Business Laws and Regulations
Business Laws and Regulations
REGULATIONS (CONT.)
Acts for apparently carrying on in the usual way the business of With binding effect except:
the partnership 1. When the partner so acting has in fact no authority to act
for the partnership in the particular matter, and
2. The person with whom he is dealing has knowledge of
the fact that he has no such authority
Acts not in the ordinary course of business Do not bind partnership unless authorized by other partners
(par. 2, Art. 1818, NCC)
Acts of strict dominion or ownership: GR: One or more but less than all the partners have no
1. Assigning partnership property in trust for creditors; authority
2. Disposing of goodwill of business; XPNs:
3. Doing an act which would make it impossible to carry on 1. authorized by the other partners; or
the ordinary business of partnership; 2. partners have abandoned the business (par. 2, Art. 1818,
4. Confessing a judgment; NCC)
5. Entering into a compromise concerning a partnership
claim or liability;
6. Submitting partnership claim or liability to arbitration;
7. Renouncing claim of partnership
Acts in contravention of a restriction on authority Partnership is not liableto 3rd persons having actual or
presumptive knowledge of the restriction
Effect of conveyance of a real property
Title in the name of 1 or more partners, and the Conveyance passes title but the partnership
record does not disclose the right of the may recover such property if the partners’ act
partnership; Conveyance in name of partner/s does not bind the partnership:
in whose name title stands 1. The partner so acting has no authority to
act for the partnership, and
2. The person with whom he is dealing has
knowledge of the fact unless the purchaser
of his assignee, is a holder for value,
without knowledge
Title in name of 1 or more or all partners or 3rd Conveyance will only pass equitable interest,
person in trust for partnership; Conveyance provided:
executed in partnership name or in name of 1. The act is one within the authority of the
partners partner, and
2. Conveyance was done in the usual way of
the business
Title in the names of all the partners; Conveyance will pass all the rights in such
Conveyance executed by all the partners property
Rights and Obligations of Partnership
Partnership to partners
1. Refund the amounts disbursed by partner in behalf of
the partnership plus corresponding interest from the
time the expenses are made (e.g. loans and advances
made by a partner to the partnership aside from capital
contribution)
2. Answer for obligations a partner may have contracted
in good faith in the interest of the partnership business
3. Answer for risks in consequence of its management
(Art. 1796)
Rights and Obligations of Partners among
themselves
A change in the relation of Settling the partnership Point in time when all
the partners caused by any business or affairs after partnership affairs are
partner ceasing to be dissolution wound up or completed;
associated in carrying on the end of the partnership
the business. life
Causes of dissolution
Without violating the agreement:
a. Termination of the definite term or specific undertaking
b. Express will of any partner in good faith, when there is
no definite term and no specified undertaking
c. Express will of all partners (except those who have
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. Expulsion of any partner in good faith of a member
Violating the agreement
Unlawfulness of the business
Loss
a. Specific thing promised as contribution is lost or
perished before delivery
b. Loss of a specific thing contributed before or after
delivery, if only the use of such is contributed
Death of any of the partners
Insolvency of any partner or of the partnership
Civil interdiction of any partner
By decree of court under Art. 1831, NCC
a. a partner has been declared insane or of unsound mind
b. a partner becomes in any other way incapable of performing his part of
the partnership contract
c. a partner has been guilty of such conduct as tends to affect prejudicially
the carrying on of the business
d. a partner willfully or persistently commits a breach of the partnership
agreement
e. the business of the partnership can only be carried on at a loss
f. other circumstances render a dissolution equitable
Effects of dissolution
1. Partnership is not terminated
2. Partnership continues for a limited purpose
3. Transaction of new business is prohibited (De
Leon, Comments and Cases on Partnership,
Agency, and Trust, p. 229, 2005 ed)
Effect of dissolution on the authority of a partner