losses, he shall bear them alone. Partners, Art. 1810.

The property rights of a partner

however, by stipulation may permit it. The are:
law permits him to carry on a business not 1. His rights in specific partnership
connected or competing with that of the property;
partnership. Law is silent on whether he can
engage in same line of business for the 2. His interest in the partnership;
account of another.
Prohibition still applies because of fiduciary 3. His right to participate in the
position imposing duties of utmost good management, extent of property rights
faith. He may not carry on any other business of a partner.
in rivalry w/ the partnership.
Principal Rights
Reason for prohibition 1. Rights in specific partner property;
Fiduciary nature of relationship imposes 2. Interest in partnership;
obligation of utmost good faith. Rule
prevents use of info obtained in course of 3. 3. Right to participate in
transaction of partnership business or management.
because of connection w/ firm regarding
business secrets and clientele of firm to its RELATED RIGHTS
prejudice. 1. Right to reimbursement for amounts
advanced to partnership and to
Art. 1809. Any partner shall have the right to indemnification for risks inconsequence
a formal account as partnership affairs: of management (art. 1796).
- The partner is entitled to be reimbursed
1. If he is wrongfully excluded from the for any money they have paid out or be
partnership business or possession of its compensated for any risks taken in their
property by his co-partner; management of the partnership.
2. Right of access and inspection of
2. If the right exists under the terms of any partnership books (art. 1805).
agreement; - The right to access and inspect records
and documents related to the
3. Provided by article 1807; partnership.
3. Right to true and full information of all
4. Whenever other circumstances render it things affecting partnership (art. 1806).
just and reasonable, Right of the partner - Partners in a partnership have the right
to a formal account. to know all information that affects the
partnership.
General rule: During existence of
4. Right to formal account of partnership
partnership, a partner is not entitled to a
affairs under certain circumstances (art.
formal account of partnership affairs.
1809).
Reason: rights of partner amply protected in
- Partners have the right to receive an
arts1805 and 1806. In addition, it would
accounting of the partnership's financial
cause much inconvenience and unnecessary
information when certain conditions
waste of time.
have been met.
5. Right to have partnership dissolved also
Exception: In the special and unusual
under certain conditions (arts.
situations enumerated under art. 1809.
18301831).
Right of partner to demand an accounting
w/o bringing about dissolution is a
- Partners can end their partnership
necessary corollary to right to share in
under certain conditions.
profits. A formal account is a necessary
incident to the dissolution of the
Partnership property and
partnership.
partnership capital distinguished
Partnership Partnership

