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PARTNERSHIP - by the contract of partnership, 2 or more persons bind themselves to contribute money, property or industry to a common fund, with the intention of dividing the profits among themselves ESSENTIAL FEATURES: 1. There must be a valid contract 2. The parties must have legal capacity to enter into the contract 3. There must be a mutual contribution of money, property, or industry to a common fund 4. The object must be lawful 5. The purpose or primary purpose must be to obtain profits and divide the same among the parties PARTNERSHIP DISTINGUISHED FROM CO-OWNERSHIP AND CORPORATION Creation PARTNERSHIP reated by a contract, my mere agreement of the parties !as a juridical personality separate and distinct from that of each partner #eali$ation of profits "o limitation CO-OWNERSHIP reated by law CORPORATION reated by law

Juridical personality Purpose Duration/ Term of existence Disposal/ Transferability of interest Power to act with 3rd persons

"one

ommon enjoyment of a thing or right 1) years ma*imum

!as a juridical personality separate and distinct from that of each partner %epends on &'( 5) years ma*imum, e*tendible to not more than 5) years in any one instance -toc.holder has a right to transfer shares without prior consent of other stoc.holders 1anagement is vested with the 2oard of %irectors

Effect of deat h Dissolution

+artner may not dispose of his individual interest unless agreed upon by all partners (n absence of stipulation to contrary, a partner may bind partnership /each partner is agent of partnership0 %eath of partner results in dissolution of partnership 1ay be dissolved at any time by the will of any or all of the partners 1inimum of 2 persons 3rom the moment of e*ecution of contract of partnership

o,owner may freely do so

o,owner cannot represent the co, ownership

No. of incorporators Commence ment of !uridical personality

%eath of co,owner does not necessarily dissolve co, ownership 1ay be dissolved anytime by the will of any or all of the co, owners 1inimum of 2 persons 3rom date of issuance of certificate of incorporation by the -4

%eath of stoc.holder does not dissolve corporation an only be dissolved with the consent of the state 1inimum of 5 incorporators

NO PRESUMPTION OF PARTNERSHIP FROM RECEIPT OF PROFITS: 1. &s debt by installment 2. &s wages or rent 3. &s annuity 4. &s interest on loan 5. &s consideration for sale of goodwill of business5other property by installments 1

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SIMILARITIES BETWEEN A PARTNERSHIP AND A CORPORATION 1. 2oth have juridical personality separate and distinct from that of the individuals composing it 2. 2oth can only act through agents 3. 2oth organi$ations are composed of an aggregate of individuals /e*cept corporation sole0 4. 2oth distribute profits to those who contribute capital to the business 5. 2oth can only be organi$ed when there is a law authori$ing their organi$ation 6. 2oth are ta*able as a corporation EFFECTS OF UNLAWFUL PARTNERSHIP 1. The contract is void ab initio and the partnership never e*isted in the eyes of the law 2. The profits shall be confiscated in favor of the government 3. The instruments or tools and proceeds of the crime shall also be forfeited in favor of the government 4. The contributions of the partners shall not be confiscated unless they fall under no. 3 FORM OF PARTNERSHIP CONTRACT GENERAL RULE7 "o special form is re8uired for the validity of the contract EXCEPTIONS: ". #here immo$able property/real ri%hts are contributed a. +ublic instrument is necessary b. (nventory of the property contributed must be made, signed by the parties and attached to the public instrument otherwise it is 9'(% &. #here capital is P3'((( or more' in money or property a. +ublic instrument is necessary b. 1ust be registered with -4 CLASSIFICATIONS OF PARTNERSHIP 1. As to e te!t o" #ts s$%&e't ()tte* ). UNIVERSAL PARTNERSHIP i. UNIVERSAL PARTNERSHIP OF ALL PRESENT PROPERTY - comprises the following7 a0 +roperty which belonged to each of the partners at the time of the constitution of the partnership b0 +rofits which they may ac8uire from all property contributed ii. UNIVERSAL PARTNERSHIP OF PROFITS - comprises all that the partners may ac8uire by their industry or wor. during the e*istence of the partnership Note: Persons who are prohibited from giving donations or advantage to each other cannot enter into a universal partnership

b. PARTICULAR PARTNERSHIP , has for its objects7

i. ii. iii. iv. %eterminate things Their use or fruits -pecific underta.ing 4*ercise of profession or vocation

