OBLIGATIONS OF PARTNERS

Section 1 obligation of partners among themselves

A contract of partnership gives rise to juridical relations:
1. Relations among partners themselves
2. Partners with a partnership
3. Relations of the partnership with 3
rd
persons with whom it contracts with
4. Relations of partners to 3
rd
persons
Art. 1784
Partnership - begins from the moment of execution unless stipulated otherwise
- Consensual contract (exists from the moment of celebration of the contract by the partners but necessary
requisites are present
Commencement of partnership is not absolute
1. Future partnership partners may stipulate some other date. (There can be future partnership which at the moment
has no juridical existence yet.
2. Agreement to create partnership a distinction must be made between partnership actually consummated and an
agreement to enter into a contract of partnership at future time (so long as the agreement remains executory, no
partnership can be said to exist)
Article 1785
Continuation of partnership beyond fixed term (or after termination)
- Duties of partners remain the same
1. Rights and duties of partners in a partnership at will partnership may be renewed upon express agreement
(written/oral/impliedly) without settlement or liquidation
2. Dissolution/Termination of partnership- basically dissolved already but partners came up with a new partnership at will.
At will meaning that a partner may terminate whenever he wishes
Article 1786
Every partner is a debtor to the partnership for whatever he promised to contribute.
- Also bound for warranty om case of eviction of thing
- Also liable for the fruits from the time they should have been delivered without the need of any demand
Obligation of partners among themselves and to the partnership
1. Contribute at the beginning of partnership or at stipulated time
2. Answer for eviction in case the partnership is deprived of the thing
3. Answer to the partnership for the fruits of the property which he delayed
4. Preserve the said property with the diligence of a good father
5. Indemnify partnership for any damage caused to it by the retention of the same or by delay of contribution
*contribution will automatically become the property of the partnership and could not be withdrawn without the
consent of the partnership or other partners

Effect of failure to contribute
1. Liability as debtor to partnership without contributions, partnership is useless. Failure to contribute will automatically
make the partner a debtor
2. Remedy of other partners action of specific performance plus damages and not rescission
Liability of partner in case of eviction
Under law, eviction shall take place whenever by a final judgement
Article 1787
Appraisal must be made when a partners contribution consists goods.
- Appraisal is necessary to know how much the partner has contributed
o Absence of stipulation, share of partners is in proportion to what they contributed
o Appraisal is made according to what is prescribed in the contract. Second, in the absence of stipulation, by
expert chosen by partners and accdg to current prices
o After contribution, partnership bears the risk or benefit of subsequent changes in their value
- Appraisal of immovable property is made in the inventory
Article 1788
A partner who promised to contribute a sum of money and fails to do so becomes a debtor for interest and damages. Also, thr
amount converted to personal use
Obligations with respect to contribution of money and money converted to personal use
1. Contribute on due date
2. Reimburse any amount he may have taken from partnership
3. Pay agreed legal interest if he fails to pay contribution on time
4. Indemnify partnership for damages caused to it by delay by delay in contribution or conversion
Liability of guilty partner for interest and damages
1. Accrual of liability- guilty partner is liable for interest and damages
2. Justification for double responsibility- double responsibility is an exception to general rule
Article 1789
Industrial partner (one who contributes his services, labor or industry) cannot engage himself in any business himself unless the
partnership permits him to do so. If he do so, capitalist partners may exclude him from firm or avail themselves of benefits
which he may have obtained in violation of the provision
Prohibition against engaging in business
1. As regards an industrial partner absolute prohibition. This is to prevent any conflict between industrial partner and
partnership and to insure faithful compliance of partner with his obligation
2. As regards capitalist partner- prohibition extends only to operation which is the same kind of business which the
partnership is engaged unless there is a stipulation
Remedies where industrial partner engages in business
1. Capitalist partners have a right to damages
2. Industrial partners are also entitled to the remedy since they are equally prejudiced
Article 1790
Unless stipulated, partners shall contribute equal shares to the capital of partnership. Not applicable to industrial partner unless
he contributed capital also
Article 1791
In case of imminent loss when theres no agreement on contrary, any partner who refuses to contribute an additional share
(except industrial partner) shall be obliged to sell his interest to other partners
Requisites before capitalist partner may be obliged to sell his interest to others:
1. Theres imminent loss
2. If majority of capitalist partners agree that an additional contribution would save the business
3. Capitalist partner refuses
4. No agreement
*industrial partner exempted
*refusal of partner shows his lack of interest for the continuance of the partnership

Article 1794
Every partner is responsible for damages suffered by the partnership through his fault
Any person guilty of negligence or fault in the fulfilment of his obligation shall be liable for damages. Fault must be determined
in accordance with the nature of obligation
Damages cant be compensated by the profits or benefits for the partnership
Exception: If unusual profits are realized through the liable partner, the court may reduce or mitigate his liability for damages
Article 1797
Losses and profits shall be distributed in conformity with the agreement
If no agreement:
1. Share of capitalist partner should be in proportion to his contribution
2. Industrial partners share is not fixed
Distribution of losses:
- According to agreement
- If no agreement, in accordance with the profit-sharing ration
- Industrial partner shall not be liable for losses
- If no profit-sharing stipulation, losses shall be borne by the partners in proportion to their capital contributions
Article 1800
A partner appointed as manager can do ACTS OF ADMINISTRATION despite opposition of partners
His power is IRREVOCABLE