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Questions and Answers
Which of the following is NOT a characteristic of a partnership?
Which of the following is NOT a characteristic of a partnership?
- Consensual
- Commutative
- Principal
- Unilateral (correct)
A partnership is considered a weak juridical personality, primarily because it can be dissolved without a formal process.
A partnership is considered a weak juridical personality, primarily because it can be dissolved without a formal process.
True (A)
Every partner is considered an agent of the partnership and can bind the partnership with actions relative to its usual business.
Every partner is considered an agent of the partnership and can bind the partnership with actions relative to its usual business.
True (A)
What does 'piercing the veil of partnership separate personality' mean?
What does 'piercing the veil of partnership separate personality' mean?
What are the three elements of a contract of partnership?
What are the three elements of a contract of partnership?
What is the difference between a universal partnership and a particular partnership?
What is the difference between a universal partnership and a particular partnership?
Which type of partnership is formed when partners contribute all their present and future properties to a common fund?
Which type of partnership is formed when partners contribute all their present and future properties to a common fund?
A limited partnership is always formed with at least one general partner and one limited partner.
A limited partnership is always formed with at least one general partner and one limited partner.
Which type of partner actively manages the business affairs of the partnership?
Which type of partner actively manages the business affairs of the partnership?
Which of these statements is true about a capitalist partner?
Which of these statements is true about a capitalist partner?
An incoming partner is always held personally liable for all partnership obligations.
An incoming partner is always held personally liable for all partnership obligations.
What are the duties of a partner towards the partnership?
What are the duties of a partner towards the partnership?
If a managing partner collects a debt owed to the partnership and himself, the payment should primarily be applied to the partnership debt.
If a managing partner collects a debt owed to the partnership and himself, the payment should primarily be applied to the partnership debt.
A partner is not criminally liable for the unlawful acts of another partner if the partnership is engaged in a legal business.
A partner is not criminally liable for the unlawful acts of another partner if the partnership is engaged in a legal business.
A partnership can only act through its partners or duly appointed agents.
A partnership can only act through its partners or duly appointed agents.
A partner can assign their interest in the partnership property to a third person without the consent of the other partners.
A partner can assign their interest in the partnership property to a third person without the consent of the other partners.
A partnership can be dissolved due to insolvency or death of a partner.
A partnership can be dissolved due to insolvency or death of a partner.
Once a partnership is dissolved, the partners cannot continue the business as a new partnership.
Once a partnership is dissolved, the partners cannot continue the business as a new partnership.
Which of these is NOT a general rule for priority of payment of partnership liabilities?
Which of these is NOT a general rule for priority of payment of partnership liabilities?
A partnership is automatically dissolved if a partner conveys their entire interest to a third person.
A partnership is automatically dissolved if a partner conveys their entire interest to a third person.
A limited partnership is formed when two partners contribute money to the partnership, and one partner manages the business.
A limited partnership is formed when two partners contribute money to the partnership, and one partner manages the business.
A limited partnership can be dissolved solely due to the death of a limited partner.
A limited partnership can be dissolved solely due to the death of a limited partner.
A general partner is legally allowed to engage in competing businesses with the partnership.
A general partner is legally allowed to engage in competing businesses with the partnership.
A limited partner's interest in the partnership is assignable.
A limited partner's interest in the partnership is assignable.
What is the purpose of the Doctrine of Marshaling of Assets?
What is the purpose of the Doctrine of Marshaling of Assets?
The process of winding up a partnership involves settling its affairs and distributing assets after dissolution.
The process of winding up a partnership involves settling its affairs and distributing assets after dissolution.
A partner's contribution to the partnership can be made through money, property, or industry.
A partner's contribution to the partnership can be made through money, property, or industry.
A general partner is responsible for contributing the capital to the partnership, while a limited partner is responsible for managing the business.
A general partner is responsible for contributing the capital to the partnership, while a limited partner is responsible for managing the business.
Limited partners have the same responsibilities as general partners regarding the partnership's management.
Limited partners have the same responsibilities as general partners regarding the partnership's management.
Limited partners can only receive their share of profits, not a return of their contribution.
Limited partners can only receive their share of profits, not a return of their contribution.
The death of a general partner always automatically dissolves the partnership.
The death of a general partner always automatically dissolves the partnership.
The death of a limited partner dissolves the partnership.
The death of a limited partner dissolves the partnership.
The partners can settle the dissolved partnership's affairs extrajudicially without going to court.
The partners can settle the dissolved partnership's affairs extrajudicially without going to court.
A partner can be expelled from a partnership by the other partners without any reason.
A partner can be expelled from a partnership by the other partners without any reason.
A partner who violates the partnership agreement can be held personally liable for damages.
