Law on Partnership Reviewer, Lecture notes of Civil Law

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1784. WHEN A PARTNERSHIP BEGINS

GR: A partnership begins from the moment of the EXECUTION OF THE CONTRACT ER: unless it is otherwise stipulated

1785. DURATION OF A PARTNERSHIP a. for a fixed term b. for a particular undertaking c. continued IF CONTINUED, after the fixed term or undertaking without express agreement Effect: the rights and duties of the partners remain the same as they were at such termination, so far as consistent with a partnership at will. PRIMA FACIE EVIDENCE of continuation: A continuation of the business by the partners or such of them as habitually acted therein during the term, WITHOUT settlement or liquidation of the partnership affairs. 1786. DUTIES OF EVERY PARTNER Every partner is: a. A debtor of the partnership for whatever he may have promised to contribute thereto b. Bound for warranty in case of eviction with regard to specific and determinate things which he may have contributed to the partnership. (as if vendor is bound to the vendee) c. Liable for the fruits thereof from the time they should have been delivered, without need of any demand. 1787. WHEN CONTRIBUTION CONSISTS OF GOODS When a capital or a part thereof which a partner is bound to contribute CONSISTS OF GOODS their appraisal must be: 1. In a manner stipulated in the contract of partnership 2. In the absence of stipulation, by experts chosen by the partners The appraisal is according to the current prices, the subsequent changes thereof being for the account of partnership. 1788. WHEN A PARTNER FAILS TO CONTRIBUTE AND HIS LIABILITY FOR CONVERSION

A partner is liable for interest and damages if:

1. He has undertaken to contribute a sum of money and he fails to do so
   • Liability begins from the time when he should have complied with the obligation
2. He took any amount from the partnership coffers
   • Liability begins from the time he converted the amount to his own use 1789. OBLIGATION OF AN INDUSTRIAL PARTNER GR: An industrial partner CANNOT engage in business for himself ER: partnership EXPRESSLY PERMITS him to do so Effects if he engaged in business for himself The capitalist partners may either:
3. Exclude him from the firm, or
4. Avail themselves of the benefits which he may have obtained in violation of this provision. Wirh a right to damages in either case. 1790. AMOUNT OF CONTRIBUTION OF PARTNERS GR: They shall contribute in equal shares to the capital of the partnership ER: When there is a stipulation to the contrary 1791. A CAPITALIST PARTNER IS OBLIGED TO SELL HIS INTEREST TO THE OTHER PARTNERS TO SAVE THE VENTURE:
5. In case of an imminent loss of the business of the partnership
6. That partner refuses to contribute an additional share to the capital Exception:
7. Industrial partners
8. If there exists an agreement to the contrary 1792. RULE IF MANAGING PARTNER COLLECTS A CREDIT
9. If a partner authorized to manage collects a demandable sum
10. Such sum is owed to him in his own name
11. He collects such sum from a person a. who also owed the partnership another sum b. such sum is also demandable Effect: the sum 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.

Exception: If the receipt is given for the account of the PARTNERSHIP credit, it shall be FULLY applied to the partnership credit.

1793. RULE IF A PARTNER RECEIVED HIS SHARE OF PARTNERSHIP CREDIT 1. If any partner has received in whole or in part his share of a partnership credit 2. Other partners have not collected theirs 3. The debtor is thereafter insolvent Effect: The partner is obliged to bring to the partnership capital what he received, even though he may have given his receipt for his share only. 1794. DAMAGES CANNOT BE OFFSET BY BENEFITS A partner is responsible to the partnership for the damages suffered by it through his fault. He cannot compensate it with the profits and benefits he may have earned for the partnership by his industry. The courts can lessen his responsibility if: 1. Through the partner’s extraordinary efforts in other activities of the partnership 2. unusual profits have been realized 1795. RISK OF LOSS

1796. OBLIGATION OF THE PARTNERSHIP FOR DISBURSED AMOUNTS

The partnership shall be responsible to every partner:

1. The amounts he may have disbursed on behalf of the partnership
2. Its corresponding interest, from the time the expenses are made
3. Obligation he may have contracted a. In good faith b. In the interest of the partnership business
4. Risks in consequence of its management. 1797. HOW PROFITS ARE DISTRIBUTED Losses and profits shall be distributed:
5. In conformity with the agreement
6. If only the share of profit has been agreed, the share of losses shall be in the same proportion.
7. If no stipulation: a. The share of each partner for profit or loss shall be in proportion to what he may have contributed b. Industrial partner is not liable for losses Industrial partner’s share:
8. He shall receive such share as may be just and equitable.
9. If he contributed capital, he shall receive a share in the profit in proportion to his capital.

