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Mr. John Smith and Mr. Albert Brown are business men. They
have been business for several years and now they are
thinking of establishing a business firm. As they are good
friends and can get along very nicely together, they agree to
be partners. However, as they have not enough capital, they
must look for somebody else to complete the amount they
need in order to start the new firm.
They both know Mr. Thomas Heller, a retired broker with
plenty of money, and they speak to him about their plans. Mr.
Heller says that he is willing to go into partnership with them,
and that he will provide the necessary amount.

  



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Messrs. Smith, Brown and Heller, therefore, draw up a draft of
a contract stating the following:
1. Their names.
 
 

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2. Residence.
3. Occupation.
4. Firm name.
5. Location of the new firm.

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6. Purpose of the firm.
7. Duration of the partnership.

   
, despues de
8. The fact that they can use the name of the firm.
9. Amount that each partner brings to the firm.
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10. Share of profits and losses among the partners.
11. Their rights and responsibilities in the firm.
After making a clean copy of the draft, they go and see a
lawyer, who makes a new copy of it in legal form, which is
afterward signed by each contracting party and two
witnesses. Then a notary public affixes his signature and seal
to the document.
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sacar una copia en limpio (del borrador).
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A new business organization has therefore started under the
name of ͞Smith, Brown and Heller.͟ This form of business
concern in which all partners share all privileges and
responsibilities according to the amount of capital
contributed, is called a ͞general partnership company. ͟ The
firm´s name contains the names of all partners, and in case
one or more is omitted, the words ͞and Co.͟ (Company) are
added to the other names.
Mr. Leonard Johnson and Mr. Peter Goodman have also
formed a business organization, each one of them having the
same privileges and responsibilities. Mr. Frederick Morse and
Mr. Charles Levy have also contributed a certain sum of
money to the capital of the new firm; they only wish to
contribute a certain sum of money. They want to be silent
partners. The organization formed under these conditions is
called ͞Limited,͟ and the firm name will be ͞Johnson and
Goodman, Ltd.,͟ the last abbreviation standing for ͞limited.͟
Several men of large business experience are trying to
develop a certain mine in the state of California. Their names
do not interest us. They write letters to many other business
men in order to call their attention to the fact that there is
money to be made in those mines, and to get them interested
in the matter. In order to obtain the required amount of
capital, it is necessary to have many partners. Those partners
will buy stock issued by the company, and they will get a
dividend as a premium on their investment.
The company thus established will be known as a ͞stock
company.͟
The name of the stock company does not contain the name of
any of the partners. In fact, the partners are not called by that
name, but by that of ͞stockholders.͟ what is the firm name
then? The firm name indicates generally the purpose of the
organization. For instance: ͞U.S. Steel Corporation͟ (a
corporation in the United States devoted to the steel
business), ͞California Mining Co.͟ (a company formed for the
purpose of developing a California mine), ͞N.Y. Insurance
Society͟ (a society with offices in New York engaged in the
insurance business), etc.
The stock companies can only be established with the
sanction of the Government, and are governed by special
bylaws. The President of the company is elected by the
stockholders.
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