+. As to ,#)%#,#t- o" .)*t!e*s a. GENERAL PARTNERSHIP , consists of general partners who are liable pro rata and subsidiarily and sometimes solidarily with their separate property for partnership debts b. LIMITED PARTNERSHIP , one formed by 2 or more persons having as members one or more general partners and one or more limited partners, the latter not being personally liable for the obligations of the partnership /. As to 0$*)t#o! a. PARTNERSHIP AT WILL , one in which no time is specified and is not formed for a particular underta.ing or venture which may be terminated anytime by mutual agreement

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b. PARTNERSHIP WITH A FIXED TERM , the term for which the partnership is to
e*ist is fi*ed or agreed upon or one formed for a particular underta.ing 1. As to ,e2),#t- o" e #ste!'e a. DE 3URE PARTNERSHIP , one which has complied with all the legal re8uirements for its establishment b. DE FACTO , one which has failed to comply with all the legal re8uirements for its establishment 4. As to *e.*ese!t)t#o! to ot5e*s a. ORDINARY OR REAL PARTNERSHIP , one which actually e*ists among the partners and also as to 3rd persons b. OSTENSIBLE OR PARTNERSHIP BY ESTOPPEL , one which in reality is not a partnership but is considered a partnership only in relation to those who, by their conduct or omission, are precluded to deny or disprove its e*istence 6. As to .$%,#'#ta. SECRET PARTNERSHIP , one wherein the e*istence of certain persons as partners is not avowed or made .nown to the public by any of the partners b. OPEN OF NOTORIOUS PARTNERSHIP , one whose e*istence is avowed or made .nown to the public by the members of the firm 7. As to .$*.ose a. COMMERCIAL OR TRADING PARTNERSHIP , one formed for the transaction of %$s#!ess b. PROFESSIONAL OR NON TRADING PARTNERSHIP , one formed for the e*ercise of a profession 8INDS OF PARTNERS 1. CAPITALIST , one who contributes money or property to the common fund 2. INDUSTRIAL , one who contributes only his industry or personal service 3. GENERAL , one whose liability to 3rd persons e*tends to his separate property 4. LIMITED , one whose liability to 3rd persons is limited to his capital contribution 5. MANAGING , one who manages the affairs or business of the partnership 6. LI9UIDATING , one who ta.es charge of the winding up of partnership affairs upon dissolution 7. PARTNERS BY ESTOPPEL , one who is not really a partner but is liable as a partner for the protection of innocent 3rd persons 8. CONTINUING PARTNER , one who continues the business of a partnership after it has been dissolved by reason of the admission of a new partner, retirement, death or e*pulsion of one of the partners 9. SURVIVING PARTNER , one who remains after a partnership has been dissolved by death of any partner 10. SUBPARTNER , one who is not a member of the partnership who contracts with a partner with reference to the latter:s share in the partnership 11. OSTENSIBLE , one who ta.es active part and .nown to the public as partner in the business 12. SECRET , one who ta.es active part in the business but is not .nown to be a partner by outside parties 13. SILENT , one who does not ta.e any active part in the business although he may be .nown to be a partner 14. DORMANT , one who does not ta.e active part in the business and is not .nown or held out as a partner RELATIONS CREATED BY A CONTRACT OF PARTNERSHIP 1. #elations among the partners themselves 2. #elations of the partners with the partnership 3. #elations of the partnership with 3rd persons with whom it contracts

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4. #elations of the partners with such 3rd persons

