Relations Created by a Contract of Partnership 1. Among partners themselves 2. Partners with the partnership 3.

Partnership with third persons 4. Partners with third persons Rights and Obligations, in General, of partners inter se 1. The relationship is one of mutual trust and confidence (fiduciary nature) 2. Fiduciary relationship exists until the partnership is terminated 3. The relationship between a limited partner and other partners in a limited partnership is NOT of mutual trust and confidence Commencement and Terms of Partnership 1. Consensual Contract partnership exists from the moment the contract is perfected (registration in the SEC is not essential to give it juridical personality) 2. The partners may fix any term and they shall be bound to remain under such a relation for the duration of the term Continuation of Partnership beyond Fixed Term - Partnership with a Fixed Term the term of its existence was agreed upon expressly or impliedly - The partners may extend or renew the partnership by express agreement or impliedly (continuing the business after such term) 1. Rights of the partners will remain the same as consistent with a partnership at will 2. The partnership with a fixed term will be dissolved and will be replaced by a partnership at will - Any one of the partners may dissolve the partnership at any time 1. Bad faith will not prevent the dissolution of the partnership

but can result in liability for damages to other partners There is no such thing as an indissoluble partnership

Continuation of Partnership for an Indefinite Term 1. Partnership for a term impliedly fixed an agreement of the party may evidence an understanding that the relation should continue until the accomplishment of a particular undertaking or certain things have been done or have taken place or until a certain sum of money has been earned 2. Partnership with mere expectation that business will be profitable will not imply a fixed term Obligations with Respect to Contribution of Property 1. To contribute at the beginning of the partnership or at a stipulated time money, property, or industry which he may have promised to contribute; 2. To answer for eviction in case the partnership has been deprived of the determinate property contributed; 3. To answer to the partnership for the fruits of the property the contribution of which he has delayed, from the time they should have been contributed to the time of actual delivery 4. To preserve the said property with the diligence of a good father of a family pending delivery to the partnership 5. To indemnify the partnership for any damage caused to it by the retention of the same or by the delay in its contribution *things cannot be withdrawn the by the contributing party without the consent or approval of the partnership or of the other partners because it becomes property of the partnership

Effect of Failure to Contribute Property Promised - Failure to contribute makes the partner an ipso jure debtor of the partnership even without demand - The remedy of the partnership is not rescission of the contract but an action for specific performance (with damages and interest) Obligation with Respect to Contribution of Money and Money Converted to Personal Use Obligation of the partners with respect to the partnership capital 1. To contribute on date due the amount he has promised to contribute; 2. To reimburse any amount he may have taken from the partnership coffers and converted to his own use; 3. To pay 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 the delay in the contribution or the conversion of any sum for his personal benefit. Liability of Partner for Failure to Return Partnership Money Received - Where he fraudulently misappropriated was committed, partner is guilty for estafa - Mere failure on the part of the industrial partner to return to the capitalist partner the capital brought by him into the partnership is not estafa (action is a civil one) Prohibition against Engaging in Business 1. Industrial Partner Prohibited from engaging in any kind of business (regardless if it is the same business as the partnership or not) to avoid any conflict of interest Unless EXPRESSLY authorized by the partnership

2. Capital Partners prohibited from engaging in business of the same kind as the partnership Remedy where Industrial Partner Engages in Business - The other partners may either exclude him from the firm or to avail themselves of the benefits which the guilty partner may have obtained with rights to damages Extent of Contribution to Partnership Capital - The partners may stipulate the contribution of unequal parts, but in absence of such the partners are presumed to have contributed equal shares - Rule not applicable to industrial partners Obligation of Capitalist Partner to Contribute Additional Capital - General Rule capitalist partner is not bound to contribute to the partnership more than what he has agreed to contribute - In case of an imminent loss of the business, and there is no stipulation to the contrary, he is under obligation to contribute additional share to shave the venture - Should her refuse, he shall be obliged to sell his interest to the other partners - Requisites 1. Imminent loss of the business 2. Majority of partners think that an additional contribution to the common fund would save the business 3. Capitalist partner refuses deliberately (not because of financial inability) 4. No agreement that in case of imminent loss of the business the partners are not obliged to contribute