MEC 45 NOTES, JANUARY 16.

2020
QUIZ 1 ESSAY
- UNIVERSAL PARTNERSHIP IS A DONATION THEFORE, PERSONS CANNOT DO
DONATE TO EACH OTHER, THEREFORE, THE PARTICULAR PARTNERSHIP IS A
BETTER OPTION.
- THE UNIVERSAL PARTNERSHIP IS A MUTUAL DONATION, A DONATION WHEN
YOU HAVE A CONNECTION WITH ANY PUBLIC OFFICE IS THEREFOREMAY BE
CALLED AS A FORM OF BRIBERY.
-IT IS A RELATIONSHIP OF TRUST. FUDECIARY NATURE, RIGHT TO CHOOSE.

CHAPTER 2
Kinds of partners
1. As to contributions
- capitalist partners: those who contribute money or property or both to the common
fund
-industrial partners: those who contribute only their expertise or labour
-capitalist- industrial partners: both money and industry
2. as to liability
General partners: those who can be held liable to third persons
Limited partners: those whose liability for the firm’s debts cannot exceed the amount
an individual invested in the company.
3. As to management:
Managing partners: those who manage actively the business or affairs of the
partnership
Silent Partners: those who do not take part in the business or affairs of the partnership
though they share profits and losses.
Liquidating Partners: those who take charge of the winding up or liquidation of the
partnership affairs after dissolution.
4. As to third Persons
Ostensible partners: takes part and known to the public as a partner in the partnership
Secret Partners: connection with the partnership is not known to the public.
Dormant Partners: those who do not take active part in the business and are not
known to the public as partners. Thus they are both secret and silent partners.
5.As to membership
Real Partners: partners in an existing legal partnership
Partners by estopel: those who are not really partners but represent, or consent to
another representing them to anyone as partners in an existing partnership or in one
that is fictitious or apparent
6.As to contribution of the business affairs after dissolution
Continuing Partners: those who continue the partnership business after the dissolution
Discontinuing Partners: those who do not continue the partnership after the
dissolution
7. As to the nature of the membership
Original Partners: those who are members from the very start of it constitution
Incoming Partners: those who became members of the partnership after its
establishment
Retiring Partners: those who withdraw form the partnership
8. As to state of Survivorship
Surviving partners: those who continue the partnership after its dissolution by reason
of death of a partner.
Deceased partner: those who died while being a member of the partnership.
9. as to expulsion
Expelled Partners: those who are expelled from the partnership by the other partners
for a valid reason.
Expelling partners: those who caused expulsion of a partner for a valid cause.
10.As to the value of contribution;
Majority Partners: those whose controlling to the partnership represents the majority of
the controlling interest.
Nominal Partners: Those whose contribution to the partnership represents the minory
interest.
LEGAL RELATIONSHIP IN A PARTNERSHIP
1.relations between partners
2. relations between the partners on one hand and the partners on the other hand
3. relations between the partners on one hand and the third persons on the other and.
4. relations between the partnership and the third persons.
ARTICLES:
Article 1784. A partnership begins from the moment of the execution of the contract,
unless it is otherwise stipulated. (1679)

General rule: a partnership begins from the moment of the execution of the
contracts
Exceptions: the partners can agree on some other date for the start of the
partnership.
-Anything acquired before the date of start is not part of the partnership yet.

Article 1785. When a partnership for a fixed term or particular undertaking is continued
after the termination of such term or particular undertaking without any express
agreement, the rights and duties of the partners remain the same as they were at such
termination, so far as is consistent with a partnership at will.
A continuation of the business by the partners or such of them as habitually acted
therein during the term, without any settlement or liquidation of the partnership affairs, is
prima facie evidence of a continuation of the partnership. (n)

Partnership with a fixed term: It is one where the life or period of existence of
the partnership has been agreed upon by the partners
Partnership for a particular undertaking: it is one where it will exist until the
purpose is accomplished
Partnership at will: a partnership does not fix its term. The birth and life of a
partnership at will is predicated on the mutual desire and consent of the partners.
The right to choose with whom a person wishes to associate himself is a very
foundation and essence of that partnership.
Article 1786. Every partner is a debtor of the partnership for whatever he may have
promised to contribute thereto.
He shall also be bound for warranty in case of eviction with regard to specific and
determinate things which he may have contributed to the partnership, in the same cases
and in the same manner as the vendor is bound with respect to the vendee. He shall
also be liable for the fruits thereof from the time they should have been delivered,
without the need of any demand. (1681a)

Obligations of every partner:

1. the obligation to contribute what has been promised; the mutual
contribution to a common fund is the first test in order to have a contract of
partnership. The failure to contribute is to make the partner a debtor of the
partnership even if there is no demand.
2. the obligation to deliver the fruits thereof; and
If the property has been promised, the fruits thereof should also be given. The
fruits referred to are those arising form the time they should have been delivered,
without the need of any demand. If the partner is in bad faith, he is liable not only
for the fruits actually produced, but also for those that could have been
produced.
3. the obligation to warrant
The warranty in case of eviction only to specific or determinate things which a
partner contributed to the partnership.