OBLIGATIONS OF THE PARTNERS A. OBLIGA ION! O" #$ PA% N$%! A&ONG #$&!$L'$! O%,#2)t#o!s :#t5 *es.e't to 'o!t*#%$t#o! o" .*o.e*t-: 1. To contribute at the beginning of the partnership or at the stipulated time the money, property or industry which he may have promised to contribute 2. To answer for eviction in case the partnership is deprived of the determinate property contributed 3. To answer to the partnership for the fruits of the property the contribution of which he delayed, from the date they should have been contributed up to the time of actual delivery 4. To preserve said property with the diligence of a good father of a family pending delivery to partnership 5. To indemnify partnership for any damage caused to it by the retention of the same or by the delay in its contribution E""e't o" F)#,$*e to 'o!t*#%$te .*o.e*t- .*o(#se0: 1. +artners becomes ipso jure a debtor of the partnership even in the absence of any demand 2. #emedy of the other partner is not rescission but specific performance with damages from defaulting partner O%,#2)t#o!s :#t5 *es.e't to 'o!t*#%$t#o! o" (o!e- )!0 (o!e- 'o!;e*te0 to .e*so!), $se 1. To contribute on the date fi*ed the amount he has underta.en to contribute to the partnership 2. To reimburse any amount he may have ta.en from the partnership coffers and converted to his own use 3. To pay for the agreed or legal interest, if he fails to pay his contribution on time or in case he ta.es any amount from the common fund and converts it to his own use 4. To indemnify the partnership for the damages caused to it by delay in the contribution or conversion of any sum for his personal benefits PROHIBITION AGAINST ENGAGING IN BUSINESS P)*+,-,T,*N INDUSTRIAL PARTNER (ndustrial partner cannot engage in business /w5n same line of business with the partnership0 unless partnership e*pressly permits him to do so apitalist partners may7 1. 4*clude him from the firm, or 2. &vail themselves of the benefits which he may have obtained 3. %amages, in either case Note: It is believed that industrial partners are also entitled to the remed( granted since the( are e)uall( pre*udiced CAPITALIST PARTNER apitalist partner cannot engage in business /with same .ind of business with the partnership0 for his own account, unless there is a stipulation to the contrary apitalist partner in violation shall7 1. 2ring to common fund any profits accruing to him from said transaction, and 2. 2ear all losses

)E.ED/

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O%,#2)t#o!s :#t5 *es.e't to 'o!t*#%$t#o! to .)*t!e*s5#. ').#t), 1. +artners must contribute e8ual shares to the capital of the partnership unless there is stipulation to contrary 2. +artners /capitalist0 must contribute additional capital (n case of imminent loss to the business of the partnership and there is no stipulation otherwise; refusal to do so shall create an obligation on his part to sell his interest to the other partners Re<$#s#tes: a. There is an imminent loss of the business of the partnership b. The majority of the capitalist partners are of the opinion that an additional contribution to the common fund would save the business c. The capitalist partner refuses deliberately to contribute /not due to financial inability0 d. There is no agreement to the contrary O%,#2)t#o! o" ()!)2#!2 .)*t!e*s :5o 'o,,e'ts 0e%t "*o( .e*so! :5o ),so o:e0 t5e .)*t!e*s5#. 1. &pply sum collected to 2 credits in proportion to their amounts 2. (f he received it for the account of partnership, the whole sum shall be applied to partnership credit Re<$#s#tes: a. There e*ist at least 2 debts, one where the collecting partner is creditor and the other, where the partnership is the creditor b. 2oth debts are demandable c. The partner who collects is authori$ed to manage and actually manages the partnership O%,#2)t#o! o" .)*t!e* :5o *e'e#;es s5)*e o" .)*t!e*s5#. '*e0#t 1. 'bliged to bring to the partnership capital what he has received even though he may have given receipt for his share only Re<$#s#tes: a. & partner has received in whole or in part, his share of the partnership credit b. The other partners have not collected their shares c. The partnership debtor has become insolvent RIS8 OF LOSS OF THINGS CONTRIBUTED -pecific and determinate things which are not fungible where only the use is contributed -pecific and determinate things the ownership of which is transferred to the partnership 3ungible things /consumable0 Things contributed to be sold Things brought and appraised in the inventory #is. is borne by partner #is. is borne by partnership #is. is borne by partnership #is. is borne by partnership #is. is borne by partnership

