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Partnership Simplified- Part 1 by Atty. Cada

Partnership Simplified- Part 1 by Atty. Cada

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PARTNERSHIP SIMPLIFIED- PART 1

1. In order that there may be a partnership, two or more persons must agree to unite their money, property, labor or skill in carrying out a legitimate business for profit. Two or more persons may also form a partnership for the exercise of their profession. 2. A partnership is consensual (it is perfected by mere consent, when two or more persons agree expressly or impliedly), bilateral (it is entered into by two or more persons with reciprocal rights and obligations), principal (it does not depend for its validity or existence upon some other contract), commutative (the undertaking of one partner is regarded as equivalent of that of the other partners), preparatory (it is entered into in order that such persons may lawfully engage in business in order to realize profits which will then be divided among themselves), onerous (one person contributes something in order that he may share in the profit), and nominate (it has a special name or designation under the law). 3. A partnership duly formed under the law is a juridical person which has a personality separate and distinct from the persons composing the partnership. It may acquire and possess property of all kinds, incur obligations and bring suits or become defendants in suits brought before the courts of law. 4. In order to establish the existence of a partnership, the following essential features must be proven to exist: 1) a valid contract; 2) legal capacity of the persons forming the partnership; 3) mutual contribution of money, property or industry to a common business; 4) its business must be lawful; and 5) the primary purpose must be obtain profits and to divide the same among the parties. Article 1769 sets out the rules in determining the existence of a partnership and enumerates certain features, which, taken alone would not prove the existence of a partnership: a. Persons who are not partners as between themselves are not partners as to third persons. However, whether or not a partnership exists depends upon how the parties conduct themselves since third persons may be misled into believing that the parties are partners because of the latter’s acts, consent of representation, thus said parties become subject to the liabilities of partners to third persons who in good faith deal with such parties, in accordance with the doctrine of estoppel;

000. The essential elements of a partnership are as follows: lawful object and common benefit or interest of the partners. the contract of partnership must appear in a public instrument and said contract must be recorded or registered with the Securities and Exchange Commission. Consequently. interest on loan. if said unlawful partnership is dissolved by a judicial decree. 7. or as consideration for the sale of a goodwill of a business. annuity. since in a partnership. c. to third persons. the contract of partnership must be in a public . but this does not of itself establish a partnership even if these persons derived profits from the joint ownership or joint possession of said undivided thing. 8. however. what is being divided among the partners is the net profits after paying off all the partnership liabilities. 5. unless immovable property or real rights are contributed in which case the execution of a public instrument is required. is contributed by any of the partners. whether in money or property. which may be contradicted if it can be proven that such profits were received in payment of a debt.00 or more. a contract of partnership may be made orally or in writing. the parties are free to choose the business or transaction they want to enter into provided this is lawful and for the common benefit of the parties. because in a partnership. If the purpose of the partnership is unlawful. regardless of value. As a general rule. does not prevent the formation of a partnership nor affect its liability. rents. the instrument or tools and proceeds of the crime shall likewise be forfeited in favor of the government. and that of the partners. the profits must be derived from the operation of the business or undertaking by the parties to the partnership. and d. 6. wages. Co-ownership or co-possession exists whenever the ownership or possession of an undivided thing belongs to different persons. The receipt by a party of his share in the profits of a business is a prima facie evidence of the existence of a partnership. Since a partnership is really a contract between the parties. Failure to comply with these requirements. its profits shall be confiscated in favor of the government. Where immovable property. Where the capital of the partnership is P3. The mere sharing of gross returns does not indicate the existence of a partnership. then the contract is void ab initio.b. and even the contributions of the partners shall be confiscated should they fall under the instrument or tools and proceeds of the crime.

