Partnership Law Essentials

Partnership Law Examination

• The profits of an unlawful partnership are not always confiscated in favor of the government.
• A partnership begins from the moment of contract execution unless stipulated otherwise.
• A partnership generally has an unlimited duration, as a rule.
• Individuals guilty of adultery or concubinage are prohibited from entering a universal partnership, as are husband and wife, and those guilty of the same criminal offense when the partnership is in consideration of the same.
• Articles of universal partnership without nature specification only constitute a universal partnership of profits.
• In a limited partnership, limited partners are not bound by the partnership's obligations.
• A partner declared insane in a judicial proceeding is not a cause for extrajudicial dissolution, but termination of a definite term, a partner's express will in good faith, or the express will of all partners not assigning interests are all causes.
• In a limited partnership, the following is incorrect: A-services (limited partner); B-cash (general partner); C-services (general partner).
• A & B are capitalist partners contributing P13,500 each, with C as an industrial partner.
• A contractual liability of P49,950 was incurred; the partnership's assets are exhausted, leaving P8,825 unpaid.
• A, B, and C are liable to X, with C possibly seeking reimbursement from A and B after giving their share unless otherwise stipulated.
• X is an industrial partner in XYZ partnership, with a profit of P60,000 in 2023 and a loss of P30,000 in 2024, resulting in a net profit of P30,000.
• X is entitled to 1/3 of the profits.
• In this scenario, X will receive only P20,000 from the first year's profits and nothing from the second year.
• In ABC partnership, A, B, and C each contributed P30,000, P20,000, and P10,000 respectively, with D as an industrial partner.
• X, a customer and creditor of the firm for P180,000, can recover P60,000 from the firm and the remaining P120,000 jointly from all four partners.
• A partnership does not dissolve upon the death of a limited partner.
• Partner A contributes P30,000, Partner B contributes P15,000, and Partner C contributes services in the partnership.
• After settling all liabilities and expenses, only P18,000 remains as partnership assets, and A and B will each receive P9,000. C will receive none.
• In M & O Partnership, M is managing partner.
• N owes M P10,000 and N also owes M & O Partnership P30,000, obligations of N are due, and M collects P10,000 from the debt in M's name.
• The P10,000 collected from N will be applied fully to the debt N owes to M.
• F, G, H, and I are partners.
• Contributions: F, P50,000; G, P30,000; H, P20,000; I (industrial partner), services.
• The partnership's external obligations exceed net assets by P18,000: F, G, and H will each be liable for P6,000.
• The contract of partnership is consensual is perfected by mere consent and agreement.
• A partnership can conduct business under its own firm name, which may or may not include the partners' names.
• Partners must be impleaded in an action concerning property registered in the partnership's name due to their real interest.
• All partners manage the partnership if there's no agreement.
• If there is an agreement then one, some, or all partners will manage the partnership.
• Two ways to appoint a manager in a partnership include appointing one in the articles of incorporation or in a separate instrument.
• Partners must pay interest for failing to contribute on time, contribute what was promised, deliver fruits of promised deliveries, and are bound by warranties in eviction cases.
• A partner who refuses to contribute extra capital during imminent business loss, except an industrial partner, is obligated to sell their interest to other partners.
• Should specific, non-fungible items contributed for use be lost, the loss is borne by the contributing partner; for fungible or perishable items, the risk is borne by the partnership, and for items contributed to be sold, it is also the partnership.
• The partnership must refund disbursed amounts plus interest, answer for obligations made in good faith, and cover risks from management consequences. It does not have the responsibility to refund amounts disbursed with interest from the time of demand.
• Profit distribution in a partnership is dictated by the partnership agreement.
• Without a profit agreement, distribution is based on contribution.
• An oral agreement to form a partnership two years from today is governed by the Statute of Frauds.
• If one partner refuses to proceed at the arrival, the agreement cannot be enforced due to being merely oral
• A limited partnership formed in 2023. X(general) and Y & Z (limited). X and Z married in 2024. Thus, the marriage does not dissolve the form of the partnership.
• A, B, and C formed a limited partnership, with A as the general partner, B the limited partner, and C the industrial partner.
• After failing and exhausting assets, a P30,000 note remains.
• Only A, as the general partner, is liable for the P30,000 indebtedness.
• Property rights of a parter include rights in specific partnership property, interest in the partnership and right to participate in management.
• A, B, and C are partners in ABC Company, where D falsely represents himself as a partner to X, who extends P150,000 credit accordingly. B and C consented to D's reprsentation.
• As partners by estoppel, B, C, & D are all liable pro-rata to X.
• A and B are equal partner in AB Company.
• C represents himself as a partner to Z, who extends P50,000 credit to AB Company; B knows and consents in C's representation. B and C as partners by estoppel are liable to Z.
• A is a managing partner of ABC and Company. X owes A and ABC Company P20,000 each. A collects P10,000 from X and issues a receipt applying it to his personal credit.
• The amount received will be proportionally applied to both credits.
• One can be a partner by estoppel by representing themselves as a partner of an existing or non-existent partnership.
• Remedies for an industrial partner conducting their own business include capitalist partners excluding him from the firm with damages, or availing themselves of benefits obtained in violation.
• In regard to a capitalist engaging in their own business, the remedies for partners include excluding him from the firm with damages, with the capitalist partner bringing any profits accruing to them from the transaction plus personally bear all the losses.
• General partners must provide additional capital to save the partnership during an imminent loss.
• A partner's interest is personal property.
• A partner who doesn't actively participate in the business and is not publicly known is a dormant or secret partner.
• The partnership is insovlet, partnership creditors are prefered as it regards partnership property.
• A stock corporation’s shares are freely transferable without consent, while partnership interests need consent, but both have juridical personality distinct from owners.
• An insolvent partner's liabilities are paid in the following order: debts to separate creditors, debts to partnership creditors, and lastly, debts to partners via contribution.
• A partner owes a duty to inform his or her co-partners of all information regarding partnership.
• Profit sharing rules include the terms being set by the agreement, or the terms being proportionate to contribution amounts.
• An industrial partner is not liable for partnership losses, but is still liable to third persons for partnership obligations.
• Dissolution can be achieved in judicial or extrajudicial.
• A "limited partnership" has at least one general partner.
• A partner's assignment of interest in a partnership does not automatically dissolve the partnership.
• The following amounts contributed as capital must be in a public instrument and registered with the Securities and Exchange Commission: cash of property worth P3,000 or more.
• X, Y, and Z are equal partners in XYZ Partnership; X owes C P20,000 and XYX owes B P150,000; B attached all the assets of the XYX partnership worth P90,000, and X has land valued at P15,000.
• B has priority to the land of X to cover X's share of the P60,000 remaining liability.