RULES FOR DISTRIBUTION OF PROFITS AND LOSSES DISTRIBUTION OF PROFITS DISTRIBUTION OF LOSSES #ith a%reement &ccording to agreement &ccording to agreement #ithout 1. -hare of capitalist partner is 1. (f sharing of profits is a%reement in proportion to his capital stipulated , apply to sharing contribution of losses 2. -hare of industrial partner is 2. (f no profit sharing not fi*ed , as may be just stipulated , losses shall be and e8uitable under the borne according to capital circumstances contribution 3. +urely industrial partner not liable for losses RIGHTS AND OBLIGATIONS WITH RESPECT TO MANAGEMENT Partner is appointed +ower of managing partner 9ote of partners mana%er in the articles of is irrevocable without representing controlling partnership just5lawful cause; interest necessary to 5

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P A R T N E R S H I P MEMORY AID revo.e power

Partner is appointed mana%er after constitution of partnership & or more persons entrusted with mana%ement of partnership without specification of duties/stipulation that each shall not act w/o the other0s consent 1tipulated that none of the mana%in% partners shall act w/o the consent of others

#evocable only when in bad faith +ower is revocable any time for any cause 4ach may e*ecute all acts of administration

(n case of opposition, decision of majority shall prevail; (n case of tie, decision of partners owning controlling interest shall prevail &bsence or disability of any one cannot be alleged unless there is imminent danger of grave or irreparable injury to partnership (f refusal of partner is manifestly prejudicial to interest of partnership, court:s intervention may be sought

oncurrence of all necessary for the validity of acts

.anner of mana%ement not a%reed upon

1. &ll partners are agents of the partnership 2. <nanimous consent re8uired for alteration of immovable property

Ot5e* *#25ts )!0 o%,#2)t#o!s o" .)*t!e*s: 1. #ight to associate another person with him in his share without consent of other partners /subpartnership0 2. #ight to inspect and copy partnership boo.s at any reasonable hour 3. #ight to a formal account as to partnership affairs /even during e*istence of partnership07 a. (f he is wrongfully e*cluded from partnership business or possession of its property by his copartners b. (f right e*ists under the terms of any agreement c. &s provided by art 1=)> d. ?henever other circumstances render it just and reasonable 4. %uty to render on demand true and full information affecting partnership to any partner or legal representative of any deceased partner or of any partner under legal disability 5. %uty to account to the partnership as fiduciary B. P%OP$% + %IG# ! O" A PA% N$% 1. !is rights in specific partnership property 2. !is interest in the partnership 3. !is right to participate in the management N)t$*e o" .)*t!e*=s *#25t #! s.e'#"#' .)*t!e*s5#. .*o.e*t1. 48ual right to possession 2. #ight not assignable 3. #ight limited to share of what remains after partnership debts have been paid N)t$*e o" .)*t!e*=s *#25t #! t5e .)*t!e*s5#. 1. -hare of profits and surplus ,. OBLIGA ION O" PA% N$%! -I # %$GA%. O /%. P$%!ON! 1. 4very partnership shall operate under a firm name. +ersons who include their names in the partnership name even if they are not members shall be liable as a partner 2. &ll partners shall be liable for contractual obligations of the partnership with their property, after all partnership assets have been e*hausted a. +ro rata b. -ubsidiary

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3. &dmission or representation made by any partner concerning partnership affairs within scope of his authority is evidence against the partnership 2. Notice to partner of any matter relatin% to partnership affairs operates as notice to partnership except in case of fraud3 a. @nowledge of partner acting in the particular matter ac8uired while a partner b. @nowledge of the partner acting in the particular matter then present to his mind c. @nowledge of any other partner who reasonably could and should have communicated it to the acting partner 5. +artners and the partnership are solidary liable to 3rd persons for the partner:s tort or breach of trust 4. 5iability of incomin% partner is limited to3 a. !is share in the partnership property for e*isting obligations b. !is separate property for subse8uent obligations >. reditors of partnership preferred in partnership property A may attach partner:s share in partnership assets =. 4very partner is an agent of the partnership POWER OF PARTNER AS AGENT OF PARTNERSHIP &cts for carrying on in the usual way the business of the 4very partner is an agent partnership and may e*ecute acts with binding effect even if he has no authority 4*cept7 when 3rd person has .nowledge of lac. of authority 1. &ct w5c is not apparently for the carrying of business %oes not bind partnership in the usual way unless authori$ed by other partners &. 6cts of strict dominion or ownership3 a. &ssign partnership property in trust for creditors b. c. d. e. f. %ispose of good,will of business %o an act w5c would ma.e it impossible to carry on ordinary business of partnership onfess a judgement 4nter into compromise partnership claim or liability -ubmit partnership arbitration claim concerning or liability a to

