ARTICLES OF PARTNERSHI
(bouvier) | ARTICLES OF PARTNERSHIP. The name given to an instrument of writing by which
the parties enter into a partnership, upon the conditions therein mentioned.
This instrument generally contains certain provisions which it is the object
here to point out.
2. But before proceeding more particularly to the consideration of the
Subject, it will be proper to observe that sometimes preliminary agreements
to enter into a partnership are formed, and that questions, not
unfrequently, arise as to their effects. These are not partnerships, but
agreements to enter into partnership at a future time. When such an
agreement has been broken, the parties may apply for redress to a court of
law, where damages will be given, as a compensation. Application is
sometimes made to courts of equity for their more efficient aid to compel a
specific performance. In general these courts will not entertain bills for
specific performance of such preliminary contracts; but in order to suppress
frauds, or manifestly mischievous consequences, they will compel such
performance. 3 Atk. 383; Colly. Partn. B. 2, c. 2, Sec. 2 Wats. Partn. 60;
Gow, Partn. 109; Story, Eq. Jur. Sec. 666, note; Story, Partn. Sec. 189; 1
Swanst. R. 513, note. When, however, the partnership may be immediately
dissolved, it seems the contract cannot be specifically enforced. 9 Ves.
360.
3. It is proper to premise that under each particular head, it is
intended briefly to examine the decisions which have been made in relation
to it.
4. The principal parts of articles of partnership are here enumerated.
1. The names of the contracting parties. These should all be severally set
out.
5.-2. The agreement that the parties actually by the instrument enter
into partnership, and care must be taken to distinguish this agreement from
a covenant to enter into partnership at a future time.
6.-3. The commencement of the partnership. This ought always to be
expressly provided for. When no other time is fixed by it, the commencement
will take place from the date of the instrument. Colly. Partn. 140 5 Barn. &
Cres. 108.
7.-4. The duration of the partnership. This may be. for life, or for
a, specific period of time; partnerships may be conditional or indefinite in
their duration, or for a single adventure or dealing; this period of
duration is either express or implied, but it will not be presumed to be
beyond life. 1 Swanst. R. 521. When a term is fixed, it is presumed to
endure until that period has elapsed; and, when no term is fixed, for the
life of the parties, unless sooner dissolved by the acts of one of them, by
mutual consent, or operation of law. Story, Part. Sec. 84.
8. A stipulation may lawfully be introduced for the continuance of the
partnership after the death of one of the parties, either by his executors
or administrators, or for the admission of one or more of his children into
the concern. Colly. Partn. 147; 9 Ves. 500. Sometimes this clause provides,
that the interest of the partner shall go to such persons, as be shall by
his last will name and appoint, and for want of appointment to such persons
as are there named. In these cases it seems that the executors or
administrators have an option to continue the partnership or not. Colly.
Partn. 149; 1 McCl. & Yo. 569; Colles, Parl. Rep. 157.
9. when the duration of the partnership has been fixed by the articles,
and the partnership expires by mere effluxion of time, and, after such
determination it is carried on by the partners without any new agreement, in
the absence of all circumstances which may lead as to the true intent of the
partners, the partnership will not, in general, be deemed one for a definite
period; 17 Ves. 298; but in other respects, the old articles of the expired
partnership are to be deemed adopted, by implication as the basis of the new
partnership during its continuance. 5 Mason, R. 176, 185; 15 Ves. 218; 1
Molloy, R. 466.
10.-5. The business to be carried on and the place where it is to be
conducted. This clause ought to be very particularly written, as courts of
equity will grant an injunction when one or more of the partners attempt,
against the wishes of one or more of them, to extend such business beyond
the provision contained in the articles. Story, Partn. Sec. 193; Gow, Partn
398.
11 - 6. The name of the firm, as for example, John Doe and Company,
ought to be ascertained. The members of the partnership are required to use
the name thus agreed upon, and a departure from it will make them
individually liable to third persons or to their partners, in particular
cases. Colly. Partn. 141; 2 Jac. & Walk. 266; 9 Adol. & Ellis, 314; 11 Adol.
