1. What is dissolution?
- It is the change in the relationship of partners caused by any partner ceasing to be associated in
the carrying on of the business.
2. Is the partnership terminated on dissolution?
- No, because according to article 1829, the partnership will not terminate during dissolution, but
the partnership will continue until the winding up of partnership affairs is completed.
3. Differentiate winding-up and dissolution.
- Dissolution is the termination of the partnership relationship, while winding-up is the process of
liquidating the partnership’s assets and settling liabilities.
4. What are the causes for the dissolution of a partnership?
- In articles 1830, it stated that there are several reasons why a partnership went to dissolution.
Based on the article there are eight reasons:
● Without violation of the agreement between the partners means that the dissolution of
the partnership is because of the fixed term or will of any partner.
● In contravention of the agreement between the partners
● When the business of the partnership is unlawful
● When a specific thing, a partner had promised to contribute to the partnership, perishes
before the delivery
● By the death of any partner
● By the insolvency of any partner or partnership
● By civil interdiction of any partner
● By decree of court under the following article 1700 and 1701
5. Give the instances when the court may decree a dissolution of the partnership.
- In article 1831, the court may decree a dissolution of the partnership in two different scenarios.
First is “On application by or for a partner”
● A partner had been declared insane
● Incapable of performing his part of the partnership
● A partner has been guilty of such conduct
● A partner willfully or persistently commits a breach of the partnership agreement
● The business of the partnership can only be carried on at loss
● Other circumstance render a dissolution equitable
- Second is “On the application of the purchaser of a partner’s interest
● After the termination of the specified term
● At any time if the partnership was a partnership at will when the interest was assigned
6. What are the effects when new contracts are entered into by a partner with third persons after
dissolution?
- Generally, the partnership is not bound unless the contract is necessary for winding up or the
third party was unaware of the dissolution.
7. What acts will bind and acts that will not bind the partnership even after dissolution?
- Acts necessary for winding up bind the partnership; new business transactions do not.
8. What are the rights of an innocent partner in case of dissolution in violation of partnership
agreement?
- They may claim damages, demand an accounting, or seek to continue the business with proper
compensation.
9. What are rights of the injured partner where the partnership contract is rescinded on the ground
of fraud or misrepresentation?
- In article 1838, there are three rights of the injured partner where the partnership contract is
rescinded on the ground of fraud or misrepresentation:
● Right of lien on, or retention of, the surplus of partnership property after satisfying
partnership liabilities for any sum of money paid or contributed by him
● Right to subrogation in palace of partnership creditors after payment of partnership
● Right of indemnification by the guilty partner against all debts and liabilities of the
partnership.
10.Summarize the rules for the distribution of partnership assets after dissolution.
- Assets are used to pay debts, return capital contributions, and distribute remaining profits
among partners.
