Partnership Formation Reviewer

5/29/24, 1:06 AM Partnership Formation Reviewer
MODULE 1: Partnership Formation and property – real or personal, tangible or

intangible – and industry or service that may
its nature
be physical or mental.
Partnership
● Limited partner - can contribute cash or other
● Unincorporated association of two or more
property but not services.
individuals for the purpose of conducting a
● Purpose: to secure profits and to divide the
business for profit.
same among the partners.
● Owned by two or more individuals
● Agreement: division of profits is incorporated
● Formed for a business undertaking that is
in the partnership contract. In case of failure
normally of continuing nature
to provide for division of profits, the provisions
● Separate accounting entities (assets and
of the law shall apply.
liabilities should remain separate and distinct
from the individual partner’s personal assets
Partnership Law (Civil Code of the Philippines)
and liabilities.
● governs the formation and operation of
partnerships in the Philippines.
Partnership Agreement
● Any person who is legally capable of entering
Article 1767 (Partnership Law)
into a contract may become a partner.
● Definition: By the contract of a partnership,
● It may be oral, but sound business practice
two or more persons bind themselves to
demands a written agreement to avoid
misunderstanding. contribute money, property or industry to a
common fund, with the intention of dividing
● Written Partnership Agreement: constitutes the
the profit among themselves. Two or more
Articles of Partnership. Contribution to the
common fund may consist of cash, non-cash
about:blank 1/34
about:blank 2/34
persons may also form a partnership for the authority to act for the partnership in the
exercise of a profession. particular matter, and the person with whom
● Exercise of a profession: A profession is a he is dealing has knowledge of the fact that
calling in the preparation for or practice of he has no such authority.
which academic learning is required and 4. Co-ownership of property - each partner is a
which has for its prime purpose the rendering co-owner of the properties invested in the
of the public service. Thus, most professional partnership and each has an equal right with
practices such as accounting, law, medicine, his/her partners tioo possess specific
engineering and dentistry take advantage of partnership property for partnership purposes.
a partnership form of organization. (Note: a partner will have no right if he or she
Characteristics of a Partnership (based on the book did not have any consent of their partners)
and Module 5 of AE 112) 5. Co-ownership of profits - a partnership is
1. Ease of Formation - the formation of a created as a profit-oriented entity or business,
partnership requires less formality compared and each partner is entitled to share in the
to corporations. profits of the company. Losses should also be
2. Separate Legal Personality - the partnership borne by all partners with the exception of the
has a juridical personality separate and industrial partner. The profit and loss
distinct from the partners. It can also transact agreement shall be clearly defined in the
and acquire properties in its name. Articles of Partnership or Article 1799 of Civil
3. Mutual Agency - Each partner is an agent of Code of the Philippines.
the other partners on matters relative to the 6. Limited Life - It has a life limited by the length
affairs of the partnership. The exception is of time that all partners continue to own the
when the partner so acting has in fact no business. It is easily dissolved:
about:blank 3/34
about:blank 4/34
about:blank 5/34
about:blank 6/34
limited partner is restricted to his capital parties without notice are

investment. concerned.
General-Lia one who has all the rights,

KINDS OF PARTNERS
bility Partner powers and subject to all
Class Partner Definition the restrictions of a general
partner as to creditors but
As to General one who is liable for
whose liability is limited to
Liability Partner partnership debts up to the
his capital contribution as to
(Real extent of his personal assets
the other partners.
Partner) or those not contributed to
the partnership when all the As to Capitalist one who contributes money
partnership assets shall Contribu Partner or other property to the
have been exhausted. tion common fund of the
partnership. The capitalist
Limited one who is liable for
partner is prohibited in
Partner partnership debts up to the
engaging to any operations
(Special extent of his capital
that is of the same kind of
Partner) contribution. It is to be
business in which the
noted that limited partners
partnership is engaged,
are prohibited from having
unless there is an
their own surnames in the
agreement to the contrary
partnership’s title or business
name. Violation of such Industrial one who contributes his
would make the limited Partner work, labor or services to
partner liable as a general the partnership. An
partner insofar as third industrial partner shares in
about:blank 7/34
about:blank 8/34
the partnership profits but the partnership without