g. #enounce claim of partnership &cts in contravention of a restriction on authority

+artnership not liable to 3rd persons having actual or presumptive .nowledge of the restrictions

EFFECTS OF CONVEYANCE OF REAL PROPERTY BELONGING TO PARTNERSHIP Title in partnership name, Con$eyance passes title but partnership can reco$er onveyance in partnership if3 name 1. onveyance was not in the usual way of business, or 2. 2uyer had .nowledge of lac. of authority Title in partnership name, Con$eyance does not pass title but only e7uitable >

CIVIL LAW REVIEWER onveyance name in

P A R T N E R S H I P MEMORY AID

partner:s interest' unless3 1. onveyance was not in the usual way of business, or

2. 2uyer had .nowledge of lac. of authority Title in name of 15 more Con$eyance passes title but partnership can reco$er partners, onveyance in if3 name if partner5partners in whose name title stands 1. onveyance was not in the usual way of business, or 2. 2uyer had .nowledge of lac. of authority Title in name of 15more5all onveyance will only pass e8uitable interest partners or 3rd person in trust for partnership, onveyance e*ecuted in partnership name of in name of partners Title in name of all partners, onveyance will pass title onveyance in name of all partners PARTNER BY ESTOPPEL> PARTNERSHIP BY ESTOPPEL P)*t!e* %- esto..e, by words or conduct' he does any of the ff.3 1. %irectly represents himself to anyone as a partner in an e*isting partnership or in a non,e*isting partnership 2. (ndirectly represents himself by consenting to another representing him as a partner in an e*isting partnership or in a non e*isting partnership E,e(e!ts to est)%,#s5 ,#)%#,#t- )s ) .)*t!e* o! 2*o$!0 o" esto..e,: 1. %efendant represented himself as partner5represented by others as such and not denied5refuted by defendant 2. +laintiff relied on such representation 3. -tatement of defendant not refuted L#)%#,#t#es #! esto..e, &ll partners consented to representation "o e*isting partnership A all those represented consented; "ot all partners of e*isting partnership consents to representation "o e*isting partnership A not all represented consented; "one of partners in e*isting partnership consented +artnership is liable +erson who represented himself A all those who made representation liable pro,rata5jointly +erson who represented himself liable A those who made5consented to representation separately liable

.. %$!PON!IBILI + O" PA% N$%!#IP O PA% N$%! 1. To refund the amounts disbursed by partner in behalf of the partnership B corresponding interest from the time the e*penses are made /loans and advances made by a partner to the partnership aside from capital contribution0 2. To answer for obligations partner may have contracted in good faith in the interest of the partnership business 3. To answer for ris.s in conse8uence of its management DISSOLUTION AND WINDING UP DISSOLUTION , change in the relation of the partners caused by any partner ceasing to be associated in the carrying on of the business; partnership is not terminated but continues until the winding up of partnership affairs is completed WINDING UP , process of settling the business or partnership affairs after dissolution