12. With regards third persons. with the intention to divide the same. a partnership may be general (one consisting of general partners who are liable pro rata and subsidiarily or at times. are not partnerships because they do not have juridical personality. insofar as the contracting parties are concerned. as well as the profits which they may acquire from these properties. among themselves. however. and attached to the public instrument. A universal partnership of all present property in a partnership in which the partners contribute all properties belonging to them at the time of the constitution of the partnership to a common fund or business. or the exercise of a profession or vocation). Failure to comply with these requirements will render the contract of partnership void. the property which belonged to each of them at the time of the constitution of the partnership and the profits which they may acquire from said property contributed become the common property of all the . Thus. Immovable property or any interest therein may be acquired in the partnership name since it has a juridical personality separate from and distinct from the partners and title so acquired can thus be conveyed only in the partnership name. Delectus personae may be defined as the right of a person to choose whom he wants to associate with. In other words. 9. 11. signed by the parties. 10.instrument and an inventory of the property contributed must be made. and shall be governed by the provisions on co-ownership. The element of delectus personae exists in a partnership. As to liability of partners. associations whose articles are kept secret among the members and wherein they contract in their own name with third persons. A partnership is thus formed by the voluntary agreement between the parties and it is a must that the parties be fully apprised of the agreement and all the matters affecting the partnership since he is considered the agent of his co-partners and of the partnership in respect of all the partnership transactions. in a universal partnership of all present property. a de facto partnership or partnership by estoppel may exist. a partnership is either universal (one which refers to all the present property or to all profits) or particular (one which has for its object determinate things. or specific undertaking. solidarity with their separate property for partnership obligations) or limited (one formed by two or more persons having as members one or more general partners and one or more limited partners (who are not personally liable for the partnership obligations). their use or fruits. As to subject matter.

or donation is void. any stipulation including the properties subsequently acquired by the partners through inheritance. hence. or those partnerships created for the purpose of carrying out a specific project. with the obligation to preserve the property’s form and substance) of movable or immovable property which each of the partners may possess at the time of the celebration of the contract. fruits of the properties subsequently acquired by inheritance. With regard to future properties. including the usufruct (or the right to enjoy or use the property of another. Fruits of property subsequently acquired by the partners are likewise not included. engineers) who associate themselves in the practice of their profession. lawyers. Upon the dissolution of the partnership the properties are returned to the partners who own them. Persons who are prohibited by law to give donations cannot enter into a universal partnership. A universal partnership of profits is one which comprises all those properties which the partners may acquire by their industry or work during the existence of the partnership. 15. Only those profits which the partners may acquire by their work or industry are included in the partnership while those profits acquired by the partners through chance such as lottery are excluded. If the articles of partnership do not specify the nature of the partnership. 13. however. or the exercise of a profession or vocation. The partners retain their ownership over both their present and future properties and what is actually contributed to the partnership are the income and the use of the property. 14. form a particular partnership. or specific undertaking.partners. unless there is an express stipulation to the contrary. Examples of this kind of partnership are: partnership formed by professionals (like accountants. A partnership formed by persons who are prohibited from giving each other any donation or advantage is null and void. . it is presumed that the parties intended only a partnership of profits. Profits from other sources (that is. not from the properties contributed by the partners) will become common property only if there is a stipulation. their use or fruits. 16. legacy or donation may be included in the stipulation. A particular partnership is one which has for its object determinate things. legacy. A husband and wife may.

