Partnership Formation

7/17/2019 Partnership Formation

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Partnership

By :

John Razel A. Mapaye

Bienz Ruezan Azas


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IS AHAT

PARTNERSHIP?W

- is an unincorporatedassociation of two or more

individuals to carry on as co-owners a !usiness wit" t"eintention of dividin# t"e pro$tsamon# t"emselves%


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"aracteristics

&of a

artners"ipPEase of formation

as compared tocorporations, theformation of a

partnership requiresless formality.Separate le#alpersonality the partnership has a

judicial personality

separate and distinct from


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"aracteristics

&of a

artners"ipP'utual A#ency

the partners are a!ents ofthe partnership for thepurpose of its "usiness. As

such, a partner may le!ally"ind this partnership to acontract or a!reement thatis in line #ith theartnershi $s o erations.


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"aracteristics

&of a

artners"ipP&o-owners"ip of

property each partner is a co%o#ner of the propertiesin&ested in the partnership

and each has an equal ri!ht#ith his to possess aspeci'c partnership

property for partnership


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"aracteristics

&of a

artners"ipP&o-ownes"ip of pro$ts

a partnership is createdas a "usiness ) a pro'toriented entity* as such,each partner is entitled to

his share in the partnershippro't. A stipulation #hiche+cludes one or more

partners from any share in


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"aracteristics

&of a

artners"ipP(imited life

the creation of apartnership is "asicallyconsensual. As such, a

partnership may "edissol&ed:a. "y the e+press #ill of any partner". "y the termination of a de'nite term stipulatedin the contract.c. "y any e&ent #hich ma0es it unla#ful to carryout the partnership

d. #hen a speci'c thin! #hich a partner had


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"aracteristics

&of a

artners"ipP)nlimited lia!ility

each partner, includin!industrial ones, may "e heldpersonally lia"le to

partnership de"t after allpartnership assets ha&e "eene+hausted. 5f a partner ispersonally insol&ent, hisshare in the partnership de"t


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A partnership is#hich allpartners areindi&idually

lia"le is called a#eneralpartners"ip%

A limited

partners"ipincludes at leastone !eneral

partner #homaintainsunlimited lia"ility.

he other, calledlimited artners,


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dvanta#es of a Partners"ip

Ease of formationS"aredresponsi!ility of

t"e runnin# t"e!usiness

*le+i!ility in t"edecision ma,in#

reatercapitalcompared to

soleproprietors"ip

Relative lac, of

re#ulation ascompared tocorporations


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isadvanta#es of a Partners"ip

Easilydissolved

/(imited life

)nlimited

(ia!ility

&on0ict amon#partners

(esser capitalcompared toa corporation A partners"ip

1ot"er t"an aPP2 is ta+edli,e acorporation%


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*ormation

A contract of partners"ip is consensual% It iscreated t"e a#reement of t"e partners w"ic"may !e constituted in any form suc" as oral orwritten%

However Articles 3443 and 3445 of t"e P"il&ivil &ode re6uires t"at a partners"ipa#reement !e made in a pu!lic instrument

and recorded in t"e o7ce of t"e SE& w"en8 a% immova!le property or real ri#"ts are contri!uted

to t"e partners"ip or

!% t"e partners"ip "as a capital of P9::: or more


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"aracteristics

&of a

artners"ipPTransfer of owners"ip

in case of dissolution, thetransfer of o#nership,#hether to ane# partner or

e+istin! partner, requiresthe appro&al of theremainin! partners.


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A contract of partnership isconsensual. 5t is created thea!reement of the partners #hich

may "e constituted in any form, suchas oral or #ritten.

(o#e&er, Articles 3443 and 3445

of the Phil /i&il /ode requires that apartnership a!reement "e made in apu"lic instrument and recorded in

the o6ce of the 78/ #hen:

ormation


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Art. --2 further requires than anin&entory of all immo&a"le propertycontri"uted to the partnership should

"e made and si!ned "y the parties,and attached to the pu"licinstrument other#ise the partnership

shall "e deemed &oid. A partnership$s le!al e+istence

"e!ins from the moment the contract

is e+ecuted, unless it is other#ise

ormation


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Art. -9- of the /i&il /ode states that #hen thecapital or part thereof #hich a partner is "ound tocontri"ute consists of !oods, their appraisal must "emade in the manner prescri"ed in the contract of

partnership, and in the a"sence of stipulation, it shall"e made "y e+perts chosen "y the partners, andaccordin! to current prices, the su"sequent chan!esthereof "ein! for the account of the partnership;

Appraisal < =air >alue All assets contri"uted to ) and related lia"ilities

assumed "y* the partnership shall "e measured atfair &alue.

tions of contri!utin# partners


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Type of

&ontri!uti

on

*air ;alue

&as" and

cas"

E6uivalent

s

=ace amount

Inventory ?et realiza"le &alue

)estimated sellin! price less

costs to complete and sell*, if

lo#er than cost.*i+ed

Asset@rder of priority:

a. Price in a "indin! sale

a!reement


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*inancial

Instrume

nts

1*inancial Assets

and

*inancial(ia!ilitie

s2

=rder of priority>

a% uoted price in an active

mar,et

!% *air value !ased ono!serva!le data 1e%#% price in

recent mar,et transaction or

6uoted price of a similarinstrument2

c% Estimate !ased on t"e !est

information availa!le 1e%#%

measurements developed


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Partners"ip *ormation for t"e*irst Time- Initial Investment


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Non-&as" Investment


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@onus or oodwill on InitialInvestment


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Sole Proprietors"ip and anot"erIndividual *orm a Partners"ip


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Sole Proprietors"ips @oo,s areRetained for t"e Partners"ips%


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Two Proprietors"ip *orm aPartners"ip


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Partnership Formation

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