PART 1 Existence of Valid Contracts

PARTNERSHIP 1. A form of voluntary & personal association –

someone can be a partner by consensus
ART. 1767
2. Creation and proof of existence – may be informally
By the contract of partnership two of more persons bind created, existence proved by conducts or acts of
themselves to contribute money, property, or industry to a parties
common fund with the intention of dividing profit among a. Customary
themselves. b. Contractual, all requisites of valid contract
must be present (COC)
Two or more persons may also form a partnership for the 3. Other forms of association excluded – there is no
exercise of a profession. such thing as partnership created by
law/operation/implied by law/etc.
(This is a viewpoint of a contract)
*Limited Partnership, however, can’t be created by mere
Concept of Partnership
voluntary agreement alone.
- Association
Legal Capacity of Parties to enter into the contract
- Legal relation
- Joint undertaking GR: any person may be a partner who is capable under the
- Status law, any person who cannot legally give consent to a contract
- Organization cannot be partners:
- Entity
a. Unemancipated minors
Partnership for the exercise of a profession b. Insane demented persons
c. Deaf-mutes who do not know how to write
Profession
d. Persons suffering from civil interdiction (legal
is a calling in the preparation/practice of which restraint ‘cause the person became incompetent)
academic learning is required (its prime purpose the e. Incompetents who are under guardianship
rendering of public service). Exceptions: those prohibited to give each other
General Professional Partnership donation/advantage cannot enter into a universal
partnership.
practice of a profession is not a business/enterprise
for profit however law allows the joint pursuit thereof by two Capacity of partnership/corporation to be a partner.
or more persons as partners.
- No prohibition of partnership being a partner of
*law does not allow individuals to practice profession as a another partnership.
corporate entity. - Unless authorized by law, a corporation has no
capacity to enter into a contract of partnership.
Characteristic Elements of an Entity
Mutual Contribution to a common fund
a contract of partnership is:
1. Proprietary or financial interest - no mutual contri =
1. Consensual – perfect by mere consent no partnership
2. Nominate – has a special name 2. Form of Contribution
3. Bilateral – 2 or more, reciprocal a. Money
4. Onerous – benefit by giving something b. Property
5. Commutative – undertaking is equivalent c. Industry
6. Principal – doesn’t depend on other contracts
7. Preparatory – entered for an “end” (profit) Legality of Object

Partnership is fiduciary 1. Effect of Legality – purpose must be lawful,

- Delectus personae, involves “does trust and
confidence between partners”
Delectus personae – choose of the persons
o Right to choose co-partners (there’s
consensus)
o Power to dissolve partnership
(power, not right)
Essential Features of a Partnership
- There must be a valid contract
- Parties must have legal capacity
- There must be mutual contributions
- Object must be lawful
- Primary purpose: obtain profits
*articles mustn’t be kept secret to parties
contrariwise, it is void ab initio.
2. Businesses partnership not permitted to engage in
– partnership may be organized for any purpose. But
not allowed to engage in an enterprise for which the
law requires a specific form of buss. org.
Intention to realize and divide profits
1. Very reason for existence of partnership
2. Sufficient if obtaining profit principal purpose
Sharing of Profits
1. Not necessarily in equal shares
2. Not conclusive evidence of a partnership
Sharing of Losses
1. Necessary corollary of sharing in profits
2. Agreement not necessary (for a system of loss
sharing)