property capital
Changes Variable: its Constant: it
value value may remains
vary from day unchanged
today w/ as the
changes in amount is fix
market value by
agreement
of the
partners, and
is not
affected by
fluctuations
in the value
of the
partnership
property,
although it
may be
increased
and
decreased by
 partners;unanimous Ownership of certain property Property
consent of use by the partnership –
the partners. 1. Where there is no express agreement
that property
Assets Includes not The
2. A partner’s right in specific
Included only the aggregate partnership property is not assignable
original of the except in connection with the assignment of
rights of all the partners in the same
capital individual
property;
contributions, contributions
3. A partner’s right in specific
but also all made by the partnership property is not subject to
attachment or execution, except on a claim
property partners in against the partnership;
subsequently establishing
4. A partner’s right in specific
acquired or continuing partnership property is not subject to legal
support under art. 291 nature of a partner’s
because of the right in specific partnership property
the partnership.
Art. 1811 contemplates tangible property
partnership
but not intangible things. A partner is a
or w/
coowner w/ his partners of specific
partnership
partnership property, but the rules on
funds,
coownership do not necessarily apply. The
including
legal incidents of this tenancy in partnership
partnership
are distinctively characteristic of the
name and
partnership relation. They are as follows:
goodwill.
used by a partnership constitutes Art. 1811. A partner is co-owner with his
partnership property, such use does not partners of specific partnership property.
make it partnership property, and whether it The incidents of this co-ownership are such
is so depends on the intention of the parties, that;
w/c may be shown by proving an express
agreement or acts of particular conduct. The 1. A partner, subject to the provision of this
intent of the parties is the controlling factor. title and any agreement between the
Property acquired by a partner with partner, has an equal right with his partners
partnership funds – Unless a contrary to possess specific partnership property for
intention appears, property acquired by a partnership purposes; but he has no right to
partner in his own name w/ partnership possess such property for any other purpose
funds is partnership property. However, without the consent of his
if the property was acquired after dissolution
but before the winding up of the partnership Equal rights of possession - Ordinarily, a
affairs, it would be his separate property but partner has an equal right to possess specific
he would be liable to account to the partnership property for partnership
partnership for the funds used in its purposes. None of the partner scan
acquisition. possesses and uses the specific
partnership property other than for
Property acquired with partnership funds is partnership purposes w/o the consent of
usually considered to be owned by the the other partners. Should any of them use
partnership, but if it is acquired after the property for his own benefit, he must
dissolution but before the partnership is account, like a stranger, to the others for the
wound up, it is the partner’s separate profits derived there from or the value of his
property but they are liable to reimburse the wrongful possession or occupation. A
partnership for the funds used to acquire it. partner wrongfully excluded from
possession of partnership property by a co-
partner has a right to formal account and
may even apply for a judicial decree of partnership property is not subject to
dissolution. On the death of a partner, his attachment, execution, garnishment, or
right in specific partnership property vests in injunction, w/o the consent of all the
the surviving partners. By agreement, the partners except on a claim against the
right to possess specific partnership partnership. For the same reason that the
property may surrender. In the absence of property belongs to the partnership, the
special agreement, however, neither partner partners cannot claim any right under the
separately owns, or has the exclusive right of homestead or exemption laws when it is
possession of any partnership property or attached for partnership debts. However, a
any proportional part thereof. Each has judgment creditor may levy upon a
dominion over the entire partnership partner’s interest in the partnership itself
property. The possession of partnership because it is actually his property, by means
property by one partner is the possession of of a “charging order.” The right of
all until his possession becomes adverse. A the partners to specificpartnership
partner cannot initiate title by adverse property is not subject to legal support
possession until and unless he makes an since the property belongs to
adverse claim. the partnership and not to the partners.
Right not assignable - A partner cannot However, their interest in the partnership is.
separately assign his right to specific The method of reaching a judgment debtor’s
partnership property but all of them can interest in partnership property is
assign their rights in the same property. specifically set forth in art.1814.

