Article 1767

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Article 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 amongst themselves. Two or more persons may also form a partnership for the exercise of a general profession Characteristics partnership      

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of

a

contract

of

Consensual – perfected by mere consent Bi/multilateral – entered into between two or more persons Nominate – has a name Principal – existence does not depend upon another contract Onerous – contributions have to be made Preparatory – in the sense that after it has been entered into other contracts essential in the carrying out of its purposes may be entered into. Contribution of money, property or industry Lawful object Intention of dividing the profit among themselves Desire to formulate an active union with people among whom there exist mutual trust and confidence

Consequences of a partnership being a juridical entity  

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Juridical personality is separate and distinct from that of each partner The partnership can, in general o Acquire and possess property of all kinds o Incur obligations o Bring civil or criminal actions Can be adjudged insolvent even if the individual members be each financially solvent

Unless he is personally sued, a partner has no right to make a separate appearance in court, if the partnership being sued is already represented.

1771 A partnership may be constituted in any form except where movable property or real rights are contributed thereto, in which case a public instrument shall be necessary 1772 Every contract of partnership having a capital of three thousand pesos or more, in money or property, shall appear in a public instrument, which must be recorded in the Office of the Securities and Exchange Commission. Failure to comply with the requirements of the preceding paragraph shall not affect the liability of the partnership and the members thereof to third persons. 1773 A contract of partnership is void, whenever immovable property is contributed thereto, if an inventory of said property is not made, signed by the parties, and attached to the public instrument. 1774 Any immovable property or an interest therein may be acquired in the partnership name. Title so acquired can be conveyed only in the partnership name Nature of universal, limited partnerships

particular,

general,

Obligations and rights of a partner Obligation  

Give contribution Not to convert firm money or property for his own use

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Not to engage in unfair competition with his own firm To account for and hold as trustee, unauthorized personal profits Pay for damages caused by his fault Duty to credit to the firm the payment made by a debtor who owes him and the firm To share with the other partners the share of the partnership credit which he has received from an insolvent firm debtor

Rights 

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Property rights o Rights in specific partnership property o Interest in the partnership o Participate in the management – not available to limited partner Right to associate with another person in his share Inspect and copy partnership books Right to demand a formal account Right to ask for the dissolution of the firm at the proper time

Partnership at will (1785) When a partnership for a fixed term or particular undertaking is continued after the termination of such term or particular undertaking without any express agreement, the rights and duties of the partners remain the same as they were at such termination, so far as is consistent with a partnership at will.

A continuation of the business by the partners or such of them as habitually acted therein during the term, without any settlement or liquidation of the partnership affairs, is prima facie evidence of a continuation of the partnership 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. 1797 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. Absence of stipulation 

Proportionate to their contribution Industrial Partner o Losses: industrial partner is not liable o Profits: he may receive such share as may be just and equitable under the circumstances o Besides services, contributed capital: receive a share in the profits in proportion to capital