Professional Documents
Culture Documents
Partnership and Corporation
Partnership and Corporation
Partnership and Corporation
Characteristic element of Partnership 1. GENERAL RULE: Any person may be a partner who
1. Consensual – perfected by mere consent. is capable under the law of entering into contractual
2. Bilateral – formed by two or more persons relations.
creating reciprocal rights and obligations.
3. Preparatory - entered into as a means to an end. o Unemancipated minors
Cannot
4. Nominate – has a special name or designation. o Insane or demented persons
give
o Deaf mutes who do not know how to write
5. Onerous – contributions in the form of either consent to
o Persons who are suffering from civil interdiction a contract
money, property and/or industry must be made. o Incompetents who are under guardianship
6. Commutative – the undertaking of each partner
is considered as the equivalent of that of the 2. EXCEPTIONS: Pre-nuptial Agreement. A married
others. woman may enter into a contract of partnership even
7. Principal – its existence or validity does not without her husband’s consent, but the latter may
depend on some other contract. object under certain conditions.
A partnership contract is a contract of agency.
3. Capacity of a partnership/corporation to be a
Partnership relation fiduciary in nature partner
Partnership
o voluntary association entered by associates Mutual Contribution to a common fund.
o personal relation in which the element of 1. Proprietary or financial interest
delectus personae exists involving as it does 2. Form of contribution
trust and confidence between the partners a. Money – legal tender
b. Property – real or personal, tangible or
delectus personae – choice of the person or persons intangible
c. Industry – work or services 2. Partnership by estoppel
Limited partner – cannot contribute mere industry or
services Co-ownership or co-possession
- whenever the ownership of an undivided thing or
Legality of object right belongs to different persons
1. Effect of legality – object is unlawful when it is
contrary to law, morals, good customs, public Test and incidents of partnership
order or public policy 1. Terms of agreement control
2. Businesses partnership not permitted to engage 2. Typical incidents once existence established
in – may not engage in an enterprise for which the a. Partners share in P & L.
law requires a specific form of business b. Equal rights in management and conduct of
organization. partnership business
c. Every partner is an agent of partnership
Sharing of profits d. All partners are personally liable for debts
1. Not necessarily equal shares e. A fiduciary relation exists
2. Not conclusive evidence of partnership f. On dissolution, partnership is not terminated
but continues until the winding up is
Sharing of losses completed
1. Necessary corollary of sharing in profits
2. Agreement not necessary Partnership distinguished from co-ownership
2. Limited partnership: one formed by two or more 3. GENERAL—one whose liability to 3rd persons
persons having as members one or more general extends to his separate property
partners and one or more limited partners, the latter
not being personally liable for the obligations of the 4. LIMITED—one whose liability to 3rd persons is
partnership. limited to his capital contribution
2. Partnership with a fixed term: one w/c the term for 7. PARTNERS BY ESTOPPEL—one who is not really
w/c the partnership is to exist is fixed or agreed a partner but is liable as a partner for the protection
upon or one formed for a particular undertaking. of innocent 3rd persons