Additional Info

• A partner who wrongfully terminates a partnership may be liable for damages to partners acting in good faith.
• Courts cannot dissolve partnerships upon a partner death.
• For dissolution cases, debts owing to creditors using partnership properties are prioritized.
• Dissolution does not absolve partners of existing liabilities including losses.
• A limited partner has the same rights as a general partner to demand true and full information of all things regarding the partnership but cannot loan money to the partnership,.and cannot receive collateral for personal loan claims if the assets of the partnership are insufficient to discharge partnership liabilities.
• Additionally, they cannot receive payment or release from liability from a a general partner if the assets discharge partnership liabilities.
• A corporation cannot become a member of a partnership without express authorization, which can be set forth in a statute or charter.
• A spouse can enter into a partnership with the other spouse, be it universal or limited.
• A stipulation excluding partners from profits and losses is voidable.
• A formal accounting of partnership affairs, right in specific partnership property, interest in the partnership, and right to participate in the management are included in the property rights of a partner.
• A partner's assignee has no inherent rights to interfere in management, demand information/accounts, or inspect partnerships affairs.
• Liquidating the partnership involves using administration of assets to terminate the business and discharge its obligations.
• There are no conclusive reasons for dissolution of a partnership as consent from the partners is not necessary.
• Dissolution of a partnership due to death holds the assignees.
• The receipt of business profits is not conclusive evidence one is a partner.
• Intention to divide profits among members is necessary, but needn't be equal.
• Partner by estoppel is known as quasi-partner.
• Partners choose who enters a partnership, and whether they will remain.
• After liquidation, the assets of a partnership are distributed in the following order: to outside creditors, to partners for advances, to partners for capital contributions, and to partners for profits.
• An industrial partner contributes services and the capitalist provides capital.
• Industrial partners cannot engage in the same type of commercial activites.
• Every partner acts as an agent of the partnership concerning its purpose, and the parntership is accountable for their actions.
• A certificate is required upon the limited partner death.
• The debts are distributed pro rata with interest.
• When cash or property is exchanged as capital it shall be acknowledged in a public instrument.
• Profits can only be distributed according to agreement.
• A partnership is an agent in any form.
• A managing partner may execute acts of administration.
• A stipulation excluding partner is in profits/ or losses is voidable.