Reasons for non-assignability: Art. 1812. A partner’s interest in the

1. It prevents interference by outsiders in partnership is his share of the profits and
partnership affairs; surplus.
2. It protects the right of other partners
and partnership creditors to have Share of profits and surplus – The partner’s
partnership assets applied to firm debts; interest in the partnership consists of his
3. It is often impossible to determine the share in the undistributed profits during the
extent of a partner’s beneficial interest life of the partnership as a going concern and
in a particular partnership asset. Reason his share in the undistributed surplus after
for impossibility: Each partner, having a its dissolution.
beneficial interest in the partnership
property considered as a whole, has a This means that each partner's share of the
beneficial interest in each part. Where, partnership's profit and any remaining
however, none of the above reasons surplus (assets, etc.) after dissolution of the
apply, an authorized assignment by a partnership is determined by the original
agreement and any subsequent changes to
partner of his right in specific partnership that agreement.
property is void, but it may be regarded
as a valid assignment of the partner’s Profits: the excess of returns over
interest in the partnership. The law expenditure in a transaction or series of
allows a retiring partner to assign his transactions; or the net income of the
rights in partnership property to the partnership for a given period.
partner(s) continuing the business.
Surplus: the assets of the partnership after
Right limited to share of what remains after partnership debts and liabilities are paid and
partnership debts has been paid Strictly settled and the rights of the partners among
speaking, no particular partnership property themselves are adjusted. It is the excess of
or any specific or an aliquot part thereof can assets over liabilities. If the liabilities are
be considered the separate or individual more than the assets, the difference
property of any partner. The whole of represents the extent of the loss.
partnership property belongs to the
partnership considered as a juridical person, Art.1813. A conveyance by a partner by his
and a partner has no interest in it but his whole interest in the partnership does not of
share of what remains after all partnership itself dissolve the partnership, or, against the
debts are paid. Consequently, specific other partners in the absence of agreement,
entitle the assignee, during the continuance law, however, provides the nonassigning
of the partnership, to interfere in the collaborates w/ a ground for dissolving
management or administration of the the partnership if they so desire.
partnership business or affairs, or to require
any information or account of the The law does not force any partner to stay in
partnership transactions, or to inspect the a partnership, and the assignment of one
partnership books; however it merely partner's interest in the partnership does not
entitles the assignee to receive the end the partnership. However, nonassigning
accordance with his contract, the profits to partners have the right to dissolve the
which the assigning partner would otherwise partnership if they choose.
be entitled.
Remedy of other partners
In case of fraud in the management of the Dissolution of partnership not intended –
partnership, the assignee may avail himself Many partnership agreements are made
of the usual remedies. In case of dissolution merely as security for loans, the assigning
of the partnership, the assignee is entitle to partner never intending to destroy the
receive his assignor’s interest and may partnership relation. If the assigning partner
require an account from the date only of the neglects his duties after assignment, the
last account agreed to by all partners. other partners may dissolve the partnership
under art. 1830. Dissolution of partnership
Effect of assignment of partner’s whole intended – A partner’s conveyance of his
interest in partnership. interest in the partnership operates as
dissolution of the partnership only when it is
- If a partner transfers their full interest in clear that the parties contemplated and
the partnership, the partnership is not intended the entire withdrawal from the
necessarily dissolved and the assignee is partnership of such partner and the
not allowed to manage the business, termination of the partnership as between
seek information, or inspect books. They the partners.
are only entitled to receive profits
according to the contract. If fraud or If a partner assigns their interest in a
dissolution occurs, the assignee can take partnership agreement, but does not intend
appropriate legal action and will receive to dissolve the partnership, the other
the assignor's interest if dissolution partners can dissolve the partnership in
occurs. accordance with Article 1830. If the partner's
intent is clear that they wish to withdraw
A partner’s right in specific partnership from the partnership and terminate it, then
property is not assignable but he may assign their assignment will dissolve the
his interest in the partnership to any of his partnership.
co-partners or to a third Person irrespective
of the consent of the other partners, in the Rights of assignee of partner’s interest
absence of agreement to the contrary. 1. To receive in accordance w/ his contract
the profits accruing to the assigning
A partner has the right to transfer their partner;
interest in a partnership to another partner The assigning partner will receive the profits
or a third person, regardless of the other that they are entitled to under their
partners' consent, unless they have agreed contract.
otherwise. 2. To avail himself of the usual remedies
provided by law in the event of fraud in
Rights withheld from assignee the management;
1. To interfere in the management. To use the legal options available if someone
2. To require any information or account. has committed fraud in the business
3. To inspect any of the partnership books. management.
3. To receive the assignor’s interest in case
No one can be compelled to be partners w/ of dissolution;
someone else. The assignment does not To get the assignor’s share once the
divest the assignor of his status and rights as partnership has ended.
a partner nor operate as dissolution. The
4. To require an account of partnership 2. With partnership property, by any one
affairs, but only in case the partnership or more of the partners with the consent
is dissolved, and such account shall of all the partners a whose interest are
cover the period from the date only of not so charged or sold, nothing in this
the last account agreed to by all title shall be held to deprive a partner of
partners. The purchaser of a partner’s his right, if any, under the exemption
interest may apply to the court for laws, as regards his interest in the
dissolution after the termination of the partnership.
specified term or undertaking or at any
time if the partnership is one at will. Partners may sell or lend against their
interests with the consent of all other
To ask for an accounting of partnership partners, and this title does not prevent a
affairs when the partnership has ended, partner from claiming an exemption on their
taking into consideration the date from the interests under applicable laws.
most recent period accepted by all partners.
The person buying a partner’s interests can Application for a charging order after
take court action to dissolve the partnership securing judgement on his credit
after the specific term or commitment is up, While a separate creditor of a partner cannot
or anytime if it is a partnership at will. attach or levy upon specific partnership
property for the satisfaction of his credit
Art. 1814. Without prejudice to the because partnership assets are reserved for
preferred rights of the partnership creditors partnership creditors, he can secure a
on due application to a competent court by judgment on his credit and then apply to the
any judgement creditor of the partner, the proper court for a “charging order”,
court which entered the interest of the subjecting the interest of the debtor partner
debtor partner with payment of the in the partnership w/ the payment of the
unsatisfied amount of such judgement debt unsatisfied amount of such judgment w/
with the interest thereon; and may then or interest thereon w/ the least interference w/
later appoint a receiver of his share of the the partnership business and the rights of
profits, and of any other money due or to the other partners. By virtue of the
fall due to him in respect of the partnership, charging order, any amount or portion
and make all other orders, directions and thereof w/c the partnership would
accounts and inquiries which the debtor otherwise pay to the debtor-partner should
partner might have made, or which instead be given to the judgment creditor.
circumstances of the case may require. The This remedy, however, is w/o prejudice to
interest charged may redeem at any time the preferred rights of partnership creditors
before foreclosure, or in any case of a sale whose claims should be satisfied first.
being directed by the court, may be
purchase without thereby causing This sentence states that a creditor may not
dissolution: take property from a partnership to satisfy
their debts but they can apply for a charging
This article allows a judgement creditor of a order subjecting the interest of the debtor
partner to apply to a court for payment of partner to the payment of their judgment.
their judgement debt with interest from the This allows the creditor to receive any
partner's share of the profits of the money that would otherwise be paid to the
partnership. The court can also appoint a debtor partner. This is done with the least
receiver and make any other orders, interference with the partnership business
directions and inquiries that are necessary. and the rights of the other partners, with the
creditors receiving payment first in order of
The judgement creditor also has the option
priority.
to redeem or purchase the interest before
foreclosure or sale is directed by the court
Availability of other remedies
without causing the dissolution of the
Art. 1814 have made this an exclusive
partnership.
remedy so that a writ of execution will not
be proper. However, if the judgment debt
1. With separate property, by any one or
remains unsatisfied, the court may resort to
more of the partners;
other courses of action notwithstanding the partner’s interest or share in the partnership
issuance of the charging order. property is really his property.