18. A partnership with a fixed term is one in which the term for which the partnership is to exist is fixed or agreed upon or one formed for a particular undertaking. the same is dissolved. parties who have agreed to become partners at some future time or upon the happening of a condition or arrival of a period. however. A future partnership thus exists. is a partnership at will. however. the rights and duties of the partners remain the same as they were at such termination but only insofar as is consistent with a partnership at will. a partnership at will. which at the moment has yet no juridical personality. it exists from the moment of the execution of the contract. With such continuation. is created which can be lawfully terminated at anytime by the express will of all the partners or any of them. Since a partnership is a consensual contract. 21. The expiration of the definite period agreed upon or the accomplishment of the particular undertaking specified will result to the automatic dissolution of the partnership. A partnership at will is one in which no time is fixed and is not formed for a particular undertaking and may thus be terminated anytime by mutual agreement of the partners. A contract of partnership creates for kinds of relationships: 1) among the partners. a partnership which is created for a fixed term or particular undertaking and which is continued by the partners after the termination of such term or particular undertaking in the absence of an express agreement. the old partnership is dissolved and a new one. and upon the expiration of the term or accomplishment of the particular undertaking. that is. unless otherwise stipulated. and 4) between the partners and third persons. 20. A capitalist partner is one who contributes money or property to the common fund while an industrial partner is one who contributes only his industry or personal service. 19. This partnership. every partner is obliged to . Thus. or by the will of any one partner. 2) between the partners and the partnership. perfected by mere consent or agreement of the parties. do not become partners until the happening of the condition or unless the period has arrived. If a partnership is continued beyond the fixed term. Therefore.17. 3) between the partnership and third persons. Regardless of the nature of his contribution to the partnership. may be extended expressly (by an agreement which is either written or oral) or impliedly (by mere continuation of the business by any of the partners after the termination of such term or particular undertaking without any settlement or liquidation).

the partnership acquires an exclusive right to the avail itself of his personal service. Every partner is obliged to contribute on the date due the amount he has undertaken to contribute to the partnership and to reimburse any amount he may have taken from the common fund and converted to his own use. done in accordance with the manner prescribed in the contract of partnership. if an industrial partner engages in . is required to determine how much has been contributed by the partners and in the absence of stipulation. the appraisal of the value of said goods.contribute at the beginning of the partnership or at the stipulated time the money. He is liable to pay both interest and damages counted from the time he should have complied with his obligation to contribute the sum of money or from the time he converted the amount to his own use. Moreover. he is likewise liable to the partnership for the fruits of the property the contribution of which he delayed from the time they should have been contributed up to the time of actual delivery even in the absence of any demand. When what is to be contributed by the partner consists of goods. He is liable to pay the agreed or legal interest should he fail to pay his contribution on time or in case he takes any amount from the common fund and converts it to his own use. he is obliged to indemnify the partnership for the damages caused to the partnership for his delay in the contribution or by reason of his having converted any sum from the common fund for his personal benefit. property or industry which he may have promised to contribute to the partnership. An industrial partner is one who contributes only his industry or personal service to the partnership and he becomes a debtor of the partnership for his work or services from the moment of the commencement of the partnership. Hence. 23. He is likewise liable for eviction in case the partnership is deprived of the property contributed. 22. He is obliged to indemnify the partnership for any damage caused to the partnership by the retention of the same or by the delay in its contribution. 24. Thus. Moreover. unless the contrary is stipulated. he is obliged to preserve said property with the diligence of a good father of a family pending delivery to the partnership. If a partner fails to contribute the property which he promised. and the other partners can file an action against said defaulting partner for specific performance with damages. If he promised to contribute specific property. without need of any demand. he becomes liable as a debtor of the partnership. by experts chosen by the partners and according to current prices.

Article 1792 explains the obligation of a managing partner who collects debts. A capitalist partner is one who contributes money or property to the common fund. An industrial partner is absolutely prohibited from engaging in business fro himself without the express permission of the partnership. 29. A managing partner is one who manages the business of the partnership. 27. In order that this article shall apply. appointed either in the articles of partnership or after the constitution of the partnership. with a right to damages in either case. the capitalist partners. without the express permission of the partnership. such act of an industrial partner engaging in business for himself is considered as prejudicial to the interest of the partnership and the other partners as well. Obviously. have the right either to exclude him from the partnership or to avail themselves of the benefits which said industrial partner may have obtained. he is obliged to contribute an additional share to save the business. as well as the other industrial partners since they are equally prejudiced by the act of their co-industrial partner. 26. the majority of the capitalist partners being of the opinion that an additional contribution to the common fund would save the business. the industrial partner is exempted from the requirement to contribute and additional share because having already contributed his entire industry. If the capitalist partner refuses to do so (deliberately and not because he is financially unable). he cannot contribute anything further. he is not bound to contribute to the partnership more than what he agreed to contribute.business for himself. As a general rule. However. he shall be obliged to sell his interest to the other partners. in case of an imminent loss of the business of the partnership. and in the absence of an agreement to the contrary. there must therefore be at least two debts which are demandable and collected by the collecting partner who is duly authorized to manage and actually . 25. In the absence of any stipulation on the contribution of unequal shares to the common fund. He is a general partner or one whose liability to third persons extends to his separate property and may be either a capitalist or an industrial partner. it is presumed that the contribution of the partners shall be in equal shares. whether or not it is the same business in which the partnership is engaged or any kind of business. If the industrial partner engages in business for himself. 28.