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CAUSES OF DISSOLUTION: ". #ithout $iolation of the a%reement between the partners a. 2y termination of the definite term5 particular underta.ing specified in the agreement b. 2y the e*press will of any partner, who must act in good faith, when no definite term or particular underta.ing is specified c. 2y the e*press will of all the partners who have not assigned their interest5 charged them for their separate debts, either before or after the termination of any specified term or particular underta.ing d. 2y the e*pulsion of any partner from the business bonafide in accordance with power conferred by the agreement 2. (n contravention of the agreement between the partners, where the circumstances do not permit a dissolution under any other provision of this article, by the e*press will of any partner at any time 3. 2y any event which ma.es it unlawful for business to be carried on5for the members to carry it on for the partnership 4. Coss of specific thing promised by partner before its delivery 5. %eath of any partner 6. (nsolvency of a partner5partnership >. ivil interdiction of any partner =. %ecree of court under art 1=31 GROUNDS FOR DISSOLUTION BY DECREE OF COURT ?)*t 1@/1A 1. +artner declared insane in any judicial proceeding or shown to be of unsound mind 2. (ncapacity of partner to perform his part of the partnership contract 3. +artner guilty of conduct prejudicial to business of partnership 4. ?illful or persistent breach of partnership agreement or conduct which ma.es it reasonably impracticable to carry on partnership with him 5. 2usiness can only be carried on at a loss 6. 'ther circumstances which render dissolution e8uitable 8pon application by purchaser of partner0s interest3 1. &fter termination of specified term5particular underta.ing 2. &nytime if partnership at will when interest was assigned5charging order issued EFFECTS OF DISSOLUTION: A. A0 #O%I + O" PA% N$% O BIN. PA% N$%!#IP Ge!e*), R$,e7 &uthority of partners to bind partnership is terminated E 'e.t#o!: 1. ?ind up partnership affairs 2. omplete transactions not finished 9$),#"#')t#o!s: 1. W#t5 *es.e't to .)*t!e*s a. &uthority of partners to bind partnership by new contract is immediately terminated when dissolution is not due to & T, %4&T! or ("-'C94" D /&%(0 of a partner /art 1=330; b. ,f due to 6D,' partners are liable as if partnership not dissol$ed' when the ff. concur3 i. (f cause is & T of partner, acting partner must have .nowledge of such dissolution ii. (f cause is %4&T! or ("-'C94" D, acting partner must have .nowledge5 notice +. W#t5 *es.e't to .e*so!s !ot .)*t!e*s ?)*t 1@/1A a. Partner continues to bind partnership e$en after dissolution in ff. cases3 /10 Transactions in connection to winding up partnership affairs5completing transactions unfinished 9&: Transactions which would bind partnership if not dissol$ed' when the other party/obli%ee3 (a) -ituation 1 ,

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i. !ad e*tended credit to partnership prior to dissolution A ii. !ad no .nowledge5notice of dissolution, or /b0 -ituation 2 , i. %id not e*tend credit to partnership ii. !ad .nown partnership prior to dissolution iii. !ad no .nowledge5notice of dissolution5fact of dissolution not advertised in a newspaper of general circulation in the place where partnership is regularly carried on b. Partner cannot bind the partnership anymore after dissolution3 /10 ?here dissolution is due to unlawfulness to carry on with business /e*cept7 winding up of partnership affairs0 /20 ?here partner has become insolvent 93: #here partner unauthori;ed to wind up partnership affairs' except by transaction with one who3 /a0 -ituation 1 , i. !ad e*tended credit to partnership prior to dissolution A ii. !ad no .nowledge5notice of dissolution, or /b0 -ituation 2 , i. %id not e*tend credit to partnership prior to dissolution ii. !ad .nown partnership prior to dissolution iii. !ad no .nowledge5notice of dissolution5fact of dissolution not advertised in a newspaper of general circulation in the place where partnership is regularly carried on B. .I!,#A%G$ O" LIABILI + F Dissolution does not dischar%e existin% liability of partner' except by a%reement between3 /10 partner himself /20 person5partnership continuing the business /30 partnership creditors R#25ts o" .)*t!e* :5e*e 0#sso,$t#o! !ot #! 'o!t*);e!t#o! o" )2*ee(e!t 1. &pply partnership property to discharge liabilities of partnership 2. &pply surplus, if any to pay in cash the net amount owed to partners R#25ts o" .)*t!e* :5e*e 0#sso,$t#o! #! 'o!t*);e!t#o! o" )2*ee(e!t ". Partner who did not cause dissolution wron%fully3 a. &pply partnership property to discharge liabilities of partnership b. &pply surplus, if any to pay in cash the net amount owed to partners c. (ndemnity for damages caused by partner guilty of wrongful dissolution d. ontinue business in same name during agreed term e. +osses partnership property if business is continued &. Partner who wron%ly caused dissolution3 a. ,f business not continued by others , apply partnership property to discharge liabilities of partnership A receive in cash his share of surplus less damages caused by his wrongful dissolution b. ,f business continued by others , have the value of his interest at time of dissolution ascertained and paid in cash5secured by bond A be released from all e*isting5future partnership liabilities R#25ts o" #!&$*e0 .)*t!e* :5e*e .)*t!e*s5#. 'o!t*)'t #s *es'#!0e0 o! 2*o$!0 o" "*)$0B(#s*e.*ese!t)t#o! %- 1 .)*t-: 1. #ight to lien on surplus of partnership property after satisfying partnership liabilities 2. #ight to subrogation in place of creditors after payment of partnership liabilities 3. #ight of indemnification by guilty partner against all partnership debts A liabilities ,. !$ L$&$N O" A,,O0N ! B$ -$$N PA% N$%! Assets o" t5e .)*t!e*s5#.: 1. +artnership property /including goodwill0

