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Transcript of Partnershi
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. (1685a)
***Take not that whoever collects doesn’t matter as it doesn’t make a differenceIf you get your share early and the other parties cannot get theirs because the debtor has become insolvent, then you must return YOUR share to the partnership so that no one gets more than he should have.
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. 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 losses and profits cannot be entrusted to one of the partners. (1690)
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. 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. (1686a)
Responsibility may be equitably mitigated by the courts if, through extraordinary efforts of the partner, unusual profits are recognized/realized.
Partners shall render on demand true and full information of all things affecting the partnership to any partner or legal representative of any deceased partner or of any partner under legal disability. (n)
Partners obligation to render information
Each partner has an obligation to render on demand true and full information of all things affecting the partnership to any partner or the legal representative of any deceased partners or of any partner under legal disability. (Art.1806) The relationship between partners is founded on mutual trust and confidenc ; hence, it is incumbent upon all f them disclose to one another matters affecting the partnership.
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.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. (1687)
The losses and profits 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.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. 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. (1689a
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 risks in consequence of its management. (1688a)
**Refers to the obligation of the partnership to the partners. The partners are merely agents so they are not personally liable except if they are at fault or if they exceeded their expressed authority
Almazan, Ana May Marie
Timtim, Donna Grace
The partner who has been appointed manager in the articles of partnership may execute all acts of administration despite the opposition of his partners, unless he should act in bad faith; and his power is irrevocable without just and lawful cause. The vote of the partners representing the controlling interest shall be necessary for such revocation of power.
A power granted after the partnership has been constituted may be revoked any time. (1692a)
A stipulation which excludes one or more partners from any share in the profits or losses is void. (1691)
Lays out the rules in the distribution of profits and losses
(1) In accordance with any existing agreement between the partners as to how they shall share.
(2) If there was no agreement, then the partners shall share on a pro-rata basis
(3) The industrial partner shall get what is JUST and EQUITABLE in the circumstances. (BONUS TO PARTNER)
The same rules shall apply for losses in the partnership’s operations, however the industrial partner shall not share in the losses as there is no way for him to retract his industry and in the event of losses, his efforts would have been for vain and it can thus be said that he has already shared
If two or more partners have been entrusted with the management of the partnership without specification of their respective duties, or without stipulation that one of them shall not act without the consent of the others, each one may separately execute all acts of administration, but if any of them should oppose the acts of the others, the decision of the majority shall prevail. In case of tie, the matter shall be decided by the partners owning the controlling interest. (1693a)
2 Kinds of Managing Partners:
Appointed DURING the Constitution of the Partnership
-May execute all administrative acts unless he acted in bad faith. His power may not be revoked unless there is a JUST and LAWFUL cause and the vote of the partners with controlling interest
-Even if there are objections as to his decisions coming from the partners, his authority will prevail UNLESS he has acted in bad faith
-Acts of administration: ordinary business and administrative transactions
Appointed AFTER the Constitution of the Partnership
-May have his power revoked with or without cause
-Decided upon by those partners who own controlling interest in the partnership
In case it should have been stipulated that none of the managing partners shall act without the consent of the others, the concurrence of all shall be necessary for the validity of the acts, and the absence or disability of any one of them cannot be alleged, unless there is imminent danger of grave or irreparable injury to the partnership. (1694)
When the manner of management has not been agreed upon, the following rules shall be observed:
a. All of the partners shall be considered agents and whatever any one of them may do alone shall bind the partnership, without prejudice to the provisions of article 1801.
b. None of the partners may, without the consent of the others, make any important alteration in the immovable property of the partnership, even if it may be useful to the partnership. But if the refusal of consent by the other partners is manifestly prejudicial to the interest of the partnership, the court’s intervention may be sought. (1695a)
If there is no agreement as to who will be the managing partners, during constitution and after constitution of the partnership, then the assumption shall be that ALL the partners are managing partners, without prejudice to Article 1801, meaning Article 1801 will then apply to their case.
Every partner may associate another person with him in his share, but the associate shall not be admitted into the partnership without the consent of all the other partners, even if the partner having an associate should be a manager. (1696)
The partnership books shall be kept, subject to any agreement between the partners, at the principal place of business of the partnership, and every partner shall at any reasonable hour have access to and may inspect and copy any of them. (n)
1. Partner's right to inspect books
Every partner has an inherent right as co-owner of the business to have access to partnership books and inspect and copy any of them. As co-owner, he is entitled to obtain true and full information concerning partnership affairs. (Art. 1806) This right is important to a managing partner in order the he may be able to discharge his functions effectively. For him and the other partners, this bright is also important for the purpose of determining or checks their fair share in the firm's profit.
2. Where partnership books are kept
The books shall be kept at the principal place of business unless there is an agreement among the partners that they shall be kept elsewhere.
3. Time of inspection
Every partner has a right to inspect the partnership books at reasonable hours on any business day throughout the year.
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. (n)
1. Partners obligation in rezpvect to benefits or profits
Every partner has an obligation to account and hold as trustee for the partnership any benefit or profits derived by him without the consent of the other partners from:
a. Any transaction connected with the formation , conduct or liquidation of the partnership.
b. Any use by him of partnership property.