WHAT IS CONTRIBUTED?

WHO BEARS THE RISK

OF LOSS?

Not fungible or determinate things (usufruct – use & fruits) Borne by the partner who owns them Fungible Things that will deteriorate Borne by the partnership If contributed to be sold The thing is brought and appraised in the inventory (in the absence of stipulation) Borne by the partnership, limited to the value of which they are appraised

1798. DESIGNATION OF THIRD PERSON’S SHARE IN PROFITS AND

LOSSES

Partners may agree to intrust to a third person the designation of the share of each one in the profits and losses. This may be impugned only when it is manifestly inequitable. A partner cannot complain (impugn) such decision if:

1. The partner has begun to execute the decision of the third person
2. He failed to impugn it within a period of three months from the time he had knowledge thereof. 1799. EXCLUSION OF PARTNER TO ANY SHARE IN PROFIT OR LOSSES Stipulation of which is void. 1800. PARTNERSHIP MANAGER
3. He is appointed in the articles of partnership
4. He executes all acts of administration despite the opposition of his partners, unless he acted in bad faith.
5. His power: GR: Is irrevocable without just or lawful cause ER : can be revoked if: a. Made by the vote of the partners representing the controlling interest. b. Power is granted after the partnership has been constituted. 1801. RULE WHEN THERE ARE TWO OR MORE MANAGERS Two or more partners may SEPARATELY EXECUTE all acts of ADMINISTRATION if there is no stipulation :
6. Of their respective duties
7. That one of them shall not act without the consent of all the others (unanimity)

• if someone opposes: decision of the majority shall prevail
• if there is a tie: the matter shall be decided by the partners owning the controlling interest. 1802. STIPULATION OF UNANIMITY FOR THE ACTS OF MANAGING PARTNERS
• If it is stipulated
• That the managing partners shall act with the consent of the others (there must be unanimity)
• The concurrence of all shall be necessary for the validity of the act

The absence or disability of any one of them cannot be alleged,

• Unless there is imminent danger of grave or irreparable injury to the partnership. 1803. RULE IF THE MANNER OF MANAGEMENT HAS NOT BEEN AGREED UPON

1. All the partners shall be considered agents Effect: - Whatever anyone may do alone shall bind the partnership

• Without prejudice to the provisions of Article 1801 (when there are two or more managers)

2. Any important alteration in the immovable property made by the partner shall be with the consent of the others, even if such alteration is useful to the partnership.

• Court’s intervention may be sought: i. If the partner refused to give consent ii. Such refusal is manifestly prejudicial to the interest of the partnership.

1804. ASSOCIATE OF PARTNER ( delectus personae)

1. Every partner may associate another person with him in his share.
2. The associate shall be admitted to the partnership with the consent of all the other partners.
3. This also applies to a partner who is the manager. 1805. PARTNERSHIP BOOKS
4. Shall be kept, subject to the agreement of the parties
5. At the principal place of business of the partnership Every partner at a reasonable hour: a. shall have access to b. may inspect and copy any of them. 1806. DUTY OF PARTNER TO GIVE INFORMATION Partner shall render on demand true and full information of all things affecting the partnership:
6. to any partner
7. the legal representative of any deceased partner
8. partner under legal disability 1807. DUTY TO ACCOUNT FOR ANY BENEFIT Every partner:
9. must account to the partnership for any benefit
10. can be hold as trustee for it any profit derived by him without the consent of the other partners

a. from any transaction connected with the formation, conduct, or liquidation of the partnership b. from any use by him of its property

