Agency, Trust, Partnership

Partnership

A partnership is a voluntary agreement between two or more individuals to operate a business together,
sharing profits, losses, and management responsibilities.

Partner's Rights

Partners have the right to participate in management, share profits, access partnership records, and
receive indemnification for expenses incurred on behalf of the partnership.

Partner Interest

Partner interest refers to the financial stake a partner has in the partnership, including their rights to
profits, assets, and decision-making.

Personal Law of Partnership

This refers to the set of legal rules and regulations governing partnerships, influenced by the partners'
agreements and the nature of the partnership.

Kinds of Partnership

1. General Partnership: All partners share liability and management.

2. Limited Partnership: Contains both general partners (who manage) and limited partners (who
only invest).

3. Silent Partnership: A partner invests but does not participate in management.

Essential Elements of Partnership

1. Agreement: Mutual consent to form a partnership.

2. Contribution: Each partner contributes capital, property, or services.

3. Profit Sharing: Intention to share profits and losses.

4. Co-ownership: Joint ownership of partnership assets.

Rights of a Partner

Partners have rights to manage the business, share in profits, access information, and make decisions.

Limited Partner

A limited partner invests in the partnership but does not engage in management, limiting their liability to
the amount invested.

Rights of a Limited Partner

Limited partners can receive profits, access information, and have limited liability, but cannot participate
in management.
Vices of Consent

Vices of consent are defects that undermine the validity of consent in a contract, including fraud, undue
influence, and mistake.

Partner's Lien

This is the right of a partner to retain partnership property until debts owed to them by the partnership
are paid.

Goodwill of a Business

Goodwill refers to the intangible value of a business, encompassing its reputation, customer
relationships, and brand recognition.

Pro Rata

Pro rata means proportionally distributing amounts based on each partner's share or contribution.

Pro Rata vs Solidary

 Pro Rata: Liability shared based on each partner's contribution.

 Solidary: Each partner is fully liable for the entire obligation, regardless of their share.

Parol Authority

This is authority given to an agent verbally rather than in a written contract.

Proprietorship

A proprietorship is a business owned and run by a single individual, who is personally liable for all debts.

Dissolution

Dissolution is the formal ending of a partnership's legal existence.

Limited Partnership

A type of partnership consisting of at least one general partner and one or more limited partners.

Notice of Fact

This refers to an alert given to a party about important information that could affect their obligations.

Knowledge of a Fact

This indicates an awareness of information relevant to a partnership’s operations or liabilities.

Termination

Termination refers to the conclusion of a partnership agreement or relationship, leading to the

Winding Up
Winding up is the process of settling a partnership’s affairs and distributing its assets after dissolution.

Contribution

Contribution is the assets or capital that partners invest in the partnership.

Presumption of General Partner

This is the legal assumption that all partners are general partners unless specified otherwise.

Doctrine of Delectus Personae

This principle states that partnerships are formed based on trust and confidence among partners.

Disqualified Persons

Persons disqualified from being partners may include minors, bankrupt individuals, and those legally
incapacitated.

Partner by Estoppel vs Partnership of Estoppel

 Partner by Estoppel: A person who is not a partner but leads others to believe they are.

 Partnership of Estoppel: A legal recognition that arises when a third party relies on someone's
representation as a partner.

Estoppel

Estoppel is a legal principle preventing someone from arguing something contrary to a claim they
previously made or implied.

Causes of Dissolution

Causes include mutual agreement, expiration of the partnership term, withdrawal of a partner, or
bankruptcy.

Continuance

Continuance refers to the ongoing existence of a partnership despite a partner’s withdrawal, usually
requiring agreement among remaining partners.

Pro Rata Liability

Liability shared among partners based on their respective shares in the partnership.

Subsidiary Liability

This refers to secondary responsibility that arises only if the primary obligor fails to fulfill their obligation.

Confession of Judgment

An admission by a defendant acknowledging the plaintiff's claim, allowing for a judgment without trial.

Equitable Interest
This is the right to benefit from partnership assets, not necessarily tied to legal title.

Universal Partnership of All Property vs Universal Partnership of Profits

 Universal Partnership of All Property: All assets contributed by partners are shared.

 Universal Partnership of Profits: Only profits earned from the business are shared.

Limited Partner Engagement

A limited partner can engage in business independently, but doing so risks losing their limited liability
status.

Distinction: Dissolution, Termination, Winding Up

 Dissolution: Legal end of partnership existence.

 Termination: Conclusion of the partnership agreement.

 Winding Up: Settling accounts and distributing remaining assets.

Partner’s Interest

A partner's interest is determined by their contributions, share of profits, and partnership agreement
terms.

Contract and Types of Contracts

A contract is a legally enforceable agreement. Types include:

 Bilateral: Mutual promises between two parties.

 Unilateral: One party makes a promise in exchange for an act.

Onerous Contract

A contract where both parties provide a benefit or service.

Solidary Obligation

An obligation where each party is fully responsible for the entire amount.

Joint Obligation

An obligation shared among multiple parties, with responsibility divided according to their shares.

Subsidiary Obligation

An obligation that exists only if the primary obligation is not fulfilled.

Order of Application of Assets

The sequence in which partnership assets are used to satisfy debts.

Distribution of Property of Insolvent Partner

Liability of a Dissolved Partnership

A dissolved partnership remains liable for obligations incurred before dissolution.

Partnership Allowed by Law Between Husband and Wife

Spouses can form a partnership, sharing profits and losses, subject to specific legal provisions.