WWW July 29, 2016

Outline
1. Partnership name; importance
and liability;
2. Illustration: partnership of A, B
and C contributed 50k each;
exhaustion
of
partnership
assets;
3. Difference between profits and
losses;
Sir: Why should one have a name?
Student: Since a partnership has a
separate
and
distinct
juridical
personality of its own, then it is
important that it should have its own
name so that third parties can sue the
partnership itself as distinguished
from the partners themselves.

Student: The moment you allow your

name to be included in the partnership
name, you are now liable to third
persons.
Sir: A, B, and C are partners who
agreed to contribute 50,000 each but
C was short of cash at that time. He
only contributed 25,000. So how much
money does the partnership have?
Student: 125,000.
Sir: however, few weeks later they
incurred a liability worth 200,000.
200,000 versus 125,000 what would
be the result?
Student: there will be a LOSS sir.
Sir: so, if you are the creditor, from
whom should you demand payment?

Sir: LIABILITY. In other words, the fact

that you lend your name to someone
else, you have assumed the certain
liability. So that if your name is part of
the partnership name, what happens?

Student: if I were the creditor, I can

go to the partners sir. Since the law
provides sir that if there are
debts/losses which cannot be paid
despite the exhaustion of partnership
assets,
the
partners
including
industrial partners are liable PRO
RATA.

Student: If your name becomes part

of the partnership name, then you will
become liable.

Sir: including industrial partners. But

did we not say that industrial partners
are exempted from losses?

Sir: You become liable UNLESS you

are not a partner?

Student: yes sir. In order to reconcile

these
seemingly
two
conflicting
provisions sir, we could say that
industrial partners as regards to third
persons are exempted from losses.
However, the industrial partner may
shoulder the losses PRO RATA but they
can claim reimbursement from the
capitalist partners.

Sir: In partnership, what goes with the

name?

Student: No sir because even if you

are not a partner sir but your name is
included in the partnership name, you
can still be liable to third persons.
Sir: Moral lesson?

Sir: because actually although losses,

and although a partner may be
exempted from losses, why can a
creditor still demand payment from
him?

RECEIVALBE of 25,000. So who will be

liable for that 25,000?

Student:
because
LIABILITIES sir.

Sir: so he must complete his 50,000.

And so after that?

these

are

Student: the partner that was not

able to complete his contribution.

Sir: Then what is the difference?

Student: then that will be the time

that they must share the remaining.

Student: loss refers within the

partners among themselves and
liability refers to third persons who are
creditors sir.

Sir. So all must share the remaining

50,000. So 50,000 divided by 3.

Sir: liabilities may refer to outside

claimants, third party creditors. But
among us, the partners, we will earn
profit or suffer loss. So going back to
our illustration, there is no industrial
partner, all of them are capitalist
partners and we have a liability of
75,000, how will they be liable?
Sir: they each agreed to contribute
50,000. However, one of them was
only able to contribute 25,000. So we
were only able to get 125,000. So
what happens? We still have a

Credits:
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Osorio
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