1808. BUSINESS PROHIBITION ON CAPITALIST PARTNERS Capitalist partner 1. cannot engage for their own account in any operation which is of the kind of business in which the partnership is engaged ER: if there is a stipulation to the contrary 2. A partner who violates this prohibition: a. shall bring to the common funds any profits accruing to him from his transactions b. shall personally bear all the losses. 1809. RIGHT TO DEMAND FORMAL ACCOUNT Any partner shall have the right to a formal account as to partnership affairs: 1. if he is wrongfully excluded from the partnership business or possession of its property by his co-partners; 2. if the right exists under the terms of any agreement; 3. as provided by Article 1807; 4. Whenever other circumstances render it just and reasonable. 1810. PROPERTY RIGHTS OF A PARTNER: 1. Right in a specific partnership property; 2. Interest in the partnership 3. Right to participate in the management 1811. CO-OWNERSHIP IN SPECIFIC PARTNERSHIP PROPERTY Partners are co-owners, its incidents are such that: 1. A partner has an equal right with his partners to possess specific partnership properties for partnership purposes, ER: he has no right to possess such property for any other purpose without the consent of his partners; 2. His right in the partnership property is not assignable ER: except in connection with the assignment of rights of all the partners in the same property 1814. CHARGING ORDER. Any judgment creditor of a partner, on due application to a competent court which entered the judgment or any other court may:

1. CHARGE the interest of the debtor partner with payment of the unsatisfied

amount of such judgment debt with interest thereon.

2. May then later on APPOINT A RECEIVER of his share of the profits, and of any other money due or to fall due to him in respect of the partnership - he is entitled to any relief to conserve partnership assets for partnership purposes, thus, he may nullify efforts to assign specific partnership property
3. Make ALL ORDERS, DIRECTIONS, ACCOUNTS AND INQUIRIES which the debtor partner might have or which the circumstances of the case may acquire. This is without prejudice to the preferred rights of partnership creditors under art. 1827 REDEMPTION. May be redeemed at any time before foreclosure, or in case of a sale being directed by the court, may be purchased without thereby causing dissolution. Redemption means EXTINGUISHMENT of the charge. IF AFTER FORECLOSURE:
4. With SEPARATE PROPERTY by any one or more of the partners; or
5. with PARTNERSHIP PROPERTY, by any one or kore of the partners with the CONSENT OF ALL THE PARTNERS whose interests re not so charged or sold INTEREST in the partnership may be charged or levied upon, but his INTEREST IN A SPECIFIC PARTNERSHIP PROPERTY cannot be attached PREFERENTIAL RIGHTS OF PARTNERSHIP CREDITORS Partnership creditors (as distinguished from separate creditors of each partner) are entitled to PRIORITY over partnership assets. On the other hand, individual SEPARATE CREDITORS have preference over separate or individual properties. Art. 1827 is preference of credits of partnership creditors. Section 3 1815. FIRM NAME Every partnership shall operate under a firm name.
6. May or may not include the name of one or more of the partners
7. Those who, not being, members of partnership, include their names in the firm name shall be SUBJECT TO THE LIABILITY OF A PARTNER. Liable because of estoppel, but not subject to the rights of partners.

The firm name shall RETAIN ALL ITS RIGHTS under the old name if: a. The change is not important b. It is made in good faith

1816. LIABILITY OF ALL PARTNERS, INCLUDING INDUSTRIAL PARTNERS

1. Liable PRO RATA this is proportionate to their contribution.
2. With ALL THEIR PROPERTY
3. after all the partnership assets have been exhausted
4. For the contracts which may be entered into a) In the name and for account of the partnership b) Under its signature c) By a person authorized to act for the partnership Any partner may enter into a SEPARATE OBLIGATION to PERFORM PARTNERSHIP CONTRACT. Here he acts FOR HIMSELF for the benefit of the partnership. Liability is to be distinguished form losses because the INDUSTRIAL PARTNER is liable for this obligation but not for partnership losses. He can, later on, recover from the capital partner what he has paid, unless there is a contrary agreement. The liability of the partners are SUBSIDIARY AND JOINT (after Exhausting the assets) NOT PRINCIPAL AND SOLIDARY LIABILITY OF A PARTNER WHO HAS WITHDRAWN. he is not liable for the obligations incurred after the withdrawal  The party defendants for a suit in collection of credits are the partnership and the partners.

