Partnership 1: Definition, Characteristics, Nature, & General Overview of Partnerships

Summary

This episode of 'Attorneys of Vlogger: Law for the Everyday Layman' explores the legal concept of partnerships. It defines a partnership as a contract where two or more individuals contribute to a common fund with the intention of profit-sharing. The video delves into partnership characteristics, essential features, creation, and the legal implications of partnership agreements. It also touches on the differences between partnerships and joint ventures, the importance of registration, and taxation specifics, providing a foundational understanding for those interested in the legal framework of business associations.

Takeaways

• 📜 A partnership is defined by a contract where two or more persons agree to contribute money, property, or industry to a common fund with the intention of sharing profits.
• 🤝 Partnerships are consensual contracts, which can be expressed or implied, and are bilateral, meaning they involve reciprocal rights and obligations among the parties.
• 🏦 A partnership has a fiduciary nature, involving trust and confidence, and each partner has the right to choose with whom they will be associated, known as the 'lectures personae'.
• 📋 The best evidence of a partnership's existence is the partnership contract or articles of partnership, but the actual existence depends on the two essential elements: contribution to a common fund and intention to share profits.
• 🔑 Essential features of a partnership include a valid contract, legal capacity of parties, mutual contribution to a common fund, lawful object, intention to obtain profits, and at least one general partner.
• 🏢 A partnership gains a juridical personality separate from its partners, allowing it to acquire property, incur obligations, and be sued.
• 📝 Partnerships can be created in any form, but for those with a capital of 3,000 pesos or more, a public instrument and registration with the SEC are required for validity.
• 📈 The primary purpose of a partnership must be to obtain profits, which can be divided among partners in varying shares as agreed upon.
• 📊 The existence of a partnership can be determined by whether there is an agreement to contribute to a common fund and an intention to divide profits, with the burden of proof on the claimant.
• 💼 Partners have equal rights in managing the business, and each partner is an agent of the partnership with the power to bind other partners in business-related acts.
• 💼 The taxation of a partnership involves a 30% tax on the partnership's income, with individual partners also subject to personal income tax on their respective earnings.

Q & A

What is the definition of a partnership according to the video?

A partnership is defined by a contract where two or more persons bind themselves to contribute money, property, or industry to a common fund with the intention of dividing the profits among themselves.

What are the two essential elements that constitute a partnership?

The two essential elements are the agreement of two or more persons to contribute to a common fund and the intention to divide the profits among the partners.

What is the nature of a contract of partnership?

A contract of partnership is consensual, meaning it is perfected by mere consent, and it can be expressed or implied.

What does the term 'commutative' in the context of a partnership mean?

Commutative in the context of a partnership means that the undertaking of each party is considered to be equivalent to that of the others.

What is the principle of 'lectures personae' in partnerships?

The principle of 'lectures personae' refers to the right of each partner to choose with whom they will be associated in the partnership, as it involves trust and confidence.

What is the significance of the 'fiduciary nature' of a partnership?

The fiduciary nature of a partnership signifies that it involves trust and confidence, and the conduct of the partnership is a voluntary and personal relation.

What is the difference between a partnership and a joint venture?

A joint venture is an association of persons or companies undertaking a commercial enterprise with shared risks and assets, usually for a single transaction and is temporary. A partnership, on the other hand, is a contractual relation with mutual contributions to a common fund and a primary purpose of profit division.

What are the essential features for the existence of a partnership?

The essential features include a contractual relation, legal capacity of parties, mutual contribution to a common fund, a lawful object, a primary purpose of profit division, and at least one general partner.

How does the creation of a partnership affect its juridical personality?

The creation of a partnership gives it a juridical personality separate and distinct from that of each partner, allowing it to acquire and possess property, incur obligations, bring actions, and be sued.

What is the requirement for the registration of a partnership with the SEC?

The partnership must be registered with the SEC if its capital is 3,000 pesos or more in money or property. This registration is necessary for the issuance of licenses to engage in business or trade and to give notice to third persons of the partnership's existence.

How is the taxation of a partnership and its partners handled?

Ordinary partnerships are taxed at a rate of 30 percent of their income, and each partner is also subject to individual income tax based on their share of the profits. However, in a general professional partnership, such as a law firm, the partnership itself is not taxed, but the partners are taxed on their individual incomes.