1)

CIVIL LAW REVIEWER 2. ontributions of the partners

P A R T N E R S H I P MEMORY AID

O*0e* o" A..,#')t#o! o" Assets: 1. +artnership creditors 2. +artners as creditors 3. +artners as investors , return of capital contribution 4. +artners as investors , share of profits if any .. -#$N B0!IN$!! O" .I!!OL'$. PA% N$%!#IP I! ,ON IN0$.: 1. reditors of old partnership are also creditors of the new partnership which continues the business of the old one w5o li8uidation of the partnership affairs 2. reditors have an e8uitable lien on the consideration paid to the retiring 5deceased partner by the purchaser when retiring5deceased partner sold his interest w5o final settlement with creditors 3. )i%hts if retirin%/estate of deceased partner3 a. To have the value of his interest ascertained as of the date of dissolution b. To receive as ordinary creditor the value of his share in the dissolved partnership with interest or profits attributable to use of his right, at his option R#25t to A''o$!t , may be exercised by3 1. ?inding up partner 2. -urviving partner 3. +erson5partnership continuing the business M)!!e* o" W#!0#!2 U. 1. Gudicially 2. 4*trajudicially Pe*so!s A$t5o*#Ce0 to W#!0 U. 1. +artners designated by the agreement 2. (n absence of agreement, all partners who have not wrongfully dissolved the partnership 3. Cegal representative of last surviving partner LIMITED PARTNERSHIP CHARACTERISTICS 1. 3ormed by compliance with statutory re8uirements 2. 'ne or more general partners control the business 3. 'ne or more general partners contribute to the capital and share in the profits but do not participate in the management of the business and are not personally liable for partnership obligations beyond their capital contributions 4. 1ay as. for the return of their capital contributions under conditions prescribed by law 5. +artnership debts are paid out of common fund and the individual properties of general partners DIFFERENCES BETWEEN GENERAL AND LIM#TED PARTNERBPARTNERSHIP GENERAL LIMITED +ersonally liable for partnership Ciability e*tends only to his capital obligations contributions ?hen manner of mgt. not agreed upon, "o participation in management all gen partners have an e8ual right in the mgt. of the business ontribute cash, property or industry ontribute cash or property only, not industry +roper party to proceedings by5against "ot proper party to proceedings partnership by5against partnership (nterest not assignable w5o consent of (nterest is freely assignable other partners "ame may appear in firm name "ame must appear in firm name

11

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P A R T N E R S H I P MEMORY AID "o prohibition against engaging in business %oes not have same effect; rights transferred to legal representative

+rohibition against engaging in business #etirement, death, insolvency, insanity of gen partner dissolves partnership