The capitalist partners cannot engage for their own account in any operation which is of the kind of business 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 fund any profits accruing to him from his transaction, and shall personally bear all the losses. (n)
1. Right of capitalist partner to engage in business apart from the partnership business
A. If the businesses he will engage in is of a kind different form the partnerzhip business, he can engage in such business without getting the consent of the partnership or the other partners.
B. If the business he will engage in is of the same kind as the partnership business, he cannot engage in such h Bush essbunless there is a stipulation among the partners allowing him to engaged in such h business. Otherwise, he will be unduly compe king with the partnership.
2. Effect if capitalist partner engage in the same kind of business without the consent of the other partners
A. The capitalist partner shall bring to the common fund any profits accruing to him form his transaction.
B. He shall personally bear all the losses.
The author submits that such losses refer not only to those he incurred in hi s own business, but also
Any partner shall have the right to a formal account as to partnership affairs:
(1) If he is wrongfully excluded from the partnership business or possession of its property by his co-partners
(2) If the right exists under the terms of any agreement
(3) As provided by Article 1807
(4) Whenever other circumstances render it just and reasonable. (n)
The property rights of a partner are:
(1) His rights in specific partnership property
(2) His interest in the partnership
(3) His right to participate in the management. (n)
• The partner has the following rights:
(1) Right to the ownership of partnership property
(2) Right to his interest in the partnership
(3) Right to participate in partnership management
A partner is co-owner with his partners of specific partnership property.
The incidents of this co-ownership are such that:
(1) A partner, subject to the provisions of this Title and to any agreement between the partners, has an equal right with his partners to possess specific partnership property for partnership purposes; but he has no right to possess such property for any other purpose without the consent of his partners;
(2) A partner’s right in specific partnership property is not assignable except in connection with the assignment of rights of all the partners in the same property;
(3) A partner’s right in specific partnership property is not subject to attachment or execution, except on a claim against the partnership. When partnership property is attached for a partnership debt the partners, or any of them, or the representatives of a deceased partner, cannot claim any right under the homestead or exemption laws;
(4) A partner’s right in specific partnership property is not subject to legal support under Article 291. (n)
A partner’s interest in the partnership is his share of the profits and surplus. (n)
A conveyance by a partner of his whole interest in the partnership does not of itself dissolve the partner, or, as against the other partners in the absence of agreement, entitle the assignee, during the continuance of the partnership, to interfere in the management or administration of the partnership business or affairs, or to require any information or account of partnership transactions, or to inspect the partnership books but it merely entitles the assignee to receive in accordance with his contract the profits to which the assigning partner would otherwise be entitled. However, in case of fraud in the management of the partnership, the assignee may avail himself of the usual remedies.
In case of dissolution of the partnership, the assignee is entitled to receive his assignor’s interest and may require an account from the date only of the last account agreed to by all the partners. (n)
Without prejudice to the preferred rights of a partnership creditor under Article 1827, on due application to a competent court by any judgment creditor of a partner, the court which entered the judgment, or any other court, may charge the interest of the debtor partner with payment of the unsatisfied amount of such judgment debt with interest thereon; and may then or later appoint a receiver of his share of the profits, and of any other money due or to fall due to him in respect of the partnership, and make all other orders, directions, accounts and inquiries which the debtor partner might have made, or which the circumstances of the case may require.
The interest charged may be redeemed at any time before foreclosure, or in case of a sale being directed by the court, may be purchased without thereby causing dissolution:
(1) With separate property, by any one or more of the partners
(2) With partnership property, by any one or more of the partners with the consent of all the partners whose interests are not so charged or sold.
Nothing in this Title shall be held to deprive a partner of his right, if any, under the exemption laws, as regards his interest in the partnership. (n)
SECTION 3 – Obligations of the Partners as to 3rd Persons
Every partnership shall operate under a firm name, which may or may not include the name of one or more of the partners.
Those who, not being members of the partnership, include their names in the firm name, shall be subject to the liability of a partner. (n)
All partners, including industrial ones, shall be liable pro-rata with all their property and after all the partnership assets have been exhausted, for the contracts which may be entered into in the name and for the account of the partnership under its signature and by a person authorized to act for the partnership. However, any partner may enter into a separate obligation to perform a partnership contract. (n)
Any stipulation against the liability laid down in the preceding article shall be void, expect as among the partners. (n)
Every partner is an agent of the partnership for the purpose of its business, and the act of every partner, including the execution in the partnership name of any instrument, for apparently carrying on in the usual way the business of the partnership of which he is a member binds the partnership, unless the partner so acting has in fact no authority to act for the partnership in the particular matter, and the person with whom he is dealing has no knowledge of the fact that he has no such authority.
An act of a partner which is not apparently for the carrying on of business of the partnership in the usual way does not bind the partnership unless authorized by the other partners.
Except when authorized by the other partners or unless they have abandoned the business, one or more but less than all the partners have no authority to:
(1) Assign the partnership property in trust for creditors or o the assignee’s promise to pay the debts of the partnership
(2) Dispose of the goodwill of the business
(3) Do any other act which would make impossible to carry on the ordinary business of a partnership
(4) Confess a judgment
(5) Enter into a compromise concerning a partnership claim or liability
(6) Submit a partnership claim or liability to arbitration
(7) Renounce a claim of the partnership
No act of a partner in contravention of a restriction on authority shall bind the partnership to persons having knowledge of the restriction. (n)
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