Every partner who is guilty of fault or negligence in the fulfillment of his obligation shall be liable for damages suffered by the partnership. Under the law. In case of specific and determinate things which are not fungible and . Article 1795 provides the rules to be applied in determining who bears the risk of loss of the things contributed. even if the partner who received his share of the partnership credit had given a receipt for his share only. Where a person separately owes the partnership and the managing partner at the same time. If unusual profits are realized. that is. As a general rule. If.one where said managing partner is the creditor and the other one where the partnership is the creditor. 32. the manner of management has not been agreed upon and all the partners participate in the management of the partnership. the courts may equitably mitigate the partner at fault’s liability for damages. he can be required to share the amount he received from the partnership debtor with the other partners. Article 1793 applies where a a person owes the partnership a sum of money and a partner has received from said person his share. the damages caused by a partner to the partnership cannot be offset by the profits or benefits which he may have earned for the partnership by his industry. 30. however. the law allows the debtor to prefer the payment of the managing partner’s credit in case he so desires. This is because every partner is obliged to secure benefits for the partnership and to exercise diligence in the performance of his obligation as partner. however. 31. in whole or in part.manages the partnership. Clearly. any sum received by the managing partner has to be applied to the two obligations in proportion to their amounts. and regardless of whether he is authorized to manage or not. the article does not apply if the partner who collects for his own credit only is not authorized to manage the business. then every partner shall be considered as managing partner for purposes of application of this article. through the extraordinary efforts of the partner at fault. except when the managing partner received the whole sum paid for the account of the partnership in which case the entire amount shall be applied to the obligations owing the partnership. in accordance with said debtor’s right to application of payment. If the obligation in favor of the managing partner is more onerous or burdensome. things that have been delivered actually or constructively to the partnership. of the partnership credit ahead of the other partners or while the other partners have not collected their share and said person (the partnership debtor) has become insolvent.

1799. The partnership is also obliged to answer for the obligation which the partner may have contracted in good faith in the interest of partnership business and is obliged to answer for risks in consequence of its management. If there is no such agreement.) or things which cannot be kept without deteriorating even if they are contributed only for the use of the partnership. etc. the share of each capitalist partner shall be in proportion to his capital contribution and the industrial partner shall be entitled to such share as may be just and equitable under the circumstances and which share must be satisfied first before the capitalist partners divide the profits. In case of things brought and appraised in the inventory. subject to the provisions of Art. from its nature or by mercantile usage. it being the owner. treated as the equivalent of any other unit such as oil. such as advances for partnership obligations due and payable) together with the corresponding interest from the time the expenses were incurred. wine. 35. the losses shall be distributed to the partners according to their agreement. 36.where only the use is contributed by the partner. the ownership to these things was transferred to the partnership since the same cannot possibly be used without these things being consumed or impaired. the partners share the profits according to their agreement. 34. the partnership is obliged to refund to the partner the amounts disbursed by him in behalf of the partnership. 33. In case of things contributed in order that the partnership may sell the same. but there is an agreement on the sharing of profits. the partner at fault shall be liable for damages to the partnership in accordance with Article 1794. the partnership bears the risk of loss because the intention of the partners was to contribute to the partnership the price of the things contributed. If there is no such agreement. 1799. Under Article 1796. the risk of loss is borne by the partnership because obviously. the partnership bears the risk of loss because ownership was transferred to the partnership otherwise the partnership could not effect the sale. subject to Art. the risk of loss is borne by the partner since he remains to be the owner of the thing. the risk of loss is for the account of the partnership. the share of each partner in the losses shall be in . rice. In case of specific and determinate things the ownership of which is transferred to the partnership. As to the distribution of losses. If the loss is due to the fault of any of the partners. In case of fungible things (things or goods of which any unit is. As to the distribution of profits.

