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June 1, 2022

OBLIGATIONS OF THE PARTNERS WITH REGARD TO THIRD PERSONS (PART II)

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Published — July 9, 2021

The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

After reading Obligations of the Partners With Regard To Third Persons (Part II), also read Obligations of the Partners With Regard To Third Persons (Part I)

  • An admission made by any partner concerning partnership affairs within the scope of his authority is evidence against the partnership

  • The creditors of the partnership shall be preferred to those of each partner as regards the partnership property

  • A partner admitted as a partner into an existing partnership is liable for all the obligations of the partnership arising before his admission

I n our previous article, it was mentioned that every partner is an agent of the partnership for the purpose of its business and that no act of a partner in contravention of a restriction on authority shall bind the partnership to persons having knowledge of the restriction.

With regard to real property in the partnership name, may a partner convey title to such property?

The law says:

Where title to real property is in the partnership name, any partner may convey title to such property by a conveyance executed in the partnership name. If the conveyance was executed or made by a partner in his own name, the interest of the partnership to such real property shall also be transferred provided that such act of the said partner was one within the authority of a partner.

If the title to real property is in the name of one or more but not all the partners, and the record does not disclose the right of the partnership, the partners in whose name the title stands may convey title to such property. However, the partnership may recover such property if the partners’ act does not bind the partnership under the law.

If the title to real property is in the name of one or more or all the partners, or in a third person in trust for the partnership, a conveyance executed by a partner in the partnership name, or in his own name, passes the interest of the partnership provided the act is one within the authority of the partner.

If the title to real property is in the name of all the partners, a conveyance executed by all the partners passes all their rights in such property.

If there is an admission made by any partner concerning the partnership affairs, what is the effect of such admission?

The law says:

An admission or representation made by any partner concerning partnership affairs within the scope of this authority is considered evidence against the partnership.

What about if a person was admitted as a partner into an existing partnership?

The law says:

A person admitted as a partner into an existing partnership is liable for all the obligations of the partnership arising before his admission as though he had been a partner when such obligations were incurred, except that such liability shall be satisfied only out of partnership property unless there is a stipulation to the contrary.

Also, an important to remember is that with regard to preference of credits, the creditors of the partnership shall be preferred to those of each of the partners as regards the partnership property. However, the private creditors of each partner may ask for the attachment and public sale of the share of the latter in the partnership assets.


Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

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