A partner who violates the partnership agreement can be held personally liable for damages.
When a partner is expelled from a partnership, what happens to their interest in the partnership?
When a partner is expelled from a partnership, what happens to their interest in the partnership?
A limited partnership is always dissolved when a general partner retires.
A limited partnership is always dissolved when a general partner retires.
A general partner must agree to have a limited partner become a general partner in a limited partnership.
A general partner must agree to have a limited partner become a general partner in a limited partnership.
What is the purpose of a partnership certificate?
What is the purpose of a partnership certificate?
A limited partnership can be dissolved if the general partners continue the business after a general partner's death.
A limited partnership can be dissolved if the general partners continue the business after a general partner's death.
A limited partnership is dissolved when the business is unprofitable.
A limited partnership is dissolved when the business is unprofitable.
A limited partner can engage in a business that directly competes with the partnership's business.
A limited partner can engage in a business that directly competes with the partnership's business.
A limited partner can assign their interest in the partnership to a third party without any restrictions.
A limited partner can assign their interest in the partnership to a third party without any restrictions.
A limited partner's liability is limited to their contribution to the partnership.
A limited partner's liability is limited to their contribution to the partnership.
Limited partners have a right to participate in the management of the partnership.
Limited partners have a right to participate in the management of the partnership.
A limited partnership is formed when two or more partners contribute money, property, or industry to a common fund and act as general partners.
A limited partnership is formed when two or more partners contribute money, property, or industry to a common fund and act as general partners.
A limited partner can be a natural person, but not a juridical person.
A limited partner can be a natural person, but not a juridical person.
A limited partner's contribution is subject to attachment or execution by creditors.
A limited partner's contribution is subject to attachment or execution by creditors.
A limited partnership is a separate legal entity from its partners.
A limited partnership is a separate legal entity from its partners.
The partners can continue a limited partnership after the death of a general partner.
The partners can continue a limited partnership after the death of a general partner.
A limited partner can assign their interest in the partnership without the consent of the other partners.
A limited partner can assign their interest in the partnership without the consent of the other partners.
The partners can file a certificate with the Securities and Exchange Commission (SEC) to establish a limited partnership.
The partners can file a certificate with the Securities and Exchange Commission (SEC) to establish a limited partnership.
The partnership agreement can allow limited partners to receive priority over other limited partners regarding their contributions or profits.
The partnership agreement can allow limited partners to receive priority over other limited partners regarding their contributions or profits.
The partners can include a provision in the partnership agreement that allows limited partners to receive property other than cash in return for their contributions.
The partners can include a provision in the partnership agreement that allows limited partners to receive property other than cash in return for their contributions.
The death of a limited partner does not dissolve the limited partnership.
The death of a limited partner does not dissolve the limited partnership.
A limited partner is responsible for maintaining the partnership's accounting records.
A limited partner is responsible for maintaining the partnership's accounting records.
Limited partners have the right to demand and receive property other than cash for their contribution in a limited partnership.
Limited partners have the right to demand and receive property other than cash for their contribution in a limited partnership.
Flashcards
What is a partnership?
What is a partnership?
A legal agreement between two or more individuals to combine their money, property, or industry, and to share profits.
What is the essence of a partnership?
What is the essence of a partnership?
The voluntary association of persons for the purpose of sharing profits.
Is a partnership consensual?
Is a partnership consensual?
A partnership is formed by the mere agreement of the partners, without needing any specific formality.
Is a partnership commutative?
Is a partnership commutative?
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Is a partnership a principal contract?
Is a partnership a principal contract?
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Is a partnership bilateral?
Is a partnership bilateral?
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Is a partnership onerous?
Is a partnership onerous?
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Is a partnership nominate?
Is a partnership nominate?
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Is a partnership preparatory?
Is a partnership preparatory?
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Is a partnership informal and have weak juridical personality?
Is a partnership informal and have weak juridical personality?
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Do partners have mutual agency?
Do partners have mutual agency?
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Do partners have unlimited liability?
Do partners have unlimited liability?
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What is 'piercing the veil of partnership separate personality'?
What is 'piercing the veil of partnership separate personality'?
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What is the first rule in determining the existence of a partnership?
What is the first rule in determining the existence of a partnership?
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What are the rules for determining the existence of a partnership when intent is unclear?
What are the rules for determining the existence of a partnership when intent is unclear?
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What happens to an unlawful partnership?
What happens to an unlawful partnership?
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What's the first element of a partnership contract?
What's the first element of a partnership contract?
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What's the second element of a partnership contract?
What's the second element of a partnership contract?
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What's the object of a partnership?
What's the object of a partnership?
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What's the purpose of a partnership?
What's the purpose of a partnership?
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What is required when real estate is contributed to a partnership?
