RIGHTS AND OBLIGATIONS WITH RESPECT TO MANAGEMENT

CAUSE EFFECT CONSEQUENCE

The partner who has been May execute: The vote of the partners
appointed manager in the - All acts of representing the Controlling
articles of the partnership administration despite interest shall be necessary shall
the opposition of his be necessary for such
( 1800 ) partners revocation of power.
- Unless , he should act in
bad faith; and
- His power is irrevocable
without just or lawful
cause
A power granted after the Revocable any time for any
partnership has been cause
constituted
Two or more partners have Each one may separately If any of them should oppose
been entrusted with the execute all acts of the acts of the others, the
management of the partnership administration decision of the majority shall
without specification of their prevail. In case of a tie, the
respective duties, or without a matter shall be decided by the
stipulation that one of them partners owning the controlling
shall not act without consent of interest.
all the others,

( 1801 )
Stipulated that none of the The concurrence of all shall be Absence or disability of any one
managing partners shall act necessary for the validity of the of them cannot be alleged,
without the consent of the acts, unless there is imminent danger
others of grave or irreparable injury to
the partnership.
(1802)
Manner of management has not 1. All the partners shall be But if the refusal of the consent
been agreed upon considered agents by the other partners is
2. Unanimous consent manifestly prejudicial to the
( 1803 ) required in making any interest of the partnership, the
important alteration in court’s intervention may be
the immovable sought.
property of the
partnership, even if it
may be useful to the
partnership
CONTRACT OF SUBPARTNERSHIP ( 1804 )
- One formed between a member of a partnership and a third person for a division of profits
coming to him from the partnership ( DISTINCT FROM PRINCIPAL PARTNERSHIP )

OTHER RIGHTS OF THE PARTNERS:

1. Every partner may associate another person with him in his share, but the associate shall noy be
admitted into the partnership consent of all the other partners, even if the partner having an
associate should be a manager. ( 1804 )
2. Every partner shall at any reasonable hour have access to and may inspect and copy any of the
partnership books. ( 1805 )
3. Right to a formal account as to partnership affairs if:
a. If he is wrongfully excluded from the partnership business or possession of its property by
his co-partners;
b. If the right exists under the terms of any agreement;
c. As provided by Article 1807
d. Whenever other circumstances render it just and reasonable.
4. True and full information of all things affecting the partnership ( 1807 )
5. Account to the partnership as a fiduciary

PROPERTY RIGHTS OF A PARTNER

The property rights of a partner are:

1. His rights in specific partnership property;
2. His interest in the partnership; and
3. His right to participate in the management

NATURE OF RIGHTS IN SPECIFIC PARTNERSHIP PROPERTY:

1. Equal right to possess but he has no right to possess such property for any other purpose
without the consent of his partners;
2. Non- assignable except in connection with the assignment of rights of all the partners in the
same property;
3. Limited to the share of what remains after partnership debts have been paid
4. Not subject to attachment or execution, except on a claim against the partnership
5. Not subject to legal support under Article 291 CC.

A partner’s interest in the partnership is his share of the profits and surplus. ( 1812 )

Profits – net income for a given period ( returns less expenses )

Surplus – excess of assets over liabilities

OBLIGATIONS OF PARTNERS WITH REGARD TO THIRD PERSONS

- Every partnership shall operate under a firm name. Those who, not being members of the
partnership, include their names in the firm name, shall be subject to the liability of a partner.
(1815)
- All partners, including industrial ones, shall be liable pro rat with all their property and after all
the partnerships assets have been exhausted, for the contracts which may be entered into in the
name and for the account of the partnership, under its signature and by a person authorized to
act for the partnership. However, any partner may enter into a separate obligation to perform a
partnership contract. ( 1816 )

- Any stipulation against the liability laid down in the preceding article shall be void, except as
among the partners. (1817)

- Every partner is an agent of the partnership. ( 1818 )

- Except when authorized by other partners or unless they have abandoned the business, one or
more but less than all the partners have no authority to:

a. Assign the partnership property in trust for creditors or on the assignee’s promise to pay the
debts of the partnership;
b. Dispose of the goodwill of the business;
c. Do any other act which would make it impossible to carry on the ordinary business of a
partnership;
d. Confess a judgment;
e. Enter into a compromise concerning a partnership claim or liability;
f. Submit a partnership claim or liability to arbitration;
g. Renounce a claim of the partnership.

No act of a partner in. contravention of a restriction on authority shall bind the partnership to
persons having knowledge of the restriction.

