SILENT—one who does not take any active part in the business although he may be known to be a partner
• May contribute capital and expertise to the partnership.

  general partner
• May only contribute capital (assets, cash, etc.) to the partnership.

  LIMITED PARTNER
• TYPES OF PARTNERSHIPS

  • GENERAL PARTNERSHIP
  • LIMITED PARTNERSHIP
  • OBLIGATIONS OF THE PARTNERS AMONG THEMSELVES
  • FIDUCIARY DUTY
  • DISSOLUTION AND WINDING UP
• General partnerships are the simplest and least expensive type of partnership to establish. It is owned by two or more general partners, who are jointly and severally liable for all debts and obligations. They co-manage and control the company.
• A limited partnership is a type of partnership in which some partners' legal liability for debts and obligations is limited. At least one limited partner contributes cash and assets in a passive manner.
• A partnership begins from the moment of the execution of the contract, unless it is otherwise stipulated.
• A partnership is a fiduciary relation—one entered into and to be maintained on the basis of trust and confidence. With that, a partner must observe the utmost good faith, fairness, and integrity in his dealings with the others:
• DISSOLUTION—change in the relation of the partners caused by any partner

  ceasing to be associated in the carrying on of the business.
• WINDING UP—process of settling the business or partnership affairs after

  dissolution.
• TERMINATION— that point when all partnership affairs are completely wound

  up and finally settled. It signifies the end of the partnership life.
• The Revised Corporation Code of the Philippines Section 2 defines a

  corporation as "An artificial being created by operation of law, having the right of succession and the powers, attributes, and properties expressly authorized by law or incidental to its existence.“
• CLASSIFICATIONS OF CORPORATIONS

  1. IN RELATION TO THE STATE
  2. AS TO STOCK
• A quasi-public corporation is a cross between private and public corporations.
• CORPORATION LAW DOCTRINES

  1. PIERCING THE VEIL OF CORPORATE EXISTENCE DOCTRINE
  2. BUSINESS OPPORTUNITY DOCTRINE
  3. TRUST FUND DOCTRINE
  4. PERPETUAL EXISTENCE.
  5. CORPORATION MAY EXERCISE ONLY EXPRESS, IMPLIED, OR INCIDENTAL POWERS.
  6. CORPORATION GENERALLY ACTS THROUGH ITS BOARD
  7. BUSINESS JUDGMENT RULE
• BUSINESS OPPORTUNITY DOCTRINE - refers to the situation in which a corporation's director or officer is presented with a business venture that the corporation can profitably manage.
• PIERCING THE VEIL OF CORPORATE EXISTENCE DOCTRINE - general legal principle that a corporation has a personality separate and

  distinct from its members.