~OBLIGATION~

RELATION:

1) relationship between the partners

2) relationship between the partners and the partnership

3) relation between the partnership and the third persons

4) between the partners themselves with those third persons

OBLIGATION:

- The foremost obligation is the obligation to observe good faith or the fiduciary
duties (trust and confidence)

1) Obligation with respect to contribution of property

2) obligation with respect to contribution of money
3) obligation not to engage in other business for himself
4) obligation of the partner to contribute capital and if necessary additional
capital
5) obligation of the managing partner who collects a debt
6) obligation of a partner who receives his share in the partnership credit
7) obligation of a partner for damages to the partnership
8) obligation to render information
9) obligation to account for any benefit and hold as trustee any personal profits
or property

OBLIGATION WITH RESPECT TO CONTRIBUTION OF PROPERTY:

- to contribute what has been promise (remedy:specific performance)

- to warrant the property
- to deliver the fruits without demand
- failure to contribute makes the partner a debtor
- goods/ immovable(inventory) needs proper appraisal at the time of the
contribution(can be agreed in contract)
- preserve the property with the diligence of the good father of the family
- indemnify for any damages caused by the retention of the property or
delay

WHO WILL BEAR THE RISK OF LOSS OF THE THINGS CONTRIBUTED:

- specific and determinate but not fungible - Partner ( Res Perit Domino)

- fruits or the use of the thing - Partner

- specific and determinate and the thing has already been delivered - Partnership

- fungible things - Partnership (since the use is impossible without the things
being consumed or impaired)

- things which are contributed to the partnership to be sold - Partnership

- things which are brought and appraised in the inventory - Partnership

OBLIGATION WITH RESPECT TO THE CONTRIBUTION OF MONEY

- on the due date of the amount which he promised to give

- duty to reimburse any amount which the partner may have taken from the
partnership and converted to his own personal use
- duty to pay the agreed or legal rate of interest in case of failure to pay the
amount that the partner promised to contribute in due time
- duty to indemnify the partnership for damages due to the delay in giving the
contribution

OBLIGATION NOT TO ENGAGE IN OTHER BUSINESS FOR HIMSELF

- Industrial partner cannot engage in any business whatsoever for himself

- unless the partnership expressly permits him to do so,
- remedies of the other partners whether they be capital or industrial partners
would be that those partners who have suffered injury can:
- claim the benefits which the industrial partner may have received.

- capitalist partner is prohibited from engaging in an operation of a business

which is of the same or similar kind in which the partnership is engaged.
- The test is simply if there will be unfair competition.

- the partner who violates these rules can be ousted from the firm on the ground of
loss of trust or confidence

OBLIGATION TO CONTRIBUTE CAPITAL AND IF NECESSARY ADDITIONAL CAPITAL

- Applicable only to capitalist partner

- A partner is not bound to contribute additional capital except in case of

imminent loss to the business and there is no agreement to the contrary

- refuses (it has to be deliberate without a valid reason) then he must sell his
share or his interest to the other partners

OBLIGATION OF THE MANAGING PARTNER WHO COLLECTS A DEBT

- a debtor who has a debt to the managing partner in his personal capacity and also
has a debt to the partnership

GR: any sum received from that debtor should be applied to the two credits, the
partnership and the managing partner in proportion to their
amounts

EX: applied for payment in full where:

- the managing partner receives it entirely for the partnership not for
himself
- the debtor is given the right to apply payment of credit to that managing
partner only if that debt is more onerous to the debtor than the debt
 owing to the partnership

OBLIGATION OF THE PARTNER WHO RECIEVES HIS SHARE IN THE PARTNERSHIP CREDIT

- if in case the debtor partner becomes insolvent,

- the other partner will be obliged to bring to the partnership capital, what he
has received
- applies before the dissolution, (after dissolution then there is no partnership)

OBLIGATION OF THE PARTNER FOR DAMAGES TO THE PARTNERSHIP

- every partner is responsible to the partnership for damages suffered by it

through his fault

- he cannot compensate the partnership with the profits and benefits which he may
have earned for the partnership

- mitigate when the partners extraordinary efforts in other activities of the

partnership resulted in unusual profits

OBLIGATION TO RENDER INFORMATION

OBLIGATION TO ACCOUNT FOR ANY BENEFIT AND TO HOLD AS TRUSTEE ANY UNAUTHORIZED
PERSONAL PROFITS OR PROPERTY

- every partner must account to the partnership for any benefit and hold as trustee
for the partnership any profits derived by him without the consent of the other
partners from any transaction connected with the formation conduct or liquidation
of the partnership or from any use by him of its property

- if the partner receives something which should properly pertain to the

partnership he holds that thing or money as a trustee with an obligation to give it
to the partnership

- the partner cannot use or apply to his own benefit any partnership assets or the
knowledge or information which he has gained as a partner and he cannot use those
to the detriment of the partnership.