 The discharge by a plaintiff of one of the partners dis not mean he is no longer a partner. They must not be held liable for the discharged partner.  A stipulation that all the industrial partners and some of the capitalist partners are exempted from liability in so far as third persons are concerned is NULL AND VOID

1817. STIPULATION TO EXEMPT LIABILITY IS VOID. This includes an industrial partner exempting himself to be liable to third parties. Exception: they can stipulate an exemption on the liability as against each other. Conflict with article 1799, harmonized. No stipulation as to exemption from sharing of profit and losses. In 1817. They can stipulate an exemption from liability as against themselves, the liability is IN EXCESS OF THE ORIGINAL CAPITAL CONTRIBUTED. THUS, he cannot recover his capital. LIABILITY - responsibility to third persons LOSSES - responsibility among partners. 1818. WHEN A PARTNER CAN BIND OR CANNOT BIND THE PARTNERSHIP

1. Every partner is an agent of the partnership: (BINDS THE PARTNERSHIP) a) For the purpose of its business b) Whose acts, including the execution of an instrument for apparently carrying on in the usual business of the partnership. He acts in behalf and in the name of the partnership DOES NOT BIND THE PARTNERSHIP:
2. If the partner so acting HAS NO AUTHORITY TO ACT for the partnership in the PARTICULAR MATTER.
3. the person with whom he is dealing HAS KNOWLEDGE of the fact that he has NO SUCH AUTHORITY For APPARENTLY carrying the business of the partnership. There must be authority

and third person mist be in good faith to bind the partnership NOT APPARENTLY

3. ACTS not apparently for the usual business of the partnership (acts which must be authorized, express or implied, by the other partners. Authority must be UNANIMOUS): a) Assign the partnership property in trust for the creditors or on the assignee's promise to pay the debts of the partnership; an assignment is made on the condition that the assignee would pay the debt of the partnership. b) Dispose the goodwill of the business c) Do any other act which would make it impossible to carry on the business of a partnership d) Confess a judgment e) Enter into a compromise concerning a partnership claim or liability f) Sub,it a partnership claim or liability to arbitration g) Renounce a claim of the partnership These are 7 acts of dominion or ownership There is MUTUAL AGENCY in partnership: each partner acts as principal on his behalf, and as agents for his co-partners for the firm. Implied authorization:
   1. Other partners do not object although they have knowledge of the act.
   2. He acts for apparently carrying on in the usual way of business 1819. CONVEYANCES OF REAL PROPERTY IN EXCESS OF AUTHORITY
4. The title of the property is in the partnership name. Conveyance in the partnership name EFFECT: partnership can recover this. EXCEPT: (absolutely binding, cannot be recovered by the partnership) a) the partner's acts bind the partnership under 1818 b) the property has been conveyed by the grantee or the person claiming from such

grantee is a HOLDER FOR VALUE - has no knowledge that the partner has exceeded his authority Conveyance not in the name of the partnership, BUT IN HIS OWN NAME EFFECT: passes the equitable interest of the partnership provided: a) act is within the authority of the partner under first par of 1818.

2. The title of the property is in the NAME OF ONE OR MORE BUT NOT ALL, records does not disclose the right of the partnership EFFECT: the named partner in the title may convey the property, partnership can recover if: a) the partner's act does not bind the partnership according to 1 818 EXCEPTION: (where no recovery can be made) Purchaser or assignee is a holder for value and in good faith.
   3. The title to the property is in the name of one or more or all partners, or third person in trust for the partnership Conveyance: partnership name or in his own name EFFECT: passes the equitable interest of the partnership, provided: a) act is under 1818
   4. In the names of all partners. Conveyance by ALL PARTNERS EFFECT: passes all the rights in such property Title Conveyance Binding effect Proviso Partnership name Partnership name Partnership can recover Compliance with art. 1818/conveyed by grantee or HFV In the partner's name Passes the equitable interest of the partnership 1818 Name of one or more but not all, records does not disclose the rights Made by a partner which the title stands Partnership can recover, no recovery can be made if

of a partnership there is HFV One or more partners All partners Person in trust for the partnership Partnership name or in his own name Passes equitable title All partners All partners Passes all the rights in such property

