CAUSES:

1.
2.

3.

4.

EXCEPT:

Without
the
violation
of
agreement of partners:
Contravention
of
the
agreement of partners, where
circumstance do not permit
dissolution
Event which makes unlawful
for the business of the
partnership to be carried on or
for the members to carry it on
in partnership
When
specific
thing
for
contribution perishes before
delivery; When a thing is lost
and if only possession is
transferred

CAUSES: (UNDER NO. 8

WITH COURT ORDER)
1.
2.
3.

4.
If the specific
thing perishes
after
the
delivery, it will
not
dissolve
the
partnership

5.

5.
6.
7.
8.

Death of partner
Insolvency of partner
Civil interdiction
Court order

Declared
insane
or unsound mind
Incapacitated
to
perform duties of
a partner
Guilty of conduct
as tends to affect
prejudicially
the
carrying
on
of
business
Willfully
or
persistently
breach
partnership
agreement;
or
conducts himself I
matters
relating
to the partnership
business that it is
not
reasonably
practicable
to
carry the business
of the partnership
with him
Just and equitable
circumstance

AUTHORITY OF PARTNER

EXCEPT:

PARTNERS CAN BIND

PARTNERSHIP THIRD
PARTY AFTER
DISSOLUTION
By the act appropriate for
winding up partnership
affairs
or
completing
transactions unfinished at
dissolution

Dissolution by act
of any partner
and the partner
acting
for
the
partnership
has
knowledge of the
dissolution
Dissolution
by
death
or
insolvency of a
partner and the
partner acting for
the
partnership
has knowledge or
notice of death or
insolvency

*Note: Transaction which

would bind the partnership
if dissolution had not taken
place provided that third
party:
1. extended credit to
the
partnership
prior
to
dissolution
and
had no knowledge
or notice of the
dissolution
2. though he had not
extended credit,
he had known of
the
partnership;
he had no notice
or knowledge of
the
dissolution
partnership;
dissolution
was
not published in
the place where
the
business
regularly carried
on (born by the
partnership)

If dissolution is not by act,

insolvency, death of a
partner - terminated

If act, death, insolvency of

partner - Each partner is
liable to the co-partner for
his share

1.

2.

Personal liability of
partner who acted.

the

AFTER DISSOLUTION, A PARTER

CANNOT BIND PARTNERSHIP
1.

2.
3.

EXCEPT:

where the partnership is

dissolved because it is
unlawful to carry on the
business, unless the act is
appropriate for winding up
the partnership
partner
has
become
insolvent
partner has no authority
to wind up partnership
affairs

*Note

RIGHTS OF PARTNERS
WHO HAS NOT CAUSED
DISSOLUTION
WRONGFULLY:
1. IF
DISSOLUTION
NOT CAUSED BY
CONTRAVENTION
OF AGREEMENT partners
and
creditors
may
apply
the
partnership
property
to
discharge
liabilities
and
surpluses
be
given
to
the
respective
partners
2. IF DISSOLUTION IS
CAUSED
BY
EXPULSION
UNDER
PARTNERSHIP
AGREEMENT AND
IF
DISCHARGED
FROM LIABILITIES
agreement
between him and
the creditor and
PCB;
or
agreement
may
be inferred from
the
course
of
business between
the creditor who
has
K
of
dissolution
and
PCB.
3. IF
DISSOLUTION
CAUSED
BY
CRONTRAVENTION
, PARTNER WHO
HAS NOT CAUSED
THE DISSOLUTION
WRONGFULLY

(NO.
1)
AND
damages
for
breach
of
agreement
4. MAY
CONTINUE
THE BUSINESS IN
THE SAME NAME
provided that they
secure
payment
by bond before
the court or pay

RIGHTS OF PARTNERS
WHO HAS CAUSED THE
DISSOLUTION
WRONGFULLY:
1. IF THE BUSINESS
IS
NOT
CONTINUED

(NO.
1)
less
damages
2. IF THE BUSINESS
IS CONTINUED
(NO. 4)
**note: in computing the
value of the interest of the
partner, good will of the
partnership is not included.

RIGHTS FOR RECISSION

ON THE GROUND OF
FRAUD OR
MISREPRESENTATION:
1. Innocent
party
has a lien on the
surplus on the
partnership
property
after
satisfying the lien
in favor of third
persons and the
capital
contributed
by
him
2. Subrogation of the
rights of creditors
over
those
payments
he
made
to
the
creditor (after all
the liabilities to
third persons had
been satisfied)
3. Indemnified
by
the guilty partner
against all the
debts
and
liabilities
of
partnership made
in
fraud
or
misrepresentation
.

ORDER OF PAYMENT OF
PARTNERSHIP
LIABILITIES:
1.
2.
3.
4.

Creditors
other
than partners
Partners
other
than capital and
profits
Partners
with
respect to capital
Partners
with
respect to profits

How to settle accounts:

1. Determine assets
2. Order of payment
3. Partnership assets
4. Personal
assets
(even deceased)
5. Reimbursement to
partners who paid
in excess
If the partner is insolvent,
order of payment is:
1. In favor separate
creditors
2. In
favor
of
partnership
creditors
3. In
favor
of
partners
for
contribution

partner
interest in
partnership
damages
partnership
liabilities.

CREDITORS
OF
THE
PARTNERSHIP
ARE
CREDITORS OF NEW
1.

2.

OLD
ALSO

If the business is continued

without
liquidation
of
partnership affairs and new
partner is admitted into an
existing partnership; when any
partner resigns or assigns his
rights
If the business is continued
without
liquidation
of
partnership affairs and when

his
the
less
and

3.

4.

5.

6.

all but one partner retire and

assign their rights
When any partner retires or
dies
and
the
dissolved
business is continued with the
consent of the retired partner
without assigning his right to
the partnership property
When all the partners assigns
their rights to third persons
who promise to pay the debts
and continue the business of
the dissolved partnership
When a partner wrongfully
causes the dissolution and the
remaining partners continue
the
business
without
liquidation
of
partnership
affairs
When a partner is expelled
and the remaining partners
continue the business without
liquidation
of
partnership
affairs

***Liability of the third person is limited

on the partnership property unless
there is a stipulation to the contrary
***Creditors
favored

of

old

partnership

is