not in losses. Such giving notice and cannot
exception, however, does be held liable for the
not extend to third parties obligations of the firm
subsequent to his
Capitalist-in one who contributes money withdrawal.
dustrial or property as well as his
Partner services to the partnership. Nominal one who does not take
Partner active part in the business,
As to Silent one who is not actively makes no investment, but
Participa Partner involved in the conduct of permits his name to be used
tion the business of the by the partnership for
partnership although he
accommodation or for a
may be known to be a consideration. Nominal
partner. If he withdraws
partners do not acquire the
from the partnership, he rights of a partner but they
must give notice to those shall be subject to the
persons who do business liability of a partner insofar
with the firm to avoid as third persons without
liability in the future
notice are concerned.
Dormant one who takes no active Managing one who manages the
Partner part in the business and is
Partner affairs of the partnership. He
not known or held out as a may be appointed either in
partner. The term is
the Articles of Partnership or
synonymous to Sleeping after the organization of the
Partner. He may retire from partnership. It should be
about:blank 9/34
about:blank 10/34
about:blank 11/34
about:blank 12/34
Sub-partner one who, not being a individual

member of the partnership, transaction or
contracts with a partner enterprise and
with reference to the divide among
latter’s share in the themselves the
partnership. The partnership benefits there from.
formed between a member It may be formed
of a partnership and the for the exercise of a
sub-partner is termed as profession
Sub-partnership.
As to Liability General one in which all the
of the Partners Co-partners partners are
hip general partners
KINDS OF PARTNERSHIP who may act
publicly on behalf
Classification Name of Definition
of the firm.
the
Furthermore, each
Partnership
of the partners may
As to Object of Universal one in which the be held individually
Partnership Partnership* parties jointly agree liable for obligations
to contribute to the of the partnership.
common fund their
Limited one in which there
whole property.
Partnership is at least one
Particular one in which the general partner
Partnership parties combine to and at least one
pursue a single limited partner, with
about:blank 13/34
about:blank 14/34
the limited partner alone; or one for a

not being liable for fixed term or
partnership debts particular
except to the undertaking which
extent of his is continued by the
contribution to the partners after the
partnership. The termination of such
word “Limited” or term or particular
“Ltd.” is added to undertaking without
the name of the express agreement.
partnership to
Partnership one in which the
inform the public
that it is a limited with a Fixed term or period for
partnership. Term which the
partnership is to
As to its Partnership one in which no exist is fixed or
Duration at Will time is specified agreed upon; or
and is not formed one formed for a
for a particular particular
undertaking or undertaking. Upon
venture and which expiration of the
may be terminated term or completion
anytime by mutual of the particular
agreement of the enterprise, the
partners, or by will partnership is
of any one partner dissolved, unless
about:blank 15/34
about:blank 16/34
about:blank 17/34
about:blank 18/34
Partnership organized for the they may acquire the common

(Non-Tradin purpose of therewith. fund.
g rendering services, ● It is the intention of ● Movable and
Partnership) such as a firm of the partners to immovable
accountants, divide the property property of each
lawyers, engineers and all the profits partner at the
or medical that will be earned time of the
practitioners on the property contract shall
among continue to be
themselves. owned by each.
*Two types of Universal Partnership
Universal Partnership of Universal Partnership of

Advantages vs. Disadvantages of Partnership (Based
all Present Property Profits
on Module 5 of AE 112)
● One in which the ● One in which
Advantages Disadvantages
whole property of only all the
each partner at property A partnership is relatively Unlimited liability for the
the time of the acquired easier and less expensive debts of the firm - The
constitution of the through the work to organize than a business risk of each
partnership and industry of corporation. investor is not limited to
becomes the the partners his capital contribution
common property during the only, except if the
of all of the existence of the investor is a limited
partners, as well as partnership partner, but extends
the profits which become part of even to his personal
about:blank 19/34
about:blank 20/34
about:blank 21/34
about:blank 22/34
about:blank 23/34
about:blank 24/34
about:blank 25/34
about:blank 26/34
about:blank 27/34
about:blank 28/34
about:blank 29/34
about:blank 30/34
about:blank 31/34
about:blank 32/34
about:blank 33/34
about:blank 34/34

Partnership Formation Reviewer

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Partnership Formation Reviewer

Uploaded by

Copyright:

Available Formats

5/29/24, 1:06 AM Partnership Formation Reviewer

MODULE 1: Partnership Formation and property – real or personal, tangible or

limited partner is restricted to his capital parties without notice are

General-Lia one who has all the rights,

the partnership profits but the partnership without

Sub-partner one who, not being a individual

the limited partner alone; or one for a

Partnership organized for the they may acquire the common

*Two types of Universal Partnership

Universal Partnership of Universal Partnership of

You might also like