- An admission or representation made by any partner concerning partnership affairs within the
scope of his authority in accordance with this Title is evidence against the partnership. ( 1820 )

- Notice to any partner of any matter relating to partnership affairs operates as notice to or
acknowledge of the partnership, (and)

1. Knowledge of the partner acting in the particular matter, acquired while a partner
2. Knowledge of the partner acting in the particular matter, then present to his mind
3. Knowledge of any other parter who reasonably could and should have communicated it to
the acting partner, except in case of fraud (1821)
POWERS OF PARTNER AS AGENT

Acts for carrying on the usual way of business of the GR: Every partner is an agent and may execute acts
partnership with binding effect
E: Third person has knowledge of lack of authority

1. Acts outside the usual way of carrying on the No act of a partner in contravention of a restriction
business on authority shall bind the partnership to persons
2. Acts of strict dominion and ownership having knowledge of the restriction
3. Assign the partnership property in trust for
creditor or on the assignee’s promise to pay
the debts of the partnership;
4. Dispose of the good-will of the business;
5. Do any other act which would make it
impossible to carry on the ordinary business
of a partnership;
6. Confess a judgment;
7. Enter into a compromise concerning a
partnership claim or liability;
8. Submit a partnership claim or liability to
arbitration;
9. Renounce a claim of the partnership
Restricted Acts Partnership is not liable to 3 rd persons who have
knowledge of the restrictions

EFFECTS OF CONVEYANCE OF REAL PROPERTY BELONGING TO PARTNERSHIP (1819)

Where title to real property is inAny partner may convey TITLE to such property by a conveyance
the partnership name executed in the partnership name, BUT the partnership may recover such
property:
1. Conveyance was not in the usual way of business
2. Knowledge of the buyer or seller’s lack of authority
Title to real property in the Only passes the EQUITABLE INTEREST provided the act is one within the
name of the partnership; authority of the partner under the provisions of the first paragraph of
conveyance by a partner in his article 1818. BUT the partnership may recover such property:
own name 1. Conveyance was not in the usual way of business
2. Knowledge of the buyer or seller’s lack of authority
Title to real property is in the The partners in whose name the title stands may convey TITLE to such
name of one or more but not all property, BUT the partnership may recover such property:
the partners and the record 1. Conveyance was not in the usual way of business
does not disclose the right of 2. Knowledge of the buyer or seller’s lack of authority
the partnership
Title to real property is in the
name of one or more or all the Only passes the EQUITABLE INTEREST
partners, or in a third person in
trust for the partnership
Where the title to real property
 is in the name of all the Conveys TITLE to such property
partners

Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of
the partnership or with the authority of his co-partners, loss or injury is caused to any person, not being
a partner in the partnership, or any penalty is incurred, the partnership is liable to the same extent as
the partner so acting or omitting to act ( 1822)

The partnership is bound to make good the loss: ( 1823 )

1. Where one partner acting within the scope of his apparent authority receives money or
property of a third person and misapplies it; and
2. Where the partnership in the course of its business receives money or property of a third person
and the money or property so received is misapplied by any partner while it is in the custody of
the partnership.

PARTNER BY ESTOPPEL – a person ( not a partner ) will be liable as a partner if by words or conduct
(1825)

1. DIRECTLY represents himself as partner, or

2. INDIRECTLY represents himself by consenting to another representing him to anyone, as a
partner in an existing partnership

REQUISITES:
1. Defendant represented himself as partner/represented by others as such and not denied by
defendant
2. Plaintiff relied on the representation
3. Statement of defendant is not refuted

LIABILITIES OF PARTNERS IN ESTOPPEL

All partners consented to the representation Partnership is liable

All those represented consented. Person who represented himself and all those who
Not all partner in existing partnership consented consented are liable jointly (pro-rata)

No existing partnership Person who represented himself and all those who
Not all those represented consented consented are liable separately
None of the partners in existing partnership
consented

ARTICLE 1826
A person is admitted as a partner into an existing partnership is liable for all the obligations of the
partnership is liable for all the obligations of the partnership arising before his admission as though he
had been a partner when such obligations, except that this liability shall be satisfied only out of
partnership property, unless there is a stipulation to the contrary.

ARTICLE 1827
The creditors of the partnership shall be preferred to those of each partner as regards the partnership
property. Without prejudice to this right, the private creditors of each partner may ask the attachment
and public sale of the share of the latter in the partnership assets.

RIGHTS OF AN ASSIGNEE: (1813)

A conveyance by a partner of his whole interest does not of itself dissolve the partnership, or, as against
the other partners in the absence of agreement, entitle the assignee, during the continuance of the
partnership,
- To interfere in the management or administration of the partnership business or affairs, or
- To require any information or account of partnership transactions, or
- To inspect the partnership books;

WHAT ARE HIS RIGHTS IN CASE OF DISSOLUTION?

1. Receive in accordance with his contract the profits to which the assigning partner would
otherwise be entitled.
2. In case of fraud in the management of the partnership, the assignee may avail himself of the
usual remedies.
3. Entitled to receive his assignor’s interest and
4. May require an account from the date only of the last account agreed to by all the partners.

REMEDIES OF A JUDGMENT CREDITOR: ( 1814 )

Without prejudice to the preferred rights of partnership creditors, on due application to a competent
court by any judgment creditor of a partner:

- The court may change the interest of the debtor partner with payment of the unsatisfied
amount of such judgment debt with interest thereon; ( CHARGING ORDER )
- May then or later appoint a receiver of his share of the profits, and of any other money due or
to fall due to him in respect of the partnership, and make all other orders, directions, accounts
and inquiries which the debtor partner might have made, or which the circumstances of the
case may require.

RESPONSIBILITY OF PARTNERSHIP TO PARTNERS

1. Refund the amounts disbursed by partners in behalf of the partnership + interest ( 1796 )
2. Answer for obligations made in good faith by partners ( 1822. – 24 )
3. Demand on accounting