The losses shall be borne by the partners in proportion to their capital contribution. 1797. 39. His power is revocable only . The decision of the third person is generally binding and may be impugned only when it is manifestly inequitable. However. Any stipulation which excludes one or more partners from any share in the profits and losses is void but the partnership remains valid and subsists and the profits and losses shall be distributed as if there were no agreement. 40. but the industrial partner shall not be liable for losses. 38.accordance with the profit-sharing ratio. and whose powers include all acts of administration notwithstanding the opposition of the other partners unless he should act in bad faith. Thus. a partner who has started to execute the decision of the third person or who failed to impugn the same within three months from the time he had knowledge of said decision can no longer complain. 37. a stipulation exempting him from the losses is valid since the law itself excludes him from losses in accordance with Art. If the industrial partner is also a capitalist partner. While every partner has a right to participate in the management of the partnership business. but the purely industrial partner shall not be liable for the losses. the share of each capitalist partner in the profits shall be in proportion to his capital contribution and the industrial partner shall be entitled to such share as may be just and equitable under the circumstances and which share must be satisfied first before the capitalist partners divide the profits. usually a general partner or one whose liability to third persons extends to his separate property and may be either a capitalist or an industrial partner) either in the articles of partnership or after the constitution of the partnership. A partner appointed as manager possess all the necessary and incidental powers to carry out the business of the partnership. Article 1800 refers to the appointment of a partner as manager of the partnership. the losses shall be borne by the partners in proportion to their capital contribution. he shall share in the losses in proportion to his contribution. the partners may nevertheless appoint a managing partner (one who manages the business of the partnership. A managing partner may be appointed by common agreement of the partners in the articles of partnership. The partners may agree to delegate to a third person the designation of the share in the profits and losses. In the absence of the profit sharing ratio or agreement. With regard to the industrial partner.

Article 1803 sets forth the rules to be observed when the manner of management of the partnerships has not been agreed upon either at the time of the perfection of the contract or after the perfection of the contract of partnership. that is. In case of tie. an exception to this. The consent of the managing partners under Article 1802 is indispensable. A partner may be appointed as managing partner after the partnership has been constituted but his power may be revoked at any time for any cause whatsoever and upon the vote of the partners representing the controlling interest. however. the unanimous consent of all the managing partners is required in order for their acts to be valid. There is. If one or more of the managing partners shall oppose the acts of the others. 43. however. each of the managing partners may separately perform all acts of administration. In case the partners fail to designate who among them shall act as managing partner or partners. Example of this act is when a managing partner purchases goods which are regularly purchased by the partnership in its business of buying and selling goods. not required in case of routine transactions or transactions required in the regular course of business of a partnership. a managing partner may act alone and even without the consent of the other managing partner or partners who may be absent or under disability. 41.when there is an imminent danger of grave or irreparable injury to the partnership. the matter shall be resolved by the partners owning the controlling interest. the decision of the majority of the managing partners shall prevail. 44. more than 50% of the capital investment of the partnership. Where there are two or more managing partners who have been appointed without specification of their respective duties or without stipulation that one of them shall not act without the consent of all the others. in that the absence of one of the managing partners or the disability of any of them cannot be alleged or cited as an excuse or as a justification for not complying with the requirement. In such a case. all of them shall be considered as managers or agents of the .upon just and lawful cause and upon the vote of the partners representing the controlling interest. in which case any of the partners can act without the consent of others and his or her act alone shall be valid. In case there is more than one managing partner appointed by the partners and the partners have agreed that none of the managing partners shall act without the consent of the other managing partners. This consent is. 42.

