Law on Partnership

ARTICLE 1767. By the contract of partnership twoor more persons

bind themselves to contribute money,property, or industry to a
common fund, with the inten-tion of dividing the profits among
themselves. Two or more persons may also form a partnershipfor
the exercise of a profession.
Concept of partnership.
The above article gives the legal de

nition of partnership(often called “co-partnership”) from the

viewpoint of a contract.There are, however, other definitions. Thus:
(1) “A partnership is a contract
of two or more competentpersons to place their money, effects,
labor and skill, or some orall of them, in lawful commerce or
business and to divide the profits and bear the losses in certain
proportions.”
(2) “A partnership is an
association of two or more persons to carry on as co-owners of a
business for profits
3) “A partnership is a legal relation
based upon the express or implied agreement of two or more
competent persons whereby they unite their property, labor or skill
in carrying on some lawful business as principals for their joint
profit.
4)A partnership is the status arising out of a contract entered into by
two or more persons whereby they agree to share as common
owners the profits of a business carried on by all or any of them on
behalf of all of them
5) “A partnership is an organization
for production of income to which each partner contributes one or
both of the ingredients of income, which are capital or service.
Obviously, a person cannot enter into a contract of
partnershipsolely with himself; there must be at least two
competent parties. As in other cases of contracts, in order to make
an agreementfor a partnership valid, there must be a valid
considerationexisting as between the partners. Each partner
surrenders to thepartnership an interest in his property, labor, skill,
or energy,in accordance with the express or implied stipulations of
theirmutual agreement.
EXAMPLE: A bought a secondhand car. He told B that he would give
B half the profit of its sale if B would repair the car. B did not repair
the car. A hired C to do the work and later sold the car at pro
Obviously, B is not entitled to any of the pro
Therewas no partnership between A and B because of the absence
ofconsideration for A’s promise.
Action seeks to compel the execution of a partnership contract.

Facts:
A and B entered into an agreement to form a partnership. Because of A’s refusal
to comply with the agreement, B brought an action to compel the execution of a
partnership contract.
Issue:
May A be compelled against his will to carry out the agreement or execute the
partnership papers?
Held:
No. Under Article 1167,
A has an obligation to do, not to give. The law recognizes the individual’s
freedom or liberty to do an act as he has promised to do, or not to do it,as he
pleases. It falls within what Spanish commentators call a very personal act
(acto personalismo)
, of which courts may not compel compliance, as it is considered an act of
violence to do so.
Thank you