CHAPTER 2 SECTION 3: Obligations of the partners with regards to third persons its affairs and if he is authorized to do so.

authorized to do so. the part of the partnership as a whole.

Partner/s can also be liable to co-partner/s The legitimate creditors will be prioritized by
The business name does not need to include Pro-rata means equally liable or joint liability in the event of wrongful actions, misapplied the partnership in times of liquidation or
name/s of any of the partners. while subsidiary means that the creditor can collections and omission on the side of (any of dissolution or in any usual event like payment
demand obligation from partners’ personal the) partner/s. Thus, partnership is equally of outstanding debts to be settled using the net
Though a person is a not a legitimate member assets if the partnership’s assets is not enough. liable to the third person yet, partners thereof assets of the partnership.
of the partnership, the same is still liable to can demand recovery and/or reimbursement
the third person if the former includes his or An industrial partner is still liable to the third from co-partner/s who cause/s such events.
her name if the firm name, in accordance with person both on subsidiary and pro-rata basis Out of three partners legally considered as If none of the three partners give consent to D,
partnership by estoppel. if the partnership’s assets is not enough to members of the partnership, partnership by only the latter is liable to the third person.
satisfy the latter’s demand. estoppel is not present if only two partners
An industrial partner is included in consented a person (let’s denote it as D) to The liability of the newly-admitted partner is
extinguishing liability but excluded from But, a partner can demand reimbursement represent the company. But in the same case, retroactive meaning, he or she will share
sharing the partnership’s losses. for paying the pro-rated amount from other there exists partners by estoppel among the equal part in the liability incurred by the
capitalists partners consequently. two partners who give consent and the partnership before the day when he or she
person, D. becomes a partner. Nevertheless, stipulation
Any stipulation made by partners in contrary Reimbursements can be demanded by an can make contrary to the article 1826
to article 1815 and 1816 is void in the view of industrial partner, and a capitalist partner The creditor of the partnership has utmost ILLUSTRATION:
the third person but the same is still valid who is relieved from external liability as preference over the assets of the partnership Lucas and Marcus formed a partnership, called “Dobre
among partners. stipulated in the agreement which is legally upon liquidation, dissolution or just a usual Twins” which normally sells sports equipment.
Consequently, Lucas sold a printer, which is legally
binding among partners. event like settlement of debt/loan. The private owned by the partnership, to Ivanita.
The contract of sale is still legally binding evenNote: stipulations made by partners are only creditors of each partner can demand
if the partner who precedes the sale binding among them and not to the third respective payment from the share of each Here are the following interpretations:
transaction with the third person is not person as the latter creates transaction with a partner in the remaining assets of the  The sale transaction is not legally binding
authorized by the partnership. This provision legally separate juridical entity, which is the partnership after the settlement of debt owed between Ivanita and the Dobre Twin
is only applicable if the third person acted in partnership itself. In general, third person Partnership because selling the entity’s printer
to the most preferred creditor. is not deemed part in the normal course of
good faith and/or innocent of such facts. Sales does not have to know who is authorized to business, which is selling sports equipment;
is no longer valid of the third person has initiate transactions in the name of the  The sale transaction can only be binding if and
knowledge that the one whom he or she deals partnership. This shall only apply to a normal only if Marcus authorized Lucas to sell such
with is not duly authorized. This shall also course or natural activity of the business. item to Ivanita.
apply to the unauthorized disposal of
immovable property especially land.
Title is the legal evidence of a person’s The buyer can only possess equitable interest
ownership rights in property; an instrument if he or she acquires the land in the name of
such as deed that constitutes such evidences. one or more than one of the partners. Thus the Submitted by: Joshua A. Daarol
former shall demand changes in the contract Submitted to: Atty. Rufino Abuda
If the name of the land is under the names of specifically to change the name of the acquired
all partners (not the partnership), the sale is land to the partnership’s name. Business Law and Regulation
valid, no objection shall be raised. 3yrd Year Level, 1st Semester
An admission is evidence against the If the notice has been received by any of the
partnership if the same gives concerns about partners, the same is also deemed received on