Hi, I am attorney Marie-Kris Bathan-Lasco. This is my virtual classroom. Welcome to my YouTube channel.
In this channel, we shall aim to simplify the law. We shall explain concepts and principles of law in under 10 minutes. Hi everyone! In this video, we will talk about the contract of partnership.
What is a partnership? A partnership is an agreement between two or more persons that they will contribute money, property, or industry to a common fund with the intention of By that definition alone that is given by your civil code, Article 1767, it tells you that the main objective or the main purpose of forming a partnership is for you to obtain profits. When or why would you want to form a partnership? Perhaps you want to form a partnership because you want to get into a business, but you don't have enough money or capital to put up a business. And so you will look for like-minded individuals to partner with you in this business.
Or you may have the capital or the money to put up the business, but you don't have the talent or the industry. to make the business prosper. Because again, we said the intention of a partnership is to obtain profits. And so you would want to partner with someone else to contribute industry to the business.
Or you'd want to partner with someone who has property or properties to contribute to the business. So these are just among the reasons that you may have to enter into a partnership. When you look for a partner, what is the most important thing that you have to consider? Of course, you will have to consider whether or not you trust getting into a business with this partner. Which brings us to what we call delectus personae.
Delectus personae is a principle in law which says that partnership is fiduciary in itself. nature meaning it is based on trust and confidence why is the partnership based on trust and confidence it is based on trust and confidence because as a general rule a partner can bind the partnership as a general rule whatever the acts or whatever contracts that a partner would enter into it will bind the partnership and that is the reason why it is important to look for a partner whom you have full trust and confidence and we call that delectus personae. Who can enter into a contract of partnership? Anyone can enter into a contract of partnership so long as he is not specially disqualified by law. So who are those who cannot enter into a contract of partnership?
the same people who cannot enter into a contract. Your minors, your deaf-mutes who do not know how to read or write, those insane or demented persons, you have incompetence under guardianship, and those who are suffering civil interdiction. In addition to that, those who are prohibited by law to make donations to each other, they cannot also form a partnership. Why?
Because if we allow them... to enter into a contract of partnership, then this is now a circumvention of the prohibition of them donating to each other. Why? Because remember, a partnership is contribution of money, property, or industry to the common fund.
And they're supposedly prohibited from donating to each other. So if we allow them to enter into a contract of partnership, this is now circumventing the prohibition. Can you also form a partnership for the purpose of exercising? your profession?
The answer is yes. So a lawyer can enter into a partnership with other lawyers and form a law firm or a law partnership. An accountant can enter into a partnership with another accountant or other accountants and they form an accounting partnership or firm. So it could be a partnership of architects, a partnership of engineers, or any other profession.
So forming a partnership is not only for business but it could also be for the exercise of your profession. Now, when you form a partnership, another legal consequence that you will have to remember is that there is now a creation of another person or another personality, the partnership itself. What do I mean by this? So, for example, A, B, and C form a partnership and let's say they call each other.
call their partnership ABC partnership. How many persons are we talking about here now? There are actually four persons.
Why four? You have A, you have B, you have C, and you have ABC partnership. That is what is meant by Article 1768 of your civil code, which says that the partnership has a personality separate and distinct.
from that of the partners. You might say, but ABC partnership is not a person. Yes, it is not a natural person, but in the eyes of the law, it is still a person.
But now we call it a juridical person. Why is this relevant? Why is Article 1768 explicitly telling us that the partnership has a separate and distinct juridical person? personality than that of the partners.
The reason is its consequence. What is the consequence for Article 1768? The consequence is that whatever the obligations are of the partnership will remain the obligations of the partnership.
It will not be the obligation of the individual partners. That's the general rule. Whatever it is, is the debt of the partnership will be the debt of the partnership.
So if the partnership owes you money, you can only go after the partnership. You cannot go after the individual partners. That is what is meant by the partnership having a separate and juridical personality apart from the other partners. So whatever the debt is, that is all. owed by the partnership will remain that of the partnerships.
As I've mentioned, there are exceptions. Just very briefly, the exception would be if the partnership was used by the partners for fraudulent means. So in that case, the creditor can now go after the individual partners. But again, as a general rule, if it is a partnership debt, then you can only go after the partnership. You cannot go after.
the partners. In fact, this is one of the advantages of a partnership over a sole proprietorship because in a sole proprietorship, you are the owner and then you have your own business. If your business is indebted to someone, that creditor can go after the business and if that business of yours solely owned by you cannot pay off the debt.
the debt, then the creditor can go after you. That is the difference between a sole proprietorship and a partnership. In a sole proprietorship, your business does not have its own juridical personality because you are the sole owner.
So whatever the debt of your business is, that debt, you may answer. You need to answer for that rather. But in a partnership, since the partnership has a separate and juridical personality apart from the partners, then whatever the debt of the partnership is, that will remain the debt of the partnership. So that is partnership in a nutshell. See you again soon in my next video.
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