1820. ADMISSION OR REPRESENTATION OF A PARTNER is an evidence against the partnership, under the conditions: 1. Admission or representation 2. Made by any partner 3. Within the scope of his authority 4 in accordance with his title ① When admission is made BEFORE dissolution - binding when the partner has authority to act on PARTICULAR MATTER ② AFTERR DISSOLUTION - binding only if admission were necessary to wind up the business ----- insert 1821 from office pc ----- 1822. WRONGFUL ACT OR OMISSION OF A PARTNER The partnership is liable to the same extent as the partner so acting or omission to act:

1. By an wrongful act or omission of any partner a) Acting in the ordinary course of the business of partnership OR b) With the authority of his co-partners
2. Loss or injury is caused to any person, not a partner

3. Or penalty is incurred.

• Innocent partners are also civilly personally liable subject to their right to recover from the guilty partner.
• this article also covers an injury caused to the employee because the law speaks of " any person, not being a partner " EXCEPTION TO THE RULE:

1. The act or omission is not done within the scope of his authority
2. The act or omission is NOT WRONGFUL
3. Wrongful act or omission did not produce any liability
4. It was committed AFTER the firm has DISSOLVED, provided that it is not in connection with winding up. 1823. LIABILITY OF PARTNERS FOR MISAPPROPRIATION Partnership is bound to make good the loss:
5. Partner a) acting WITHIN THE SCOPE OF HIS APPARENT AUTHORITY b) receives money or property of a third person c) and misapplies it.
6. Partnership a) in the course of its business b) receives money or property of a third person c) and the money or property so received is MISAPPLIED BY A PARTNER while it is in the custody of the partnership. The third person can sue either the partner alone, who misappropriated the money, or all the partners, or the partnership. Because the liability is solidary under 1824.

1824. SOLIDARY LIABILITY OF PARTNERS CHARGEABLE TO THE

PARTNERSHIP UNDER ART 1822 and 1823 TORTS and DAMAGES: solidary. Which results from individual acts of the partners CONTRACTUAL OBLIGATIONS : joint (art. 1816) pro rata. Results from partnership obligation  ER: in cases of workmen's compensation where the liability f the partners is SOLIDARY because of public policy for the full protection of labor.

1825. PARTNER AND PARTNERSHIP BY ESTOPPEL

1. When a person, by words spoken or written or by conduct, a) represents himself, b) or consents to another representing him to anyone,
2. as a partner in an existing partnership or with one or more persons not actual partners,
3. made in a public manner
4. whether the representation a) has or has not been made or communicated b) or with the knowledge of the apparent partner making the representation or consenting to its being made
5. IS LIABLE to any such person, who has on the faith of such representation given credit to the actual or apparent partnership: i. When a partnership liability results, he is liable AS THOUGH HE WERE AN ACTUAL MEMBER of the partnership ii. When no partnership liability results, he is liable pro rata with the other persons, if any, so consenting to the contract or representation as to incur liability, otherwise separately (partner by estoppel) PARTNERSHIP BY ESTOPPEL When a person
6. has been thus represented to be a partner in an existing partnership,
7. or represented with one or more persons not actual partners,

EFFECT:

a) he is an agent of the persons consenting to such representation b) Which will bind them to the same extent and in the same manner as though he were a partner in fact, with respect to persons who rely upon the representation.

3. When all the members of the existing partnership consent to the representation EFFECT: a partnership act or obligation results; but in all other cases it is the joint act or obligation of the person acting and the person consenting to the representation. Partner by estoppel is committed by one person only Partnership by estoppel is committed when representation involves several persons pretending to be a firm  the admission or representation must be PLAIN AND CLEAR ESTOPPEL DOES NOT APPLY IF: There is misrepresentation and third party IS NOT DECEIVED REQUISITES TO MAKE A PERSON A PARTNER BY ESTOPPEL:
4. Person must represent himself as a partner when in fact he is NOT A PARTNER, or consents to another representing him to anyone as a partner in an existing partnership or with one or more persons not actual partners.
5. Third person relied on the said misrepresentation
6. Third person has given credit to the actual or apparent partnership
7. Alleged partner cannot disallow liability by claiming he is not actually a partner. NOTE: a partnership wanting of legal formalities may be CONSIDERED AS PARTNERSHIP BY ESTOPPEL with regard to their contractual obligations. 1826. ENTRY OF A NEW PARTNER INTO AN EXISTING PARTNERSHIP

