OBLIGATIONS OF THE PARTNERS

OBLIGATIONS OF THE PARTNERS

A. OBLIGATIONS OF THE PARTNERS AMONG THEMSELVES

Obligations with respect to contribution of property:
1. To contribute at the beginning of the partnership or at the stipulated time the money, property or industry which he may have promised to contribute
2. To answer for eviction in case the partnership is deprived of the determinate property contributed
3. To answer to the partnership for the fruits of the property the contribution of which he delayed, from the date they should have been contributed up to the time of actual delivery
4. To preserve said property with the diligence of a good father of a family pending delivery to partnership
5. To indemnify partnership for any damage caused to it by the retention of the same or by the delay in its contribution

Effect of Failure to contribute property promised:
1. Partners becomes ipso jure a debtor of the partnership even in the absence of any demand
2. Remedy of the other partner is not rescission but specific performance with damages from defaulting partner

Obligations with respect to contribution of money and money converted to personal use
1. To contribute on the date fixed the amount he has undertaken to contribute to the partnership
2. To reimburse any amount he may have taken from the partnership coffers and converted to his own use
3. To pay for the agreed or legal interest, if he fails to pay his contribution on time or in case he takes any amount from the common fund and converts it to his own use
4. To indemnify the partnership for the damages caused to it by delay in the contribution or conversion of any sum for his personal benefits

Obligations with respect to contribution to partnership capital
1. Partners must contribute equal shares to the capital of the partnership unless there is stipulation to contrary
2. Partners (capitalist) must contribute additional capital In case of imminent loss to the business of the partnership and there is no stipulation otherwise; refusal to do so shall create an obligation on his part to sell his interest to the other partners

Requisites:
a. There is an imminent loss of the business of the partnership
b. The majority of the capitalist partners are of the opinion that an additional contribution to the common fund would save the business
c. The capitalist partner refuses deliberately to contribute (not due to financial inability)
d. There is no agreement to the contrary

Obligation of managing partners who collects debt from person who also owed the partnership
1. Apply sum collected to 2 credits in proportion to their amounts
2. If he received it for the account of partnership, the whole sum shall be applied to partnership credit
Requisites:
a. There exist at least 2 debts, one where the collecting partner is creditor and the other, where the partnership is the creditor
b. Both debts are demandable
c. The partner who collects is authorized to manage and actually manages the partnership

Obligation of partner who receives share of partnership credit
1. Obliged to bring to the partnership capital what he has received even though he may have given receipt for his share only
Requisites:
a. A partner has received in whole or in part, his share of the partnership credit
b. The other partners have not collected their shares
c. The partnership debtor has become insolvent

Other rights and obligations of partners:
1. Right to associate another person with him in his share without consent of other partners (subpartnership)
2. Right to inspect and copy partnership books at any reasonable hour
3. Right to a formal account as to partnership affairs (even during existence of partnership):
a. If he is wrongfully excluded from partnership business or possession of its property by his copartners
b. If right exists under the terms of any agreement
c. As provided by art 1807
d. Whenever other circumstances render it just and reasonable
4. Duty to render on demand true and full information affecting partnership to any partner or legal representative of any deceased partner or of any partner under legal disability
5. Duty to account to the partnership as fiduciary

B. PROPERTY RIGHTS OF A PARTNER
1. His rights in specific partnership property
2. His interest in the partnership
3. His right to participate in the management

Nature of partner's right in specific partnership property
1. Equal right to possession
2. Right not assignable
3. Right limited to share of what remains after partnership debts have been paid

Nature of partner's right in the partnership
1. Share of profits and surplus

C. OBLIGATION OF PARTNERS WITH REGARD TO 3RD PERSONS
1. Every partnership shall operate under a firm name. Persons who include their names in the partnership name even if they are not members shall be liable as a partner
2. All partners shall be liable for contractual obligations of the partnership with their property, after all partnership assets have been exhausted
a. Pro rata
b. Subsidiary
3. Admission or representation made by any partner concerning partnership affairs within scope of his authority is evidence against the partnership
4. Notice to partner of any matter relating to partnership affairs operates as notice to partnership except in case of fraud:
a. Knowledge of partner acting in the particular matter acquired while a partner
b. Knowledge of the partner acting in the particular matter then present to his mind
c. Knowledge of any other partner who reasonably could and should have communicated it to the acting partner
5. Partners and the partnership are solidary liable to 3rd persons for the partner's tort or breach of trust
6. Liability of incoming partner is limited to:
a. His share in the partnership property for existing obligations
b. His separate property for subsequent obligations
7. Creditors of partnership preferred in partnership property & may attach partner's share in partnership assets
8. Every partner is an agent of the partnership

PARTNER BY ESTOPPEL; PARTNERSHIP BY ESTOPPEL

Partner by estoppel - by words or conduct, he does any of the ff.:
1. Directly represents himself to anyone as a partner in an existing partnership or in a non-existing partnership
2. Indirectly represents himself by consenting to another representing him as a partner in an existing partnership or in a non existing partnership

Elements to establish liability as a partner on ground of estoppel:
1. Defendant represented himself as partner/represented by others as such and not denied/refuted by defendant
2. Plaintiff relied on such representation
3. Statement of defendant not refuted

D. RESPONSIBILITY OF PARTNERSHIP TO PARTNERS
1. To refund the amounts disbursed by partner in behalf of the partnership + corresponding interest from the time the expenses are made (loans and advances made by a partner to the partnership aside from capital contribution)
2. To answer for obligations partner may have contracted in good faith in the interest of the partnership business
3. To answer for risks in consequence of its management