If the judgment debt is not paid, the court A partner does not have any protection or
may use other remedies in addition to the legal right against their interest in specific
charging order. partnership property when a debt is due
from the partnership. However, if
Redemption or purchase of interest charged partnership debts have been paid, the
Redemptioner – The interest of the partner is still entitled to the protections of
debtorpartner so charged may be redeemed exemption laws for their interest in the
or purchased w/ the separate property of partnership as a whole.
any one or more of the partners, or w/
partnership property but w/ the consent of Art. 1815. Every partnership shall operate
all the partners whose interests are not so under a firm name, which may or may not
charged or sold. include the name of one or more of the
partners, those who, not being members of
A redemptioner is someone who pays off a the partnership, include their names in the
partner's debt with either their own firm name, shall be subject to liability of a
personal assets or with the consent of the partner
other partners.
Partners in a business must use a name for
Redemption Price – The value of the the partnership that can include the name of
partner’s interest in the partnership has no one or more of the partners; those who have
bearing on the redemption price w/c is likely their name in the firm name but are not
to be lower since it will be dependent on the partners are still liable like a partner.
amount of the unsatisfied judgment debt.
Requirement of the firm name Meaning of
The redemption price for the partner's word “firm” – The name, title, or style under
interest in the partnership is determined by which a company transacts business; a
the amount of the unsatisfied judgment partnership of two or more persons; a
debt, not the value of the partner's interest, commercial house. In its common
and it is likely to be lower than the value. acceptation, the term implies a partnership.
The term is also used as synonymous with
Right of redeeming non-debtor partner – “company,” “house,” and “concern.”
There deeming non-debtor partner does not
acquire absolute ownership over the debtor- The application is under consideration
partner’s interest but holds it in trust for him Meaning of phrase “under consideration” –
consistent w/ principles of fiduciary Currently being assessed or looked at.
relationship.
Importance of having a firm name
This sentence means that a non-debtor A partnership must have a firm name under
partner has the right to redeem the debtor- which it will operate. A firm name is
partner's interest, but they must do so in a necessary to distinguish the partnership,
way that is consistent with the principles of which has a distinct and separate juridical
a fiduciary relationship. personality from the individuals composing
the partnership and from other
Rights of partner under exemption laws A partnerships and entities.
partner cannot claim any right under the
homestead laws or exemption laws when The partnership must have a unique name
specific partnership property is attached for that will separate it from other individuals
partnership debt. W/ respect, however, to and businesses. This name will represent
the partner’s interest in the partnership as the partnership legally.
distinguished from his interest in specific
partnership property, the partner may avail Right of the partners to choose firm
himself of the exemption laws after name The partners enjoy the utmost
partnership debts have been paid. A freedom in the selection of the
partnership name. As a general rule, they Article 1816 distinguished from article
may adopt any firm name desired. 1787
Article 1816 applies in cases where third
Use of misleading name – The partners party creditors are concerned as it falls
cannot use a name that is identical or under the heading of section 3. “Obligations
deceptively confusingly similar to that of of the Partners with Regard to Third
any existing partnership or corporation or to Persons.” Article 1797 applies only where
any other name already protected by law or the issue is among the partners as it falls
is patently deceptive, confusing or contrary under the heading of Section 1, Chapter 2,
to existing laws, as to mislead the public by which states: “Obligations of the Partners
passing itself off as another partnership or Among Themselves.” The pro rata liability of
corporation, or its goods or services as those partners to third persons under Article 1816
of such other company. being a clear mandate of the law, any
stipulation changing or modifying such
Liability inclusion of name in the firm name liability is void except as among the partners.
– Persons who, not being partners, include
their names in the firm name do not acquire Article 1816 is about the obligations
the rights of a partner but shall be subject between partners and third parties, whereas
to the liability of a partner insofar as 3rd Article 1787 is about the obligations
Persons without notice are concerned. Such between partners. Article 1816 deals with
persons become partners by estoppel. Art. the pro rata liability of partners to third
1815 does not cover the case of a limited parties, which is a mandate of the law, and
partner who allows his name to be included any changes or modifications to this liability
in the firm name, orof a person continuing are only valid between the partners.
the business of a partnership after
dissolution, who uses the name of the Refers to partnership obligations
dissolved partnership or the name of a Article 1816 which refers to the payment of