1. A person admitted as a partner into an existing partnership
2. is liable for all the obligations of the partnership a) arising before his admission
3. as though he had been a partner when such obligations were incurred,
4. EXCEPT that this liability shall be SATISFIED only out of PARTNERSHIP PROPERTY
5. unless there is a stipulation to the contrary. An original partner is liable insofar as his share in the firm is concerned, and with his own individual property. The newly admitted partner becomes an ORDINARY ORIGINAL PARTNER for the obligation incurred AFTER his admission Although the partnership is dissolved because of the admission of the new partner, partnership assets are also available even to the old creditors including that of the contribution of the new partner. All creditors, irrespective of the times when they become creditors of the partnership, SHOULD HAVE EQUAL RIGHTS IN SUCH PROPERTY. 182 7. PREFERENCE OF PARTNERSHIP CREDITORS
6. The creditors of the partnership shall be preferred to those of each partner as regards the partnership property.
7. Without prejudice to this right, the private creditors of each partner may ask the attachment and public sale of the share of the latter in the partnership assets.  Partnership property of the partners cannot be taken as payment for partnership debts until the partnership property of the firm has been exhausted. CONFLICT: 1811 provides that specific partnership property is not subject to attachment or execution. To reconcile this the phrase " share in the latter of the partnership assets " should not be interpreted as specific partnership property but merely as SHARE IN THE PROFITS AND LOSSES.

DISSOLUTION AND WINDING UP

1828. DISSOLUTION DEFINED

Dissolution of a partnership

1. is the change in the relation of the partners
2. caused by any partner ceasing to be associated in the carrying on
3. as distinguished from the winding up of the business. 1829. EFFECT OF DISSOLUTION in dissolution, the partnership is NOT TERMINATED, but continue until the winding up of partnership affairs is completed. DEFINITIONS: WINDING UP is the process of settling business affairs after dissolution.

CHAPTER III

TERMINATION is the point in time after all the partnership affairs have been wound up.  An action for accounting and payment of money allegedly due a partner, a receiver must be appointed to wind up the dissolved partnership.  A dissolved partnership cannot evade previous obligations entered into by the partnership

1830. CAUSES OF DISSOLUTION

1. Without violation of the agreement between the partners: a) By the termination of the definite term or particular undertaking specified in the agreement; if the partnership continues after this period PARTNERSHIP AT WILL. b) By the express will of any partner , who must act in good faith, when no definite term or particular undertaking is specified; if in BAD FAITH, partnership dissolves but liable for damages. Because of the mutual agency that arises in the partnership. The doctrine of DELECTUS PERSONAE allows the partners to have the power, although not necessarily the right to dissolve the partnership. c) By the express will of all the partners who have not assigned their interests or suffered them to be charged for their separate debts, either before or after the termination of any specified term or particular undertaking; d) By the expulsion of any partner from the business bona fide in accordance with such power conferred by the agreement between the partners; because the number of partners decrease. Expulsion in bad faith may effectuate dissolution because there would be apparent lack of confidence. Without prejudice to liability
2. In contravention of the agreement if they agree for a definite term or particular undertaking between the partners, where the circumstances do not permit a dissolution under any other provision of this article, by the express will of any partner at any time; with or without justifiable cause.
3. By any event which makes it unlawful for the business of the partnership to be carried on or for the members to carry it on in partnership; if the law or ordinance declares the transaction o object thereof to be unlawful; if unlawful from the beginning, there is no juridical personality. All its acts are void
4. Note: this article does not apply to GENERIC THINGS, because genus does not

perish a) When a specific thing, which a partner had promised to contribute to the partnership, perishes before the delivery; b) In any case by the loss of the thing, when the partner who contributed it having reserved the ownership thereof, has only transferred to the partnership the use or enjoyment of the same; naked owner reserves the ownership, the loss is borne by him, as if he had not contributed anything. Since the thing itself is lost, the usufruct is also lost c) but the partnership SHALL NOT BE DISSOLVED by the loss of the thing when it occurs after the partnership has acquired the ownership thereof - firm bears the loss because after all he had NOT given his contribution;

