Chapter 2

• Juridical relations in a partnership

  • Relations among the partners themselves
  • Relations of partners, with the partnership
  • Relation of partnership with 3rd person with whom it contracts
  • Relation of partners with such 3rd person
• Partnership

  Consensual contract that arises from the moment of celebration of the contract by the partners
• Executory agreement


  Future partnership where partners may stipulate another date for commencement, no partnership unless agreed time arrived or condition happened
• Failure to agree on material terms only prevents any rights or obligations from arising on either side for lack of complete contract
• Partnership with fixed term


  Expires at the end of the agreed term, causing automatic dissolution
• Partnership at will


  Partners may extend or renew by agreement after termination, rights and duties remain the same but only as consistent with partnership at will
• Dissolution/termination of partnership at will


  Any partner may terminate whenever they wish, partnership relationship is personal so law won't force anyone to continue
• Power/right to terminate partnership


  Any partner can declare dissolution, but must act in good faith to avoid liability for damages to other partners
• There is no such thing as an indissolvable partnership
• Obligations of partners with respect to contribution and property


  • Contribute at beginning/stipulated time the money, property as promised
  • Answer for eviction if deprived of contributed property
  • Answer partnership for fruits of property contributed with delay
  • Preserve property with diligence
  • Indemnify partnership for any damage caused by retention or delay
• Failure to contribute


  Makes partner automatically debtor of partnership, even in absence of demand
• Remedies for other partners


  • Action for specific performance with damages and interest
  • Rescission or annulment of contract if fraud or misrepresentation
• Liability of partner in case of eviction


  Same as seller, bound to buyer/vendee who was evicted (e.g. double sales)
• Liability of partner for fruits of property in case of delay

  No demand is necessary to put partner in default, partnership fails to receive benefits from the time of failure to contribute
• Appraisal of goods contributed


  1. Determine amount contributed

  2. In absence of stipulation, share is in proportion to what was contributed

  3. Appraisal by experts according to current price

  4. Partnership bears risk and benefits of subsequent change in fair value
• Obligations of partner who contributed money then converted to personal use

  • Contribute on due date
  • Reimburse amount taken
  • Pay agreed or legal interest (12%)
  • Indemnify partnership for damages caused by delay and conversion
• Industrial partner


  Contributes industry, labor or services, becomes debtor at commencement
• Prohibition on engaging in business

  Absolute for industrial partner, extends only to same kind of business for capitalist partner
• Remedies against industrial partner engaging in prohibited business

  • Right to exclude from firm
  • Right to benefits obtained
  • Right to damages
• Extent of contribution to partnership capital

  Can be stipulated unequally, but presumption is equal shares unless industrial partner also contributes capital
• Obligation of capitalist partner to contribute additional capital


  Generally not bound to contribute more than agreed, exception is imminent loss of business and no agreement to contrary
• Requisites for capitalist partner to contribute additional capital

  • Imminent loss of business
  • Majority of capitalist partners agree additional contribution can save venture
  • Capitalist partner deliberately refuses to contribute additional share
• Reason for sanction on capitalist partner refusing additional contribution

  Reflects lack of interest, unjust for them to remain and reap benefits while refusing to help
• Obligation of managing partner collecting debt


  If managing partner has personal credit against debtor, sums received shall be applied proportionally, exception is if money is paid on account of partnership credit only
• Obligation of partner receiving share of partnership credit

  Applies when partner received whole or part of their share, other partners have not yet collected, and debtor becomes insolvent
• Reason for imposing obligation to return received share is to avoid unjust or unfair outcome for other partners based on principles of partnership contract
• Liability for negligence or fault in fulfilling obligations

  Partner liable for damages, cannot generally be offset by profits earned, exception is for extraordinary efforts
• Obligation of partner

  Secure benefits for partnership, exercise diligence, both creditor and debtor
• Risk of loss of things contributed

  Specific/determinate things - ownership manifested to partnership

  Fungible things - contributed only for use

  Things to be sold - contributed with intent to contribute price

  Appraised things - claim limited to appraised value
• Responsibility of partnership to partners

  Refund amounts disbursed by partner with interest

  Answer for obligations contracted in good faith

  Answer for risks in consequence of its management
• Rules for distribution of profit


  • Conform with agreement

  Accord to capital contribution

  Industrial/managing partner first receives share of profit
• Rules for distribution of losses

  • Accord to agreement

  Same as sharing of profit

  Accord to capital contribution
• Designation of share in profit/loss by a third person


  Fulfillment of contract cannot be left to the will of one contracting party alone
• Responsibility of partnership to partners

  • Refund amount disbursed by partner (advances for partnerships due del+) plus correspond interest at the time of expences mode (not demand)
  • Answer for obligation he may contracted in good faith in interest of partnership budness
  • Answer risk in consequence of its management (accidents)
• Rules for distribution of profit

  1. Conform wl agreement

  2. Accord capital contribution

  3. Industrial managing partner shall first receive his share in PROFIT and haven't contribute in Losses (Furely only)
• Rules for distribution of Losses

  1. Accord to agreement

  2. Same as sharing of profit (PL ratio)

  3. Capital contribution
• Designation of share in P/L by a third person


  • This speak to svd person not on partner
  • Designation may be delegated by 3rd person by common concent
• Fulfillment of contract cannot be left will of one of contracting porties alone
• Designation of P/L cannot be intructed to one of the partners
• Binding force of designation

  • It is binding unless manifestly in equitable
  • No longer complain when they began to execute the decision of 3rd person
  • Fail to impugn within 3 months from time he had knowledge of it