Obligations of

the Partners
among
Themselves
BUSINESS LAWS AND
REGULATIONS
 RULES ON WHO BEARS THE RISK OF LOSS

1. Specific and determinate things which are not fungible where only
the use is contributed (Usufruct is enjoyed by the firm)
2. Specific and determinate things the ownership of which is
transferred to the partnership
3. Fungible things or things which cannot be kept without
deteriorating even if they are contributed only for the use of the
partnership.
4. Things contributed to be sold
5. Things brought and appraised in the inventory
RESPONSIBILITY OF PARTNERSHIP TO PARTNERS

1. to REFUND amounts disbursed on behalf of the firm plus legal

interest from the time expenses where made
2. to ANSWER to each partner for OBLIGATIONS he may have
entered into in good faith in the interest of the partnership, as well
as the risks in consequence of its management

• REFUND must be made even in case of failure of the enterprise

entered into, provided the partner is not at fault
• AMOUNT DISBURSED – does not refer to the ORIGINAL CAPITAL
RULES FOR DISTRIBUTION OF PROFITS AND LOSSES

HOW PROFITS ARE DISTRIBUTED

1. according to AGREEMENT
2. IF NONE, according to amount of CONTRIBUTION

• an INDUSTRIAL PARTNER shall receive a JUST and EQUITABLE share in the profits

HOW LOSSES are DISTRIBUTED

1. according to AGREEMENT as to losses
2. IF NONE, according to agreement as to PROFITS
3. IF NONE, according to amount of CONTRIBUTION
DESIGNATION OF SHARE IN PROFITS AND LOSSES BY A THIRD PERSON

• third person is NOT a PARTNER -- appointed to only distribute shares

• the designation of shares by third persons may be IMPUGNED, IF it

is MANIFESTLY INEQUITABLE
• the designation of shares by third persons CANNOT be IMPUGNED
EVEN IF MANIFESTLY INEQUITABLE IF:
• the aggrieved partner has already BEGUN to EXECUTE the decision
• the aggrieved partner has not IMPUGNED the distribution within 3 months he
had knowledge
STIPULATION EXCLUDING PARTNER FROM ANY SHARE IN PROFITS AND BUSINESS

1. Stipulation generally void, but partnership subsists

2. Stipulation, a factor to show no partnership exists
3. Where partner excluded is industrial partner
 RULES AND OBLIGATIONS WITH RESPECT TO MANAGEMENT

1. Appointment as manager in the articles of the partnership

• His power is revocable only upon just and lawful cause and upon the vote of
the partners representing the controlling interest.

2. Appointment as manager after constitution of the partnership

• power to act may be REVOKED at ANY TIME with or without just cause
• REMOVAL should be done by the controlling interest
 COMPENSATION FOR SERVICES RENDERED

1. Partner generally not entitled to compensation

2. Exceptions
• Partner’s work was beyond normal partnership functions
• In a capacity other than that of a partner
RULE WHEN THERE ARE 2 OR MORE MANAGERS

CONDITIONS
• 2 or more partners are managers
• there is no specification of respective duties
• there is no stipulation requiring UNANIMITY
RULE WHEN THERE ARE 2 OR MORE MANAGERS

SPECIFIC RULES:
• each may separately execute all acts of administration
 UNLIMITED POWER to ADMINISTER
 
IF any of the managers OPPOSE
 MAJORITY RULE
 IN CASE OF A TIE
- persons owning controlling interest prevail provided they are
also managers
 WHERE UNANIMITY OF ACTION IS STIPULATED

1. the CONCURRENCE of all shall be necessary for the validity of the

acts
2. the ABSENCE or DISABILITY of ANYONE of them CANNOT BE
ALLEGED UNLESS there is imminent danger of grave or
irreparable injury to the partnership

RULE ON DUTY of THIRD PERSONS

 third persons are not required to inquire as to whether or not a
partner with whom he transacts has the consent of all the managers