deceased partner as part thereof. partnership obligations arising from
contracts clearly imposes subsidiary and
Persons who have their name included in a joint (pro rata) liability for contractual debts
company's name but are not partners do owing to third persons upon all the partners,
not gain partner rights, but they will be held including industrial partners who ordinarily
liable to parties outside the company as are not liable for losses. The liability is
though they were partners. This is known as subsidiary because the partners cannot be
"partner by estoppel". Article 1815 does not made answerable with their separate
apply to limited partners or people using a property unless the partnership property has
dissolved partnership's name or a deceased first been exhausted.
partner's name in their company.
Partners are jointly and severally liable for
Art. 1816. All partners, including industrial any contractual debts that arise from their
ones, shall be liable pro rata with all their partnership, including industrial partners
property and after all the partnership assets who would not usually be liable for losses.
have been exhausted, for the contracts They are only liable after the partnership
which may be entered into in the name and property has been exhausted.
for the account of the partnership, under its
signature and by a person authorized to act Pro rata liability – Literally, pro rata liability
for the partnership. However, any partner means proportionate distribution of liability.
may enter into a separate obligation to In the law of obligations, the concurrence of
perform a partnership contract. two or more debtors in one and the same
obligation makes it prima facie a joint (pro
Partners are responsible for the contracts rata) obligation, and the debts is presumed
made on behalf of the partnership, and all of divided into as many equal shares as there
their property may be used to pay for them are debtors and each one of them is bound
if the partnership assets are not enough. A to pay only his share.
partner may also take on a separate
responsibility to fulfill the Partnership
contract.
Art. 1817. Any stipulation against the liability An act of a partner which is not apparently
laid down in the preceding article shall be for the carrying on of business of the
void, except as among the partners. partnership in the usual way does not bind
the partnership unless authorized by the
Partners cannot agree to limit each other's other partners.
responsibility when it comes to their shared
legal obligations. Partners may not be held responsible for the
actions of one partner unless the other
Industrial partner cannot exempt himself partners have given approval.
from liability to third persons Each one of
the industrial partners is liable to third Except when authorized by the other
persons for the debts of the firm and if he partners or unless they have abandoned the
has paid such debts out of his private business, one or more but less than all the
property during the life of the partnership, partners have no authority to:
when its affairs are settled he is entitled to
1. Assign the partnership property in trust
credit for the amount so paid, and if its
for creditors or on the assignee’s
results that there is not enough property in
the partnership to pay him, then the promise to pay the debts of the
capitalist partners must pay him. Our partnership.
conclusion is that neither on principle nor on One or more partners, but less than all of
authority can the industrial partner be them, cannot assign partnership property to
relieved from liability to third persons for the settle debts without the consent of the other
debts of the partnership. partners, or if the other partners have left
the business.
Industrial partners cannot be relieved from
2. Dispose of the goodwill of the business.
responsibility for the debts of the
partnership; they must bear the burden of One or more partners, but less than all of
any debts owed to third parties. If an them, cannot dispose of the business's
industrial partner pays these debts from reputation.
their own private funds, they are entitled to 3. Do any other act which would make it
reimbursement from the other partners. In impossible to carry on the ordinary
the end, no matter the circumstances, the business of a partnership.
industrial partner will remain liable for the
One or more partners, but less than all of
partnership’s debts.
them, cannot do anything to make it
Art. 1818. Every partner is an agent of the impossible to run the ordinary business of a
partnership for the purpose of its business, partnership.
and the act of every partner, including the 4. Confess a judgment.
execution in the partnership name of any One or more partners, but less than all
instrument, for apparently carrying on in the of them, cannot admit to a legal
usual way the business of the partnership of judgment.
which he is a member binds the partnership,
5. Enter into a compromise concerning a
unless the partner so acting has in fact no
partnership claim or liability.
authority to act for the partnership in the
particular matter, and the person with One or more partners, but less than all
whom he is dealing has knowledge of the of them, cannot enter into a
fact that he has no such liability. compromise about a partnership
obligation.
Each partner is authorized to take actions 6. Submit a partnership claim or liability to
related to the business of the partnership, arbitration.
and these actions will bind the partnership, One or more partners, but less than all of
unless the partner has no authority to act in