Article 1787. When the capital or a part thereof which a partner is bound to contribute
consists of goods, their appraisal must be made in the manner prescribed in the
contract of partnership, and in the absence of stipulation, it shall be made by experts
chosen by the partners, and according to current prices, the subsequent changes
thereof being for account of the partnership.
Rationale: in order to know the monetary value of the contribution if that partner
as of the date of contribution. For accounting of shares [profit or loss]
Manner of appraisal:
1.) by stipulation or
2.)by experts chose by the partners according to current situation
Article 1788. A partner who has undertaken to contribute a sum of money and fails to
do so becomes a debtor for the interest and damages from the time he should have
complied with his obligation.
The same rule applies to any amount he may have taken from the partnership coffers,
and his liability shall begin from the time he converted the amount to his own use.
(1682)
Cases covered by the liability for the damages and interest
1. Money promised by a partner is not given on time; and
2.Money of the partnership is converted to partner’s own use.,
Rationale: time is of the essence

Article 1789. An industrial partner cannot engage in business for himself, unless the
partnership expressly permits him to do so; and if he should do so, the capitalist
partners may either exclude him from the firm or avail themselves of the benefits which
he may have obtained in violation of this provision, with a right to damages in either
case. (n)
Capitalist partners: - those who contribute money or property or both to the
common fund
-cannot engage in the same business venture because he or she knows
the secrets of the business and might unfairly compete with the existing
partnership.
Industrial partners: those who contribute their industry or labour to the common
fund
Capitalist- industrial partners: those who contribute money or property and
industry or both to the common fund.
CAPITALIST INDUSTRIAL
GR: Cannot engage in the same kind of GR: cannot engage in business for
business as the partnership’s himself
EXCEPTION: Stipulation authorizing him EXCEPTION: If the partnership
expressively permits him

-Shares in the profits according to the -Shares in the profits according to the
agreement; if there’s no agreement, in agreement; if there is no agreement,
proportion to his contribution. receive what is just equitable.

GR: Share in losses according to the GR: Shares in losses according to the
agreement; if any. If there is no agreement; if any.
 agreement, then the agreement as to
profits.
EXCEPTION: in the absence of any EXCEPTION: In the absence of
agreement, in proportion to contribution.agreement as to losses ( even if there’s
an agreement as to profits), the industrial
partner shall not be liable for losses
Remedies of capitalist partners against an industrial partner who engaged in
business for himself:
1. the capitalist partners may exclude the industrial partner from the partnership
plus damages; or
2.the capitalist partners may avail themselves of the benefits which the industrial
partners may have obtained plus damages.
An action for specific performance to compel the partner to perform the promised
industry is not available.

Article 1790. Unless there is a stipulation to the contrary, the partners shall contribute
equal shares to the capital of the partnership. (n)

Article 1791. If there is no agreement to the contrary, in case of an imminent loss of the
business of the partnership, any partner who refuses to contribute an additional share to
the capital, except an industrial partner, to save the venture, shall he obliged to sell his
interest to the other partners. (n)
GR: Capitalist partners are not bound to contribute additional capital.
EXCEPTION: case of imminent loss of the business of the partnership to save
the venture.
- if there is imminent loss but it does not need additional capital, therefore there is
no need to contribute additional capital.
EXCEPTION TO THE EXCEPTION: there is a stipulation to the contrary( not
bound even if there is danger of imminent loss and a need to save a venture.)

Article 1792. If a partner authorized to manage collects a demandable sum which was
owed to him in his own name, from a person who owed the partnership another sum
also demandable, the sum thus collected shall be applied to the two credits in
proportion to their amounts, even though he may have given a receipt for his own credit
only; but should he have given it for the account of the partnership credit, the amount
shall be fully applied to the latter.
The provisions of this article are understood to be without prejudice to the right granted
to the other debtor by article 1252, but only if the personal credit of the partner should
be more onerous to him. (1684)