Corporation vs Partnership: Key Differences

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Questions and Answers

When is a partnership liable for loss caused by a partner?

When the partner acts in the ordinary course of business (correct)

When the loss occurs outside business hours

When the partner is not a co-partner

When the partner acts without authority

In what situation is a partnership bound to make good the loss, according to Art. 1823?

When a partner receives money and uses it for personal purposes

When a partner acts beyond their apparent authority

When a partner acts without the knowledge of co-partners

When a partner acting within apparent authority misapplies money of a third person (correct)

Under Art. 1824, who is liable for everything chargeable to the partnership?

All partners are liable solidarily (correct)

The partnership itself assumes all liability

Only the partners who directly caused the loss

Only the senior partners in the partnership

What happens if a partner misapplies money received by the partnership from a third party?

All partners become liable solidarily for the misapplication Signup and view all the answers

Who incurs liability when one partner receives money within their apparent authority but misapplies it?

All partners are liable solidarily with the partnership Signup and view all the answers

Prior to the Revised Corporation Code, how long could a corporation exist for?

50 years Signup and view all the answers

What is a key difference between a partnership and a corporation regarding succession?

Corporations follow the principle of succession, partnerships do not. Signup and view all the answers

In partnerships, what is the requirement for a transferee to become a partner?

Consent of all other partners Signup and view all the answers

How are partners' liabilities to third persons different from stockholders' liabilities in corporations?

Partners are liable with personal property, stockholders with subscribed capital stock. Signup and view all the answers

What grounds can lead to the dissolution of a partnership?

Insolvency, civil interdiction, death, insanity Signup and view all the answers

How does the registration process impact the legal status of a partnership?

It creates separate juridical personality for the partnership Signup and view all the answers

If the title to real property is in the partnership name, how can any partner convey the title?

By executing a conveyance in the partnership name Signup and view all the answers

When title to real property is in the name of the partnership, what happens if a partner conveys the property in his own name?

The partnership loses its equitable interest Signup and view all the answers

What happens if the partners convey real property titled in their individual names but not that of the partnership?

Partnership may recover the property under certain conditions Signup and view all the answers

In what scenario can a partner convey real property without risking recovery by the partnership?

If the conveyance is executed in the partner's personal name Signup and view all the answers

Under what circumstances can a partnership recover real property that has been conveyed by a partner?

If the partner's act binds the partnership under specific provisions Signup and view all the answers

What happens if real property is conveyed to a holder for value without knowledge of the partner exceeding authority?

The partnership retains its right to recover the property Signup and view all the answers

What happens if a conveyance is executed by a partner in the partnership name?

It passes the equitable interest of the partnership. Signup and view all the answers

In what situation does a conveyance executed by all partners pass all their rights in real property?

When the property is owned in the name of all partners. Signup and view all the answers

What does Article 1820 state with regard to admissions or representations made by a partner?

They are evidence against the partnership. Signup and view all the answers

When does notice to any partner relate to knowledge of the partnership according to Art. 1821?

When the partner acts in the particular matter. Signup and view all the answers

What effect does notice or knowledge acquired by one partner have on the partnership?

It always operates as notice to or knowledge of the partnership. Signup and view all the answers

Under what circumstances can notice or knowledge acquired by one partner not be considered notice to or knowledge of the partnership?

If there is fraud committed by that partner. Signup and view all the answers

When may additional limited partners be admitted to a limited partnership?

After filing an amendment to the original certificate Signup and view all the answers

Who must sign the writing to cancel a certificate of a limited partnership?

All members Signup and view all the answers

In what situations should an amendment be made to a limited partnership certificate?

When there is a change in the name of the partnership Signup and view all the answers

Who should sign an amendment substituting a limited partner in a limited partnership?

The member to be substituted or added Signup and view all the answers

What is required to admit an additional limited partner to a limited partnership?

Filing an amendment to the original certificate and having it signed by all members Signup and view all the answers

When is a limited partnership certificate amended?

When there is a change in the amount or character of a limited partner's contribution Signup and view all the answers

Study Notes

Partnership Property

Title to real property can be in the name of one or more partners, or in a third person in trust for the partnership.
A conveyance executed by a partner in the partnership name, or in their own name, passes the equitable interest of the partnership, provided the act is within the partner's authority.

Partnership Affairs

An admission or representation made by a partner concerning partnership affairs is evidence against the partnership.
Notice to any partner of any matter relating to partnership affairs, and the knowledge of the partner acting in that matter, operates as notice to or knowledge of the partnership.

Liability

Where a partner acting in the ordinary course of business or with authority causes loss or injury to a third person, the partnership is liable.
The partnership is also liable if one partner misapplies money or property received in the course of business.

Partnership vs. Corporation

A partnership has no right of succession and is susceptible to convenient dissolution, while a corporation follows the principle of succession and can only be dissolved with government concurrence.
In a partnership, a partner's interest can be transferred to another, but the transferee does not automatically become a partner.
In a corporation, when shares of stock are transferred to another, the transferee becomes a stockholder.
Partners may be held liable with their personal property, while stockholders are generally liable only to the extent of their subscribed capital stock.

Dissolution of Partnership

A partnership may be dissolved due to grounds of insolvency, civil interdiction, death, insanity, or retirement of any partner.

Amending a Partnership Certificate

Additional limited partners may be admitted to a limited partnership upon filing an amendment to the original certificate.
The amendment must be signed and sworn to by all members, and the assigning limited partner if applicable.
The certificate must be filed with the Office of the Securities and Exchange Commission to record the cancellation or amendment of the certificate.

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Description

Explore the distinctions between corporations and partnerships, including the concept of perpetual existence versus limited duration and the principles of succession and dissolution. Gain a deeper understanding of these business entities and their legal implications.