them, cannot submit a partnership
that particular matter, and the person they
are working with knows about the lack of obligation to arbitration.
authority. 7. Renounce a claim of the partnership.
One or more partners, but less than all of
them, cannot give up a partnership right.
 purchaser or his assignee, is a holder for
No act of a partner in contravention of a value, without knowledge.
If the title of real property is held under the
restriction on authority shall bind the
name of some partners but not all, the
partnership to persons having knowledge of
partners whose names appear on the title
the restriction. may sell the property. However, the
partnership can reclaim the property if the
If a partner does something
partners selling it did not have permission to
outside their authority in the
do so, unless the person or people buying
partnership, the partnership
the property were a value holder and did not
is not responsible to any
have information of the partnership's rights.
outsiders who know of the
Where the title to real property is in the
restriction.
name of one or more or all the partners, or
Art. 1819. Where title to real property is in in a third person in trust for the
the partnership name, any partner may partnership, a conveyance executed by a
convey title to such property by a
partner in the partnership name, or in his
conveyance executed in the partnership
own name, passes the equitable interest of
name; but the partnership may recover such
the partnership, provided the act is one
property unless the partner's act binds the
partnership under the provisions of the first within the authority of the partner under the
paragraph of article 1818, or unless such provisions of the first paragraph of
property has been conveyed by the grantee Article 1818.
or a person claiming through such grantee to
If a partnership owns real
a holder for value without knowledge that
the partner, in making the conveyance, has estate, a partner can transfer
exceeded his authority. the property's title on behalf of
the partnership if it is within
Any partner can transfer ownership of real the scope of the partner's
estate owned by the partnership as long as authority.
their actions do not exceed their authority
and the buyer is unaware of the lack of Where the title to real property is in the
authority. name of all the partners a conveyance
executed by all the partners passes all their
Where title to real property is in the name of rights in such property.
the partnership, a conveyance executed by a
partner, in his own name, passes the If all the partners
equitable interest of the partnership, own property
provided the act is one within the authority together, all of them
of the partner under the provisions of the must sign for any
first paragraph of Article 1818. transfer of rights to
that property.
Conveyance of real property owned by a
partnership is legally valid when a partner Art. 1820. An admission or representation
signs the document in their own name, if made by any partner concerning
they have the authority to do so according to partnership affairs within the scope of his
Article 1818. authority in accordance with this Title is
evidence against the partnership.
Where title to real property is in the name of
one or more but not all the partners, and the A statement made by a partner about
record does not disclose the right of the company activities which is allowed by law is
partnership, the partners in whose name the considered evidence against the
title stands may convey title to such partnership.
property, but the partnership may recover
such property if the partners’ act does not
bind the partnership under the provisions of
the first paragraph of Article 1818, unless the Art. 1821. Notice to any partner of any
matter relating to partnership affairs, and
the knowledge of the partner acting in the If a partner acts or omits to act in an unlawful
particular matter, acquired while a partner way while conducting business transactions
or then present to his mind, and the on behalf of the partnership, the partnership
knowledge of any other partner who is responsible for any losses or costs incurred
reasonably could and should have by a third party.
communicated it to the acting partner,
operate as notice to or knowledge of the Partner liable for wrongful act of a partner
partnership, except in the case of fraud on The partners are liable for the negligent
the partnership, committed by or with the operation of a vehicle by a partner, acting in
consent of that partner. the course of business, which results in a
traffic accident.
Partners must be informed of any matters
relating to the partnership. If a partner If he is driving a partnership-owned vehicle
knows about something or should for purposes of his own, the acting partner
reasonably have known about it, the alone is liable it is not a partnership tort.
knowledge is considered to be that of the
entire partnership, unless the partner was Partnership may proceed against negligent
involved in fraud on behalf of the partner
partnership. Where a partnership is liable to a third
person, there is a right of indemnity against
Notice to partner is notice to partnership the partner whose negligence caused the
Clearly a third person desiring to give notice injuries.
to a partnership of some matter pertaining
to the partnership business need not If one partner is negligent, the other
communicate with all of the partners. If partners have a right to be reimbursed for
notice is delivered to a partner, that is an any losses they incur due to that partner's
effective communication to the partnership. negligence.