subject to the timely opposition or objection of any partner.partnership. the matter shall be decided by the majority vote of the partners who are entitled to one vote each. he does not acquire the rights nor the liability of a partner. In case of tie. 45. The reason for this is that the partnership is created based on the mutual trust and confidence among the partners. The partnership books is one of the properties of the partnership and as such. He is not a partner and therefore. or in the absence of the managing partner or partners. in the absence of any agreement to the contrary. even if such alteration may be useful or beneficial to the partnership. Any of the partners may freely have access to the partnership books and enjoy the right to inspect or copy any of the books of the partnership at any reasonable hour. the unanimous consent of all the partners shall be required in case of any important alteration in the immovable property of the partnership. His inclusion as a new partner will in effect be a modification of the existing contract of partnership. This is because an important alteration is considered as an act or ownership or strict dominion in which case all the partners must give their consent since all have interest in the partnership property. If the refusal of the consent of the partner or partners is evidently prejudicial to the interest of the partnership. and even after the dissolution of the partnership. such person is not a partner and shall not become such in the absence of the unanimous consent of all the other partners. According to the second paragraph of this article. then the other partners may seek the intervention of the court in order to secure the authority to effect the necessary alteration. The partnership books is presumed to contain the true and correct record of the accounts of the partnership and is normally in the custody of the managing partner or partners. then the matter shall be decided by the vote of the partners representing the controlling interest. a sub-partner does not ipso facto enjoy the mutual trust and confidence among the partners. Being a sub-partner. In such a case. and naturally. This person becomes what is known as a sub-partner. the active partners. Every partner has the right to associate another person with him in his share of the profits coming from the partnership even without the consent of the partners. in which case whatever any one of them may do alone shall bind the partnership. even if the partner associating him is a managing partner. The consent need not be expressly given by a partner but it may be impliedly given or presumed when a partner knew of the alteration but interposed no objection thereto. Other partners . 46. shall be kept at the principal place of business of the partnership.

permit the capitalist partner to engage in the same kind of business as that of the partnership. Since there exists mutual trust and confidence among the partners. or from any transactions relating to the operation of the partnership business. deny a partner of his rights to inspect the books if the information to be gathered will be utilized for some purpose other than the partnership purpose.may. Note. but he shall personally bear the losses. Each of the partners occupies a fiduciary position as against the other partners. however. as discussed in the previous article. In the following cases. Thus. He cannot keep for himself any profit or benefit received from the operation of the partnership business and is bound to hold all these benefits as trustee for the partnership. more so. 48. 50. which facts relate to or affect the partnership. a formal account as to partnership affairs would only be necessary upon the dissolution of a partnership. however. Any and all of the partners have also the duty to voluntarily disclose all material facts within his exclusive knowledge. In the absence of an agreement to the contrary. a true and full information of all things affecting the partnership. during the existence of the partnership. any and all of the partners have the duty to render true and full information of all things affecting the partnership upon demand by any partner. If he violated this provision. if the same is derived by him in the absence of the consent of the other partners. He has the duty to act for the common benefit of all the partners and is obliged to account for any profits he may have acquired from any transaction involving the use of partnership property. a . a partner does not have the right to a formal account of partnership affairs since he already enjoys the right of access to partnership books at any reasonable hour and a right to demand from his partners. is already readily available to any partner under his right of inspection. The partners may by agreement. As a general rule. the legal representative of any deceased partner or any partner suffering from legal disability. that this obligation to disclose pertains only to those matters which are not reflected in the partnership books which. 47. the capitalist partner is prohibited from engaging for his own account in any business which is the same or similar to and in competition with the business in which the partnership is engaged. however. he shall be duty-bound to bring to the common fund any profits he derived from his transactions. however. 49.

