Professional Documents
Culture Documents
Contribution of future property: to allow persons who are prohibited to give each other any
donation or advantage from a universal partnership will be
GR: future properties cannot be contributed. Property like permitting them to do indirectly what the law expressly
subsequently acquired by inheritance, legacy or donation prohibits. A partnership formed in violation of this article is
cannot be included by stipulation null and void.
XPN: fruits thereof
The above is not true under the Uniform Partnership Act The term is sometimes used to designate joint ventures and
which defines a partnership as “an association of two or partnerships limited only in respect of the nature and scope
more persons to carry on as co-owners a business for of the business to be carried on.
profit” (Sec. 6 thereof.) and states that “business includes correct usage of the term confines it to the form of business
every trade, occupation, or profession.” (Sec. 2 thereof. association composed of one or more general partners and
The word “business,” as used in the Act, clearly means one or more special partners, the latter not being personally
business in the commercial sense only, not merely “a joint liable for the partnership debts
venture’’ which exists for carrying on a single act or It is so called because the liability to third persons of one or
isolated transaction or a limited number of transactions. more of its members referred to as limited (or special)
Thus, a distinction exists between a joint venture, a legal partners is limited to a fixed amount, their capital
concept of common law origin, on which the members are contributions or the amount they have invested in the
interested only in a single transaction, and is thus of a
partnership. This limited liability is the key characteristic of to the incidental amount actually contributed by
the limited partnership. them. The object of such a statute is to furnish
reasonable protection to those dealing with the
Characteristics of limited partnership concern by requiring acts to be done and public
(1) A limited partnership is formed by compliance with the notice thereof given so that all who desire may
statutory requirements (Art. 1844.); know the essential features of the arrangement.”
(2) One or more general partners control the business and are
personally liable to creditors (Arts. 1848, 1850.); Differences between a general partner/partnership and a limited
(3) One or more limited partners contribute to the capital and partner/partnership.
share in the profits but do not participate in the
management of the business and are not personally liable (1) A general partner is personally liable for partnership
for partnership obligations beyond the amount of their obligations (Art. 1816.), while a limited partner’s liability
capital contributions (Arts. 1845, 1848, 1856.); extends only to his capital contribution (Arts. 1845, 1848,
(4) The limited partners may ask for the return of their capital 1856.);
contributions under the conditions prescribed by law (2) When the manner of management has not been agreed
(Arts. 1844[h], 1857.); upon, all of the general partners have an equal right in the
(5) The partnership debts are paid out of common fund and management of the business (Arts. 1803, 1810[3].),
the individual properties of the general partners whether or not the general partner has made any capital
contribution, while a limited partner has no share in the
Business reason and purpose of statutes authorizing limited management of a limited partnership, his rights being
partnerships. limited to those enumerated in Article 1851, such that he
(1) Secure capital from others for one’s business and still retain renders himself liable to creditors as a general partner if he
control. takes part in the control of the business (Art. 1848.);
- “The business reason for the adoption of acts (3) A general partner may contribute money, property, or
making provisions for limited or special partners is industry to the partnership (Art. 1767.), while a limited
that men in business often desire to secure capital partner must contribute cash or property to the partnership
from others. but not services (Art. 1845.);
- three classes of contracts which can be made with (4) Unlike a general partner, a limited partner is not a proper
those from whom the capital is secured: party to proceedings by or against a partnership unless he is
i. the ordinary loan on interest. also a general partner (Art. 1853.), or where the object of
ii. loan where the lender, in lieu of interest, the proceeding is to enforce a limited partner’s right
takes a share in the profits of the against, or liability to, the partnership (Art. 1866.);
business. (5) A general partner’s interest in the partnership (Art. 1812.)
iii. those cases in which the person may not be assigned as to make the assignee a new partner
advancing the capital secures, besides a without the consent of the other partners (Art. 1813.)
share in the profits, some measure of although he may associate a third person with him in his
control over the business. share (Art. 1804.), while a limited partner’s interest is
- The lender who takes a share in the profits does freely assignable, with the assignee acquiring all the rights
not by reason of that fact, run a risk of being held of the limited partner subject to certain qualifications1 (Art.
as a partner. If, however, his contract falls within 1859.);
the third class mentioned and he has any measure (6) The name of a general partner may appear in the firm name
of control over the business, he at once runs (Art. 1815.), while, as a general rule, that of a limited
serious risk of being liable for the debts of the partner must not (Art. 1846.);
business as a partner.” (7) A general partner is prohibited from engaging in a business
which is of the kind of business in which the partnership is
(2) Share in profits of a business without risk of personal engaged, if he is a capitalist partner (Art. 1808.), or in any
liability. business for himself if he is an industrial partner (Art.
- The policy of laws authorizing the formation of 1789.), while there is no such prohibition in the case of a
limited partnerships is to bring into trade and limited partner who is considered as a mere contributor to
commerce funds of those not inclined to engage in the partnership (see Art. 1866.); and
that business, who are disposed to furnish capital (8) The retirement, death, insanity, or insolvency of a general
upon such limited liability with a view to the share partner dissolves the partnership (Arts. 1860, 1830, 1831.),
of profits which might be expected to result to while the retirement, etc. of a limited partner does not have
them from its use.” the same effect, for his executor or administrator shall have
the rights of a limited partner for the purpose of selling his
(3) Associate as partners with those having business skill. estate. (Art. 1861.)
- The primary purpose of the statute authorizing the - The other differences are: a general partnership
formation of limited partnerships is to encourage may, as a general rule, be constituted in any form
those having capital to become partners with those by contract or conduct of the parties, while a
having skill, by limiting the liability of the former limited partnership is created by the members after
compliance with the requirements set forth by law; the requirement that the dissolution must not be made at
it is composed only of general partners; it must an improper or unreasonable time.
operate under a fi rm name which in the case of a - Even a partnership for a fixed term may likewise be
limited partnership must be followed by the word terminated by the express will of any partner before the
“Limited” (Art. 1844[1, a].); and its dissolution time mentioned. (Art. 1830[2].) There is no such thing
and winding up are governed by different rules. as an indissoluble partnership.
- A limited partnership, unless prohibited by law,
may carry on any business which could be carried b. PARTNERSHIP FOR A PARTICULAR UNDERTAKING
on by a general partnership.
III. As to term
a. PARTNERSHIP WITH A FIXED TERM c. PARTNERSHIP AT WILL