This sentence means that if a third-party Art. 1823. The partnership is bound to make
wants to give the partnership some sort of good the loss:
notification or notice, they only need to
communicate with one of the partners. This Where one partner acting within the
notification to the partner will be regarded scope of his apparent authority receives
as notification to the entire partnership. money or property of a third person
and misapplies it.
Knowledge before becoming partner Where
the knowledge or notice had been received 1. One person with authority misuses money
by the partner before he became a partner, or property from another person.
and his partners are ignorant of this, and he
is not the partner acting in the particular Where the partnership in the course of
matter, there is no doubt that there has its business receives money or property
been neither knowledge of nor notice to the of a third person and the money or
partnership.
property so received is misapplied by
Partner was unaware of knowledge prior to any partner while it is in the custody of
becoming partner. the partnership.

2. The partner misused money or property

Art. 1822. Where, by any wrongful act or
given to the partnership by a third party
omission of any partner acting in the
while it was in the partnership's
ordinary course of the business of the
possession.
partnership or with the authority of
copartners, loss or injury is caused to any
person, not being a partner in the
partnership, or any penalty is incurred, the
partnership is liable therefor to the same
extent as the partner so acting or omitting to
Partnership bound by partner’s breach of
act.
trust Business partners solidarily liable Arts.
1711 and 1712 of the New Civil Code and
The partnership is liable for the Sec. 2 of the Workmen’s Compensation Act
conversion (misappropriation) of money reasonably indicate that in compensation
or property entrusted to the partnership by cases, the liability of business partners
a third person. The effect under Article 1824 should be merely joint and not solidary,
is the same whether by the partnership and and one of them happens to be insolvent,
subsequently misappropriated by a partner. the amount awarded to the dependents of
No partner is allowed to assign any part of the deceased employee would only be
their interest in the partnership to any other partially satisfied, which is evidently
person without the consent of all other contrary to the intent and
partners. purpose of the law to give full protection to
the employee.
Art. 1824. All partners are liable solidarily
with the partnership for everything Business partners are generally responsible
chargeable to the partnership under for compensation claims in a joint, rather
than a solidary, manner. If one partner
Articles 1822 and 1823.
happens to be insolvent, the amount of
All partners are compensation awarded to the employee's
legally responsible dependents would not be fully paid, which
together with the does not meet the intention of the law to
partnership for any provide full protection to the employee.
debts of the
Art. 1825. When a person, by words
partnership
spoken or written or by conduct,
according to Articles
represents himself, or consents to another
1822 and 1823.
representing him to anyone, as a partner in
Law imposes solidary liability an existing partnership or with one or
The law imposes solidary liability upon the more persons not actual partners, he is
partners and the partnership in cases of torts liable to any such persons to whom such
and acts of conversion by a partner as representation has been made, who has,
provided in Art. 1824. It may be stated that on the faith of such representation, given
the liability of a partner for a debt of the credit to the actual or apparent
partnership depends upon whether the partnership, and if he has made such
debts is contractual or it arises from tort or representation or consented to its being
conversion. If it arises from contract, the made in a public manner he is liable to such
liability is subsidiary and pro rata; if it arises person, whether the representation has or
from tort or conversion, the liability is has not been made or communicated to
solidary. such person so giving credit by or with the
knowledge of the apparent partner making
1. Partners and the partnership are the
responsible for any wrongdoings such as representation or consenting to its being
torts or conversion. made:

2. A partner is liable for a debt of the If someone represents themselves, or

partnership depending on whether the debt allows someone else to represent them, as
was caused by a contract or by a tort or a partner in a business, to someone who
conversion. then gives them credit on the faith of that
representation, they are liable for that
3. If a debt was caused by a contract, the
credit, even if they did not communicate it
partner's liability is shared amongst
to the person who gave the credit.
everyone equally.
When a partnership liability results, he
4. If a debt was caused by a tort or
is liable as though he were an actual
conversion, the partner's liability is complete
and solidary. member of the partnership.
1. He is held equally responsible for any Estoppel – A preclusion, in law, which
liabilities that arise from the partnership. prevents a man from alleging or denying a
fact, in consequence of his own previous act,
allegation, or denial of a contrary tenor.

When no partnership liability results, he Person bound by his representation A

is liable pro rata with the other persons, person who hold himself out as a partner in
if any, so consenting to the contract or a business, or consents to his being so held
representation as to incur liability, out, is liable on contracts made with third
persons who deal with the persons carrying
otherwise separately.
on the business on the faith of the
2. If no one is liable on the contract, he is representation. He is stopped to deny the
liable proportionally with other parties who apparent agency.
agreed to the contract or statement that
caused the liability, otherwise he is liable This means that if someone in a business
alone. holds themselves out as a partner or
contributor to a business, they are legally
responsible for any agreements they
have made with third-party individuals or
companies that have accepted that
representation. The individual is not able
When a person has been thus represented to to deny the agency that was implied.
be a partner in an existing partnership, or
Art. 1826. A person admitted as a partner
with one or more persons not actual
into an existing partnership is liable for all
partners, he is an agent of the persons
the obligations of the partnership arising
consenting to such representation to bind
before his admission as though he had been
them to the same extent and in the same
a partner when such obligations were
manner as though he were a partner in fact,
incurred, except that this liability shall be
with respect to persons who rely upon the
satisfied only out of partnership property,
representation. When all the members of
unless there is a stipulation to the contrary.
the existing partnership consent to the
representation, a partnership act or
obligation results; but in all other cases it is Someone joining an existing partnership is
the joint act or obligation of the person liable for any debts and other obligations of
acting and the persons consenting to the the partnership that were created before
representation. they joined, but are only responsible for
payment if the partnership has the funds to
do so, unless otherwise stated.

1. By the express will of any partner,

Incoming partner liable for existing b. who must act in good faith, when
obligations
no definite term or particular is
A newly admitted partner is liable for
obligations of the partnership at the time of specified.
his admission. The obligation of the
incoming partner shall be satisfied only out 2. By the express will of all the
c. of partnership property. This is not a partners who have not assigned
harsh rule because the incoming their interests or suffered them to
partner be charged for their separate debts
“partakes of the benefit of the partnership, either before or after the
property, and an established business. He termination of any specified term or
has every means of obtaining full knowledge particular undertaking.
of protecting himself, because he may insist
on the liquidation or settlement of existing d.
partnership debts. On 3. By the expulsion of any partner
from the business bona fide in
accordance with such a power
conferred by the agreement
between the partners
the other hand, the creditors have no means
of protecting themselves.

1. Any partner may terminate an

agreement without providing a specific
reason, as long as they act in good faith.

2. All partners must agree to assign or be

charged for any debts that were incurred
prior to or after the end of the partnership
agreement.

3. The partner who is removed from the

business in line with the agreement
between the partners cannot be protected
by the creditors.

Art. 1827. The creditors of the partnership

shall be preferred to those of each partner

as regards the partnership property. In contravention of the agreement

2 between the partners, where the
. Without prejudice to this right, the private circumstances do not permit a
creditors of each partner may ask the
dissolution under any other provision of
attachment and public sale of the share of
this article, by the express will of any
the latter in the partnership assets.
partner at any time.
C
Creditors of the partnership have priority
over those of individual partners, except
where the agreement between the
partners prevents it and the
circumstances allow a dissolution. Private
creditors of each partner can request the
attachment and public sale of their
partner's share in the partnership assets.

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.