A. What is meant by a personal by estoppel?

 Estoppel is a legal doctrine that prevents a person from adopting a position,

action, or attitude, asserting a fact or a right, or prevents one from denying a fact
inconsistent with an earlier position if it would result in an injury to someone else.
B. When in an existing or actual partnership bound by the representation made
by or in behalf of a person that he is member of the partnership?

C. What is the character liability of a partnership by estoppel to person who,
relying on the representation that the former is a partner in an actual or
apparent partnership, have given credit such partnership?


26. what are the 3 final stages of a partnership? Discuss.

1. Partnership dissolution refers to the termination of a partnership as well as the cessation of its
various business activities. Partnerships can dissolve for various reasons and under many
circumstances. When a partnership dissolves, the partners share equally when it comes to profits
and gains; however, they also share equally in the distribution of losses as well. Also, there are
generally no tax consequences from dissolving a partnership; however, the partners do need to
account for all properties involved in the business and whether or not they have appreciated in
value over time.

2. Winding up a partnership business occurs after dissolution of the partnership and it is similar
to liquidation of the partnership. Typically, when partners decide that there is no sustainable
future for the partnership to continue, then the decision of winding up the partnership occurs.

The two basic ways of winding up a partnership business are:

 Creditor Petition: A creditor who is owed debt by the partnership business can petition
to wind up the insolvent partnership in order to satisfy the debt owed by the partnership.
 Partners Petition: Partners can petition to wind up the partnership concurrently if they
believe that the partnership does not have a sustainable future. Partners can only do this
if there are no bankruptcy petitions pending.

There are laws governing property distribution in a partnership, the partners hold title to
partnership properties as "tenants in common" or "tenants in partnership." This means that each
respective partner has equal rights to the partnership property as long as the use of the property
is restricted to partnership purposes. The property must be used according to the terms set out
in a partnership agreement, if one exists between the partners.

The laws governing property distribution in a partnership are determined based on whether the
partnership business is a general partnership or a limited liability partnership. The laws may also
vary according to local jurisdictional rules.

Property distribution in a partnership will most likely occur when dissolving a partnership. Upon
dissolution (also known as termination or “wind-up”), each partner is allowed to have their
partnership applied toward the payment of their partnership debts. Once the debts are paid to
creditors, any surplus from the property will be distributed to each partner according to their
ownership interest in the partnership.

If the partners drafted a partnership agreement prior to the formation of the partnership, then
the partnership agreement controls. However, if there is no partnership agreement, the
partnership liabilities must be paid in the following order:

 Debts owed to non-partner creditors for partnership debt

 Those owing to partners other than for capital and profits
 Those owing to partners for capital
 Those owing to partners for profits

In the other hand, we have a limited partnership. In this case, the laws governing the distribution
of property in a limited partnership and winding up their property is basically the same as a
general partnership. However, a limited partner has priority in getting paid.

If there is a limited partner within the partnership who has limited liability for the partnership
debt, the limited partner has the same rights of a general creditor with respect to debts owed by
the partnership that exceed his limited liability contribution. For example, if a limited partner
contributed Php 500,000 and he is only liable up to that amount, any loans or advances by the
limited partner exceeding that amount must be reimbursed by the general partners

 3rd stage – Termination

Partnership termination refers to the way in which a business partnership is legally ended. In
most cases, a partnership will terminate in a "natural" way, such as when the business aim of the
partnership has been achieved. In other cases, a partnership may terminate prematurely due to
unexpected circumstances, such as the death of a partner, or due to an illegal violation.

How is Partnership Termination Accomplished?

State laws governing partnership formation will vary. Also, the procedure for partnership
termination may vary according to whether the partnership is a general partnership or a limited
partnership. Dissolving a general partnership often occurs if a partner dies, becomes
incapacitated, or formally expresses her desire to disassociate from the partnership.

Partnership termination is different with a limited partnership or limited liability partnership.

Withdrawing from a limited partnership usually does not automatically terminate the entire
organization. In order to terminate a limited partnership, it’s usually necessary to file termination
papers with the state’s business authorities.

What if I Have a Dispute Involving Partnership Termination?

A common dispute with partnership termination occurs when one or more of the partners disagree
with the decision to terminate the partnership. In most cases, the partners will need to consult
the partnership agreement, which should state procedures for termination and conflicts. A similar
situation occurs when the remaining partners contests the withdrawal of a partner from a contract
or business deal.

Another common dispute involved in many partnerships is the issue of property distribution.
Again, this likely depends on whether the partnership is general or limited. For general
partnerships, the partners are typically entitled to equal distributions of partnership property. For
limited partnerships, the property is usually distributed according to each partner’s individual
contributions to the partnership.

Do I Need a Lawyer for Assistance with Partnership Termination?

Partnership termination is a complex area of business law. Also, there can be much variation for
termination, depending on the type of partnership as well as individual state laws. You may wish
to hire a business lawyer if you need help with partnership termination or other related business
matters. A qualified lawyer in your area will be able to recommend options for you to follow, and
can represent you in court if needed

27. What are the causes of dissolution in a partnership?

 Dissolution of partnership firm is a process in which relationship between

partners of firm is dissolved or terminated. If a relationship between all the
partners of firm is dissolved then it is known as dissolution of firm. In case of
dissolution of partnership of firm, the firm ceases to exist. This process includes
the discarding and disposing of all the assets of firm or and settlements of
accounts, assets, and liabilities.

Other circumstances that may lead to partnership dissolution may include:

 Loss of profits or declaration of bankruptcy

 Illegal activities or violations
 Merging of a partnership with a larger entity
 Changes of the business’ registration status (such as switching to a corporation)
 Fulfillment of conditions stated in the partnership agreement (such as the production or
sale of a certain number of products).

Some limited partnerships may not dissolve automatically if a partner withdraws or becomes
deceased. The company may continue on, especially if the partnership still has sufficient
managerial capacity to keep up with business activities.

After the dissolution of partnership firm, the existing relationship between

the partner’s changes. But the firm continues its activities. The dissolution of
partnership takes place in any of the following ways:

1. Change in the existing profit-sharing ratio.

2. Admission of a new partner
3. The retirement of an existing partner
4. Death of an existing partner
5. Insolvency of a partner as he becomes incompetent to contract. Thus,
he can no longer be a partner in the firm.
6. On completion of a specific venture in case, the partnership was formed
specifically for that particular venture.
7. On expiry of the period for which the partnership was formed.