What is required when real estate is contributed to a partnership?
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What are the formal requirements for a partnership with substantial capital?
What are the formal requirements for a partnership with substantial capital?
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What is a Universal Partnership of All Present Properties?
What is a Universal Partnership of All Present Properties?
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What is a Universal Partnership of All Profits?
What is a Universal Partnership of All Profits?
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What is a Particular Partnership?
What is a Particular Partnership?
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Who are General Partners?
Who are General Partners?
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Who are Limited Partners?
Who are Limited Partners?
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What is a Partnership with a Fixed Term?
What is a Partnership with a Fixed Term?
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What is a Partnership for a Particular Undertaking?
What is a Partnership for a Particular Undertaking?
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What is a Partnership at Will?
What is a Partnership at Will?
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What is a De Jure Partnership?
What is a De Jure Partnership?
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What is a De Facto Partnership?
What is a De Facto Partnership?
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Who is a Capitalist Partner?
Who is a Capitalist Partner?
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Who is an Industrial Partner?
Who is an Industrial Partner?
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Who is a Capitalist-Industrial Partner?
Who is a Capitalist-Industrial Partner?
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Study Notes
Law on Partnership
- Partnership defined: Two or more persons contributing money, property, or industry to a common fund, intending to divide profits.
- Doctrine of Delectus Personae: The right to choose business associates.
- Partnership as a separate legal entity: Has its own distinct legal personality, separate from its partners.
- Piercing the veil of partnership: Partners can be held liable for partnership debts even if the partnership has sufficient assets, if a fraudulent or illegal action is undertaken.
Characteristics of a Contract of Partnership
- Consensual: Perfected by mere consent.
- Commutative: Each partner's contribution is equivalent to others.
- Principal: Does not depend on other contracts.
- Bilateral: Involves obligations and rights of both parties.
- Onerous: Each partner incurs a cost or obligation.
- Nominate: Has a specific name (e.g., partnership).
- Preparatory: It's a preliminary stage for other contracts.
- Informal/Consensual and Weak Juridical Personality: Can be constituted informally, and dissolves without specific procedure.
- Mutual Agency: Each partner acts as an agent for the others.
- Unlimited Liability: Partners are responsible for all partnership obligations.
Elements of a Partnership
- Two or more persons
- Contribution of money, property, or industry
- Intent to divide profits
Rules in Determining a Partnership
- Clear intent governs.
- If intent unclear, consider these rules:
- Separate to third parties
- Co-ownership, joint possession doesn't imply partnership
- Sharing of gross returns does not mean a partnership.
- A share in profits suggests partnership (unless it's payment as a debt, wages, rent, etc.)
Kinds of Partnerships
- Universal Partnership
- All present properties: All current property.
- All profits: Profits from anything.
- Particular Partnership: Specific undertaking or profession.
Universal Partnership
- A universal partnership generally is a donation to each other of the partner's properties (or at least their usufruct).
Object and Purpose of Partnership
- Lawful purpose
- Mutual benefit or interest
Form of Contract of Partnership
- General rule: No specific form required
- Exceptions:
- Immovable property or real rights; public instrument needed and must be recorded with the Securities and Exchange Commission.
- Partnerships with Php3,000 or more capital (money or property) need a public instrument and be recorded
Kinds of Partners
- Capitalist: Contributes funds.
- Industrial: Contributes skills or labor.
- Capitalist-industrial: Contributes money/property and labor.
Obligations of a Partner to the Partnership
- Contribute promised money/property/industry
- Be liable for losses,
- Render true information
- Avoid competing businesses (with similar or the same business).
Partner Obligations to Other Partners
- Duty to render true and full information
- Duty not to engage in business that competes with the partnership
- Duty to compensate for partnership losses caused by their fault.
- Duty to observe good faith (and not do things against others in the partnership that would be detrimental to business
Dissolution and Winding-up
- Dissolution: Change in the relationship.
- Causes of dissolution: Judicial, non-judicial or by operation of law.
- Winding up: Settling the business after dissolution.
Liability of a Partner to Third Parties
- Solidary liability: Partners jointly and severally accountable.
- Wrongful acts: Partnership liable for partner's wrongdoings, even outside business.
- Misapplication of funds: Partnership liable for partner mismanagement.
- Criminal liability: Limited (no liability unless they are involved in an illegal act).
Limited Partnerships
- Formed following specific legal requirements
- Distinctions between General and Limited partners
- Limited partners have limited liability.
- Limited partners cannot manage the partnership.
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Description
Explore the key concepts of partnership law including definitions, characteristics, and legal implications. This quiz covers essential principles such as the Doctrine of Delectus Personae and the piercing of the veil of partnership, crucial for understanding the legal framework surrounding partnerships.
