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Rules to determine existence of partnership Except as provided by 1825 – a person who verbally/written/conduct represents himself as a partner in an existing partnership, he is liable for the partnership if his partners acknowledged the partnership **Where terms of contract not clear – all essential features of a partnership must be present. (Sometimes it is unclear, they may not have had a formal contract) **Where existence disputed – existence could be questioned by an affected party; 3. 2.
Persons not partners as to each other *Matter of intention – each party must give consent. They cannot deny, it has consequences **Estoppels – A&B says that they are partners to C, but they are really not, then they will be considered partners to C, even if they’re not really partners (couple example: A wants to make C Jealous, so they pretended to be a couple) 3. 3. Co-ownership or co-possession **Co-ownership does not establish a partnership: (A inherited an apartment from their father, but they are not partners.
IF they AGREED to share money to buy something for the both of them, I. Egg, an OXBOW, then they are partners. ) 3. . Sharing of gross returns **Sharing of gross returns does not establish a partnership: (A owns a Jeep, B is a driver. They both agree for B to have full control over the Jeep, and that they will equally share gross receipts. No partnership is established because no sharing of profits is contemplated?? ) 3. 5. Receipt of share in the profits **Agreement to share in profit in losses tends strongly to establish a partnership, and vise-versa. BUT it does not affect those engaged in partnerships : Sharing of profit is not an evidence that one is a part of a partnership, because persons could hare profit for different purposes: Y is in A partnership and he died, X is his wife, and the A partnership agreed to give part of the profit to X even though she is not a partner. ) 3. 6. Test and incidents of partnership **A “test” could ensure the existence of a partnership, and once existence is established, certain consequences could follow, even in the absence of any actual understanding between the parties.
Incidents that could mean an existence of partnership: **share in profits and losses, equal rights to management, every partner binds the other partners, all partners are liable for debts except partners tit limited liabilities, partners have a relation, dissolution does not terminate the partnership but continues until the partnership is completed again. 3. 7. Partnership distinguished from co-ownership Co-ownership – ownership of an undivided thing or right belongs to different persons Difference of co-ownership and partnership as to…
Creation – co-ownership is created by law, it may exist even without a contract, while a partnership is created by contract. Juridical personality – co-ownership has a separate Juridical parties while partnership has none. Purpose: co-ownership – Business Law, Articles 1679 1770 Summarization By Pathogenic ownership – 10 years, partnership: no limitation Disposal of interest (share in profit) – partnership: cannot dispose interest without consent of all partners, co-ownership: may freely do so Power to act with third persons – partner could bind the partnership, co-owner could not bind the co-ownership.
Only one Judgment against co-owners does not bind the other co-owners. Effect of death: co-ownership – does not necessarily dissolve co-ownership, partnership: dissolves (A & B agreed to share 1000 pesos to buy a land that would be divided equally between them: co-ownership, cause there is no agreement that it would be used for business purposes. ) 3. 8. Partnership distinguished from conjugal partnership of gains Conjugal partnership gains – formed by marriage wherein husband and wife place in a common fund the income from their separate properties Difference of business partnership and conjugal partnership as to…
Parties – business: voluntary agreement of two or more, conjugal: husband and wife agrees Laws which govern – business: governed by stipulation (agreement) of parties, conjugal: by law Juridical personality – business: as separate Juridical personality, conjugal: none Commencement (beginning) – partnership: from execution of contract (unless stipulated), conjugal: from celebration of marriage, stipulation is void Purpose – business: profit, conjugal: regulate properties of husband and wife Distribution of profits: business: according to agreement or in proportion to the capital shared, conjugal: divided equally Management – business: equally, unless one is appointed as manager, conjugal: husband’s decisions prevail Disposition of shares – business: may be disposed thou the consent of the others, conjugal: cannot be disposed during marriage, even with consent 3. 9. Partnership distinguished from voluntary associations Voluntary associations – used for social purposes (clubs, committees, frats, etc) Difference of business partnership and voluntary associations as to…
Juridical personality – business: has separate Juridical personality, voluntary: none Purpose – business: profit, voluntary: this objective is lacking Contribution of members – business: contribution of capital (money, service, property), voluntary: no contribution THOUGH it fees are usually collected among members Liability of members – business: partners are liable for debts of firm, voluntary: individually liable (for debts authorized by them) Members of associations are not strictly partners, though it may poses business features. 4. Article 1770 Partnership must be legal and must be established for the common benefit of partners Dissolved unlawful partnership by a Juridical person means the profits will be confiscated in favor of state