RE9UIREMENTS FOR FORMATION OF LIMITED PARTNERSHIP ". Certificate of articles of the limited partnership must state the ff. matters3 a. "ame of partnership B word Hltd.H b. haracter of business c. Cocation of principal place of business d. "ame5place of residence of members e. Term for partnership is to e*ist f. &mount of cash5value of property contributed g. &dditional contributions h. Time agreed upon to return contribution of limited partner i. -haring of profits5other compensation j. #ight of limited partner /if given0 to substitute an assignee .. #ight to admit additional partners l. #ight of limited partners /if given0 to priority for contributions m. #ight of remaining gen partners /if given0 or continue business in case of death, insanity, retirement, civil interdiction, insolvency n. #ight of limited partner /if given0 to demand5receive property5cash in return for contribution 2. ertificate must be filed with the -4 WHEN GENERAL PARTNER NEEDS CONSENTBRATIFICATION OF ALL LTD PARTNERS: 1. %o any act in contravention of the certificate 2. %o any act which would ma.e it impossible to carry on the ordinary business of the partnership 3. onfess judgement against partnership 4. +ossess partnership property5assign rights in specific partnership property other than for partnership purposes 5. &dmit person as general partner 6. &dmit person as limited partner , unless authori$ed in certificate >. ontinue business with partnership property on death, retirement, civil interdiction, insanity or insolvency of gen partner unless authori$ed in certificate SPECIFIC RIGHTS OF LIMITED PARTNERS: 1. #ight to have partnership boo.s .ept at principal place of business 2. #ight to inspect5copy boo.s at reasonable hour 3. #ight to have on demand true and full info of all things affecting partnership 4. #ight to have formal account of partnership affairs whenever circumstances render it just and reasonable 5. #ight to as. for dissolution and winding up by decree of court 6. #ight to receive share of profits5other compensation by way of income >. #ight to receive return of contributions provided the partnership assets are in e*cess of all its liabilities LOAN AND OTHER BUSINESS TRANSACTIONS WITH LIMITED PARTNERSHIP ". 6llowed a. Iranting loans to partnership b. Transacting business with partnership c. #eceiving pro rata share of partnership assets with general creditors if he is not also a general partner 2. +rohibited a. #eceiving5holding partnership property as collateral security b. #eceiving any payment, conveyance, release from liability if it will prejudice right of 3rd persons RE9UITES FOR RETURN OF CONTRIBUTION OF LIMITED PARTNER:

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CIVIL LAW REVIEWER -

P A R T N E R S H I P MEMORY AID

1. &ll liabilities of partnership have been paid5if not yet paid, at least sufficient to cover them 2. onsent of all members has been obtained 3. ertificate is cancelled5amended as to set forth withdrawal 5reduction of contribution LIABILITY OF LIMITED PARTNER AS CREDITOR 1. %eficiency in contribution 2. <npaid contribution AS TRUSTEE -pecific property stated as contributed but not yet contributed5wrongfully returned 1oney5other property wrongfully paid5 conveyed to him on account of his contribution

DISSOLUTION OF LIMITED PARTNERSHIP P*#o*#t- #! D#st*#%$t#o! o" Assets: 1. Those due to creditors, including limited partners 2. Those due to limited partners in respect of their share in profits5compensation 3. Those due to limited partners of return of capital contributed 4. Those due to general partner other than capital A profits 5. Those due to general partner in respect to profits 6. Those due to general partner for return of capital contributed AMENDMENTBCANCELLATION OF CERTIFICATE C)!'e,,e0: 1. +artnership is dissolved other than by reason of e*piry of term 2. &ll limited partners cease to be such A(e!0e0: 1. hange in name of partnership, amount5character of contribution of ltd. partner 2. -ubstitution of ltd. partner 3. &dmission of additional ltd. partner 4. &dmission of gen. partner 5. %eath, insolvency, insanity, civil interdiction of gen. partner A business is continued 6. hange in character of business >. 3alse5erroneous statement in certificate =. hange in time as stated in the certificate for dissolution of partnership5return of contribution E. Time is fi*ed for dissolution of partnership. #eturn of contribution if no orig. time specified 1). hange in other statement in certificate

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