& Ellis, 339; Story, Partn. Sec. 102, 136, 142, 202.
12.-7. A provision is not unfrequently inserted that the business shall
be managed and administered by a particular partner, or that one of its
departments shall be under his special care. In this case, courts of equity
will protect such partner in his rights. Story, Partn. Sec. 172, 182, 193,
202, 204 Colly. Partn. 753. In Louisiana, this provision is incorporated in
it's civil code, art. 2838 to art. 2840. The French and civil law also agree
as to this provision. Poth. de Societe, n. 71; Dig. 14, 1, 1, 13; Poth.
Pand. 14, 1, 4.
13. Sometimes a provision is introduced that a majority of the partners
shall have the management of the affairs of the partnership. This is
requisite, particularly when the associates are numerous, As to the rights
of the majority, see Partners.
14.-8. A provision should be inserted as to the manner of furnishing
the capital or stock of the partnership. When a partner is required to
furnish his proportion of the stock at stated periods, or pay by
installments, he will, where there are no stipulations to the contrary, be
considered a debtor to the firm. Colly. Partn. 141; Story, Partn. Sec. 203;
1 Swanst. R. 89, Sometimes a provision is inserted that real estate, and
fixtures belonging to the firm shall be considered, as between the partners,
not as partnership but as several property. In cases of bankruptcy this
property will be treated as the separate property of the partners. Colly.
Partn. 141, 595, 600; 5 Ves. 189; 3 Madd. R. 63.
15.-9. A provision for the apportionment of the profits a and losses
among the partners should be introduced. In the absence of all proof, and
controlling circumstances, the partners are to share in both equally,
although one may have furnished all the capital, and the other only his
skill, Wats. Partn. 59; Colly. Partn. 105; Story, Partn. Sec. 24; 3 Kent,
Com. 28; 4th ed.; 6 Wend. R. 263; but see 7 Bligh, R. 432; 5 Wils. & Shaw,
16.
16.-10. Sometimes a stipulation for an annual account of the Property
of the partnership whether in possession or in action, and of the debts due
by partnership is inserted. These accounts when settled are at least prima
facie evidence of the facts they contain. Colly. Partn. 146 Story Partn.
Sec. 206; 7 Sim. R. 239.
17.-11. A provision is frequently introduced forbidding any one
partner to carry on any other business. This should be provided for, though
there is an implied provision in every partnership that no partner shall
carry. on any separate business inconsistent or contrary to the true
interest of the partnership. Story, Partn. Sec. 178, 179, 209.
18.- 12. When the partners are numerous, a provision is often made for
the expulsion of a partner for gross misconduct, for insolvency, bankruptcy,
or other causes particularly enumerated. This provision will govern when the
case occurs.
19.-13. This instrument should always contain a provision for winding
up the business. This is generally provided for in one of three modes:
first, by turning all the assets into cash, and, after paying all the
liabilities of the partnership, dividing such money in proportion to the
several interests of the parties; secondly, by providing that one or more of
the partners shall be entitled to purchase the shares of the others at a
valuation; thirdly, that all the property of partnership shall be appraised,
and that after paying the partnership debts, it shall be divided in the
proper proportions. The first of these modes is adopted by courts of equity
in the absence of express stipulations. Colly. Partn. 145 Story, Partn. Sec.
207 8 Sim. R. 529.
20.-14. It is not unusual to insert in these articles, a provision
that in case of disputes the matter shall be submitted to arbitration. This
clause seems nugatory, for no action will lie for a breach of it, as that
would deprive the courts of their jurisdiction, which the parties cannot do.
Story, Partn. Sec. 215; Gow, Partn. 72; Colly. Partn, 165 Wats. Partn. 383.
21.-15. The articles should be dated, and executed by the parties. It
is not requisite that the instrument, should be under seal. Vide Parties to
contracts; Partners Partnership.
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