Summary
Highlights
Partnerships are categorized by object, liability, duration, and representation to others. This video specifically details partnerships 'as to object', 'as to liability', 'as to duration', and 'as to representation to others'.
In this type of partnership, all partners contribute their existing property to a common fund, intending to share both the property and the profits derived from it. This includes property owned at the time of the partnership's formation and profits generated from it. Property acquired after formation can also be included if stipulated, but property obtained through inheritance, legacy, or donation generally remains exclusive to the partner, though its fruits or profits can be part of the common fund if agreed upon.
This partnership includes all profits and earnings acquired by partners through their work or industry during the partnership's existence. It also includes the usufruct (use and fruits) of property owned by partners, even if the ownership itself remains separate. Profits acquired without physical or intellectual effort, such as by chance or lucrative title, are excluded unless specifically stipulated. If a universal partnership is formed without specifying its nature, it is presumed to be a universal partnership of profits because it transmits fewer rights and interests compared to a partnership of all present property.
Certain individuals are prohibited from forming universal partnerships, similar to those prohibited from making donations to each other. This includes spouses, individuals guilty of adultery or concubinage, and those guilty of the same criminal offense if the partnership is formed in consideration of such an offense. This prohibition exists because a universal partnership is essentially a form of donation, and the law prevents people from indirectly circumventing direct prohibitions.
Unlike universal partnerships, particular partnerships do not involve all of the partners' property. Their object is typically determinate things, their use or fruits, a specific undertaking, or the exercise of a profession or occupation. Examples include real estate partnerships, or general professional partnerships, such as a law firm. Spouses are permitted to form or be partners in a general professional partnership because it is a particular partnership, not a universal one.
Partnerships can be general or limited. In a general partnership, all partners are general partners with unlimited liability, meaning they are liable to the extent of their separate property once partnership assets are exhausted. In contrast, a limited partnership must have at least one general partner and at least one limited partner. General partners retain unlimited liability, while limited partners' liability is restricted to their capital contribution. The requirement for at least one general partner protects third parties and ensures there is always someone with unlimited liability to cover debts.
Partnerships can be classified by their duration: fixed term, particular undertaking, or at will. A partnership for a fixed term has a specific duration set by the partners, after which it dissolves. A partnership for a particular undertaking dissolves once that undertaking is completed. A partnership at will has no fixed period and can be terminated by any partner at any time without liability for damages. If a fixed-term or particular-undertaking partnership continues beyond its designated term or completion without a new agreement, it automatically becomes a partnership at will.
Partnerships can be either ordinary partnerships or partnerships by estoppel. An ordinary partnership is one that genuinely exists among the partners and is recognized by third parties. A partnership by estoppel, however, is not a true partnership in reality. It is considered a partnership only to those who, through their conduct or admission, represent themselves as partners or allow themselves to be represented as such, thereby being precluded from denying its existence to protect third parties who rely on such representations.