1. Is the contract of partnership consensual?

FALSE. Although the general rule provides that agreement and no form is required for its
validity, a contract of partnership has to comply with legal formalities when contribution
is 3K or more (1772) and when immovable or real rights are contributed (1773) and in
case of limited partnership (1844)
2. Can a limited partner be liable as a general partner? (6)
YES.
 In cases where the statutory requirements under 1844 are not complied with
(signed and sworn certificate of Articles of Parntership AND filing and recording
of such with the Office of SEC)
 Rendering of services (cannot be an industrial partner – 1845)
 When his surname is included in the firm name, he is liable to 3rd persons who
had no actual knowledge that he is not a general partner
 He participates or interference in the control or management of the
partnership
 Failure to amend or cancel false statements upon ascertainment or knowing that
they were false
 Receives partnership property as collateral security, payment, conveyance or
release from liabilities in fraud of creditors
3. Instances that a general partner need the consent of limited partners (7)
 Act in contravention of the agreement in the Articles
 Renders it impossible to carry on the ordinary business of partnership
 Confession of judgment against the partnership
 Possess partnership property or assign rights in specific partnership property
for purposes other than for the affairs of the partnership
 Admission of a limited partner
 Admission of a general partner unless expressly allowed under articles
 Continuation of the business upon dissolution unless expressly allowed under
articles
4. T or F. An industrial partner can be a limited partner
FALSE. Art 1845 provides that a limited partner’s contribution can be money or property
but not services.

5. Rights of a limited partner same sa GP (1851)

 Have the partnership books kept at the principal place of business and shall at
any reasonable hour, the right to inspect and copy them
 Render on demand true and full information relating to partnership affairs and
formal account of partnership affairs upon just and reasonable circumstances
  Dissolve and wind up affairs upon judicial decree
 Receive share in profits, compensation by way of income and to return of
contribution

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1. Gathering of assets and receivables
2. Settlement of partnership outstanding liabilities
3. Distribution of surplus and property
Assets include –
1. Capital constributions
2. Receivables from debtors
3. Goodwill – economic advantage from, good repute in relation to the public and 3rd
persons

ORDER OF PREFERENCE is settlement of partnership liabilities –

1. 3rd person creditors
2. Partner creditors except as to contributions and profits but as to interest or loans
advanced
3. Partner creditors as to contributions
4. Partner creditors as to distribution of profits or surplus
RIGHTS OF INNOCENT PARTIES – it depends if in contravention or not:
NOT IN CONTRAVENTION
1. Discharge partnership liabilities with partnership assets
2. Surplus in cash the net amount owing to the partners
IN CONTRAVENTION
1. Discharge partnership liabilities with partnership assets
2. Surplus in cash the net amount owing to the partners
3. Continue the partnership business under same name
4. The right to possess partnership property upon securing payment in cash or through a
bond approved by court OR pay value of partner who caused the dissolution’s interest in
the partnership property and be released from existing and future partnership liabilities

Purpose of the bond is to secure and protect the interest of the person who caused the
dissolution.

WHEN BUSINESS IS CONTINUED, we have OLD AND NEW CREDITORS AND OLD AND NEW
PROPERTIES –
Rule governing partnership properties:
1. New partners are preferred over new assets
2. Old are preferred over old assets
The law provides that new partners shall be liable to old creditors only to the extent of their
capital contribution, not personally.
General as to new, limited as to old.

RIGHT OF RESCISSION
1. RIGHT TO SUBROGATION
2. LIEN OR RETENTION OF SURPLUS
3. INDEMINIFICATION