a partner has no interest in the partnership property except for his share of what remains after all the partnership obligations are paid. 53. it is the partnership which has a personality separate and distinct from the partners comprising it. Even while a partner is considered as co-owner with his partners of specific partnership property. in which . 51. Each partner has the following property rights: 1) his rights in specific partnership property. nor can he dispose or mortgage his share. The partner’s right in specific property is likewise not subject to attachment or execution except when the claim is against the partnership. He can only assign his right in specific partnership property if all his other copartners also assign their respective rights in such specific partnership property. None of the partners can assign his right in specific partnership property. and 4) whenever other circumstances render the same just and reasonable. 3) in case any of his co-partners need to account to the partnership any benefits or profits the latter received and holds as trustee for the partnership without the consent of the other partners from any transaction connected with the operations of the partnership business. which is the real owner of the properties. a partner stands on equal footing with his copartners relative to the right to possess specific partnership property for partnership purposes. Accurately speaking. and in favor of a common individual or entity. Be as it may. such as in case he is an absentee partner who needs to determine his rightful share in the profits upon his return. and 3) his right to participate in the management. 2) when there is an agreement giving the partner the right to a formal account during the existence of the partnership. 2) his interest in the partnership. this article provides that a partner is a co-owner with his partners of specific partnership property.partner has the right to a formal account of partnership affairs even before the dissolution of the partnership: 1) when his co-partners wrongfully or unjustifiably excludes him from the partnership business or possession of the partnership property. Should a partner desire to possess such property for some other purpose then the consent of his partners is necessary. This is due to the impossibility of determining the extent of a partner’s beneficial interest in the property until after the liquidation of partnership affairs. however. 52. As such. 54. Strictly speaking. separate creditors of an individual partner still cannot run after any specific partnership property.

While a separate creditor of a partner cannot attach or levy upon specific partnership property for the satisfaction of his credit.case not even any of the partners or representatives of a deceased partner can claim any right under the homestead or exemption laws. 56. and in case the partnership is dissolved. a partner’s right in specific partnership property is not subject to legal support. The conveyance does not grant entitle the assignee the right to interfere in the management or administration of the partnership business. which may be levied upon by a judgment creditor or may be subject to legal support. The partner’s interest is his personal property and is therefore assignable by him in the absence of any stipulation to the contrary. encumber. The interest of the debtor-partner so charged may be redeemed with the separate property of any one or more of the partners. or convey his whole interest in the partnership without causing its dissolution. to receive the assignor’s interest in case of dissolution. sell. The partner’s interest in the partnership consists of his share in the profits (defined as the excess of returns over expenditures in a transaction or the net income) during the existence of the partnership and his share in the surplus (defined as the net or remaining assets of the partnership after all partnership obligations are paid and settled) after its dissolution. but subject to the preferred rights of partnership creditors. The partner’s interest is his share of the residue or balance after a formal account has been taken and the value of a partner’s share cannot be determined until liquidation of the business had taken place and all the obligations of the partnership settled. A partner may assign. donate.partner in the partnership. Furthermore. 57. It may also be levied upon by a judgment creditor and subject to legal support. The person to whom the conveyance is made does not become a partner and his only rights are to receive in accordance with his contract the profits accruing to the assigning partner. or to inspect the partnership books because these are the rights available only to partners. to avail himself of the usual remedies under the law in case of fraud in management. to require or demand any information or account of partnership transactions. It is the partner’s interest in the partnership itself (which is actually his share in the profits and surplus). or with partnership property but with the consent of all the . he can go to court and secure a judgment on his credit and then apply to the court for a charging order against the interest of the debtor. to require an account of partnership affairs covering the period from the date of the last account agreed to by all the partners. 55.

then the partner may avail himself of the exemption laws after partnership debts have been paid. however. . while a partner cannot claim any right under the homestead laws or exemption laws in case of specific partnership property being attached for partnership debt. since such is really the property of a partner. with respect to a partner’s interest in the partnership. In addition.partners whose interests not so charged or sold.

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