1.
Explain the rules in the division of profits of partners;
According to Article 1797, the distribution of profits will be based on the
partnership agreement. If there is no such agreement provided, the sharing of profits will
be based, first, on the proportion of the capital contribution of each capitalist partner.
However, in the case of an industrial partner who does not provide any capital, such as
money or property, but only contributes services and labor to the partnership, the
distribution of profits must prioritize satisfying them first, under just and equitable
circumstances. If a third person, who has no knowledge or connection with the partners in
the partnership, was the one who entrusted the determination of profit or loss to the
partners, according to Article 1798, the partners have three months to impugn or
complain about the distribution assigned by those third persons.
2. What are the property rights of partners?;
In accordance with Article 1810, partners possess three distinct property rights,
with the first being the right to specific partnership property. This entails the partner
having rights over particular and determinate properties within the partnership. The
partner's entitlement to specific partnership property is formalized through a co-
ownership arrangement. Despite the legal ownership being vested in the partnership
entity, individual partners maintain beneficial interests in the assets they contribute. This
co-ownership structure reinforces the notion that partners retain a stake in and derive
benefits from the specific assets they brought into the partnership.
The second property right of a partner lies in their interest in the partnership,
manifested through specified percentages representing their property rights in their
respective contributions to the partnership. These ownership shares delineate the agreed-
upon proportions of the total capital invested by each partner, highlighting the individual
property rights linked to their interests in the partnership.
The third property right is the partner's entitlement to participate in the
management. This principle advocates for a collaborative management approach,
allowing each partner the opportunity to contribute to decision-making processes and the
overall administration of the partnership. It underscores the democratic nature of
partnerships, where, in the absence of specific managerial designations, all partners
collectively share the property right to actively participate in and contribute to the
management of the partnership.
3. What are the rules on acts of a partner or partners on usual business?
Article 1818 specifies rules regarding the acts of a partner or partners engaged
in the usual business of a partnership. According to this article, actions undertaken by a
partner, including those executed in the name of the partnership for its customary
business, are binding on the partnership, unless the partner lacks the actual authority to
act on behalf of the partnership, and the counterparty is aware of this absence of
authority. The article recognizes the practicality of business transactions by stipulating
that third parties entering into contracts with a managing partner can reasonably presume
that the partner has the necessary consent from their co-partner, based on the ordinary
course of business. Moreover, it further extends to the obligation created between
managing partners by the articles of partnership, emphasizing that while partners must
seek each other's consent, this obligation doesn't extend to third parties contracting with
the partnership. It also addresses the authority of a partner, such as a widow, to sell real
estate owned by the partnership, distinguishing between real estate held as stock in trade
and that held merely as a business site. It asserts that when the partnership's purpose
includes buying and selling real estate, the sale of such immovable property falls within
the ordinary powers of the partner, aligning with the partnership's objectives.
4. What are the rules on acts of a partner or partners on unusual business?
It is the same as with question number 3 which was covered by article 1818
where it includes the acts of a partner not apparently for the carrying the usual way of
business of the partnership where actions by a partner not for the customary conduct of
the partnership's business do not automatically bind the partnership. In such cases, the
key determinant for the binding nature of these actions is explicit authorization from the
other partners. This means that if a partner wishes to engage in activities outside the
ordinary scope of the partnership's business, they must obtain permission from their
fellow partners for those actions to be legally valid and binding on the entire partnership.
This requirement serves to ensure that decisions involving unconventional or non-routine
business activities are made collectively.
5. What is the difference between dissolution and winding up of partnership?
The difference between dissolving and winding up a partnership, as explained in
Article 1828 "The dissolution of a partnership is the change in the relation of the partners
caused by any partner ceasing to be associated in carrying on, as distinguished from the
winding up of the business" it highlights that dissolution represents a shift in the internal
dynamics of the partnership resulting from a partner's cessation of involvement. This is
distinct from the winding-up of the business, which follows as a subsequent step or a
process to settle business affairs after dissolution. It is like pressing pause and then hitting
play, dissolution is hitting pause, it happens when a partner stops being involved,
changing how everyone works together. After this, the winding-up process is like hitting
play again it's the process where they settle everything after the pause. Moreover,
dissolving doesn't immediately end the partnership, it's more like the beginning of a
change without automatically splitting up assets. The partnership continues after
dissolving until they finish wrapping up their business. This order shows that dissolving
starts a change in how partners work together, and then the winding-up process concludes
the partnership, dividing up assets among the partners.