5. By the death of any partner; because in the reduction in number a) PARTIAL - surviving partners continue the business among themselves b) TOTAL - proceeds to the liquidation (status: partnership in liquidation )  No profit gained after the dissolution could be collected by heir. He is only entitled to the profits already obtained at the time of the death of the partner.
6. By the insolvency of any partner or of the partnership; need not be judicially declared, what is enough is that the assets must be less than the liabilities
7. By the civil interdiction of any partner; incapacity to dispose of his property, inter vivos
8. By the decree of court under the following article. It must be a final judgment  The partners cannot agree that the causes for automatic dissolution is limited or restricted  Disposition of all real property of a partnership engaged in a real estate brokerage will not dissolve the partnership  After dissolution partners become CO-OWNERS. hence, the right to demand accounting can be transferred.  The right to dissolve is incidental to partnership and wrongful dissolution would be a cause for damages. 1831. COURT DECREE OF DISSOLUTION
9. A partner is the one who can file a complaint in court. a) A partner has been judicially declared insane in any judicial proceeding or b) is shown to be of unsound mind. Ratio: partner will be incapacitated to

contract

2. A partner becomes in any other way incapable of performing his part of the partnership contract if the partner enters into govt. service and would prohibit from participating
3. A partner has been guilty of such conduct as tends to affect prejudicially the carrying on of the business.
4. A partner willfully or persistently commits a breach of the partnership agreement , or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable to carry on the business of the partnership with him
5. The business of the partnership can only be carried on at a loss
6. Other circumstances render dissolution equitable. On the application of the purchaser of a partner's interest under article 1813 or 1814
7. After the termination of a specified term or particular undertaking - can be filed AFTER THE TERMINATION...
8. At any time if the partnership is a partnership at will when the interest was assigned or when the charging order was issued can be filed anytime. Note: A partnership is considered JUDICIALLY DISSOLVED from the time a judicial decree has become FINAL AND EXECUTORY  It is not a cause for partnership dissolution if there was neither allegation nor proof of fraudulent or dishonest practices nor when it is apparent in the partnership agreement that almost exclusive control was vested in one partner. Neither can it be dissolved if differences and discord can be settled by the partners themselves. Appointment of RECEIVER: pending suit for dissolution at the court's discretion. Except (receiver is not needed):
   1. If all the firm assets are in the hands of a sheriff under a writ of replevin
   2. When existence of a partnership is denied. 1832. EFFECTS OF DISSOLUTION. Dissolution terminates all authority of any partner to act for the partnership:
9. With respect to the partner: insofar as the partners themselves

a) When dissolution is NOT BY the act, insolvency or death of a partner; or b) When dissolution is by such act, insolvency, or death of a partner, in cases where art. 1833 so requires. Relations of the firm toward third persons

2. With respect to persons NOT partners, as declared in Article 1834  With respect to obligations previously entered into whether the partnership is a creditor or debtor, it STILL HAS PERSONALITY for the winding up of its affairs. 1833. EFFECT IF DISSOLUTION IS CAUSED BY A PARTNER's ACT, INSOLVENCY, OR DEATH GR: each partner is liable to his co-partners for HIS SHARE OF ANY LIABILITY created by any partner as if the partnership had not been dissolved ER: (not bound to share in the liability)
3. The dissolution being by act of any partner, the partner acting for the partnership had knowledge of the dissolution : or
4. The dissolution being by the death or insolvency of a partner, the partner acting for the partnership had knowledge or notice of the death or insolvency. Note of the notice here Difference between KNOWLEDGE and NOTICE: Term knowledge presupposes actual awareness of a fact. Mere notice is more of a presumption like the leaving of a letter in an ordinary business on the table of a person which he did not open 1834. GENERAL RULE ON EFFECT OF DISSOLUTION; EXCEPTIONS after dissolution a PARTNER CAN BIND THE PARTNERSHIP, except as provided in the third paragraph of this article:
5. By any act appropriate for WINDING UP partnership affairs or by COMPLETING TRANSACTIONS unfinished at dissolution;
6. By any transaction which would bind the partnership if dissolution had not been taken place, provided the other party to the transaction: a) Had EXTENDED CREDIT to the partnership prior to dissolution and HAD NO KNOWLEDGE or NOTICE of the dissolution

b) Though he had NOT SO EXTENDED CREDIT, had nevertheless known of the partnership prior to dissolution, and having no knowledge or notice of dissolution, the fact of dissolution had NOT BEEN ADVERTISED in a newspaper of general circulation in the place (or in each place if more than one) at which the partnership business was regularly carried on. The liability of a partner under the first paragraph, no. 2, shall be satisfied OUT OF PARTNERSHIP ASSETS alone when such partner had been prior to dissolution:

1. Unknown as a partner to the person with whom the contract is made; and
2. So far unknown and inactive in partnership affairs that the business reputation of the partnership could not be said to have been in any degree due to his connection with it. The partnership is in no case bound by any act of a partner after dissolution:
3. Where the partnership is dissolved because it is unlawful to carry on the business, unless the act is appropriate for winding up partnership affairs; or
4. When the partner has become insolvent; or
5. Where the partner has NO AUTHORITY to wind up partnership affairs, except by a transaction with one who: a) Had extended credit to the partnership prior to dissolution and had no knowledge or notice of his want of authority; or b) Had not extended credit to the partnership prior to dissolution, and, having no knowledge or notice of his want of authority, the fact of his want of authority has not been advertised in the manner provided for advertising the fact of dissolution in the first paragraph no. 2(b). Nothing in this article shall affect the liability under article 1825 of any person who after dissolution represents himself or consent to another representing him as a partner in a partnership engaged in carrying on business. 1835. DISSOLUTION DOES NOT DISCHARGE EXISTING LIABILITY OF A PARTNER; EXCEPTION The dissolution of the partnership DOES NOT OF ITSELF DISCHARGE the existing liability of any partner. A partner is discharged from any existing liability upon the dissolution of the partnership:
6. By an agreement to that effect between

a) HIMSELF, b) THE PARTNERSHIP CREDITOR and c) THE PERSON OR PARTNERSHIP CONTINUING THE BUSINESS

2. and such agreement CAN BE INFERRED FROM the course of dealing between the creditor having knowledge of the dissolution and the person or partnership continuing the business The INDIVIDUAL PROPERTY of a deceased partner shall be liable for all obligations of the partnership incurred while he was a partner, but subject to the prior payment of his separate debts. Ratio: if it is otherwise, partnership creditor will be prejudiced, particularly if a partner will just withdraw anytime from the firm. The liability of a retiring partner as regards partnership obligations incurred before the dissolution shall continue as that of a principal debtor.  A partner who has WITHDRAWN from the partnership is RELEASED from liability only when  There was liquidation  And his withdrawal has been duly published.  An action for accounting against the legal representatives of the deceased managing or industrial partner will not prosper because upon the latter's death the responsibility devolves to the other partners. 1836. WINDING UP Unless otherwise agreed, (extrajudicial) a. The partners who HAVE NOT WRONGFULLY DISSOLVED the partnership ; or b. Legal representatives of the last surviving partner, not insolvent has the RIGHT TO WIND UP the partnership affairs. PROVIDED: (judicial) That any partner, his legal representative or his assignee, upon cause shown, may OBTAIN WINDING UP BY THE COURT. Under the control and direction of the court, upon proper cause. The person to wind up must be APPOINTED by the court. He SHOULD NOT BE the legal representative but

the surviving partner. PETITIONER: any partner, his legal representative or his assignee. PROFITS V. CAPITAL considered as:

1. PROFITS OF THE FIRM: profits earned after dissolution is still considered as profit when it is a result of a transaction made BEFORE THE DISSOLUTION.
2. CAPITAL to be distributed under the rules of co-ownership: if other income is earned AFTER THE DISSOLUTION. capital is computed as to the TIME OF DISSOLUTION, this is after profits and losses have already been computed. Powers or prerogatives of the liquidating partner. 1837. CAUSES OF DISSOLUTION and its EFFECTS.
3. if dissolution is caused IN ANY WAY: ie. Death, arrival of the term and inevitable insolvency Each partner, as against, a. His co-partners, and b. All persons claiming through them in respect of their interests in the partnership ① May have the partnership property applied to discharge its liabilities ② The surplus applied to pay in cash the net amount owing to the respective partners. Except: a. in contravention of the partnership agreement b. There is an agreement to the contrary.
4. If dissolution is caused in CONTRAVENTION OF THE PARTNERSHIP AGREEMENT The rights of the partners shall be: ie. Deliberate withdrawal before the arrival of