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    Article 1793

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    Judy
    This document discusses two articles related to partnership agreements: Article 1793 states that if one partner collects their share of a partnership debt before other partners, and the debtor later becomes insolvent, the partner who collected must return that share so it can be split evenly among all partners. Article 1794 establishes that partners are responsible for any damages caused to the partnership through their fault. Profits earned for the partnership cannot be used to compensate for such damages, but courts may reduce the responsibility if the partner's extraordinary efforts generated unusual profits in other areas. For example, if one partner uses the wrong paint on a customer's car, causing $30,000 in damages to repair it, they cannot use profits earned

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    Article 1793

    Uploaded by

    Judy
    1K views2 pages
    This document discusses two articles related to partnership agreements: Article 1793 states that if one partner collects their share of a partnership debt before other partners, and the debtor later becomes insolvent, the partner who collected must return that share so it can be split evenly among all partners. Article 1794 establishes that partners are responsible for any damages caused to the partnership through their fault. Profits earned for the partnership cannot be used to compensate for such damages, but courts may reduce the responsibility if the partner's extraordinary efforts generated unusual profits in other areas. For example, if one partner uses the wrong paint on a customer's car, causing $30,000 in damages to repair it, they cannot use profits earned

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    This document discusses two articles related to partnership agreements: Article 1793 states that if one partner collects their share of a partnership debt before other partners, and the debtor later becomes insolvent, the partner who collected must return that share so it can be split evenly among all partners. Article 1794 establishes that partners are responsible for any damages caused to the partnership through their fault. Profits earned for the partnership cannot be used to compensate for such damages, but courts may reduce the responsibility if the partner's extraordinary efforts generated unusual profits in other areas. For example, if one partner uses the wrong paint on a customer's car, causing $30,000 in damages to repair it, they cannot use profits earned

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    1K views2 pages

    Article 1793

    Uploaded by

    Judy
    This document discusses two articles related to partnership agreements: Article 1793 states that if one partner collects their share of a partnership debt before other partners, and the debtor later becomes insolvent, the partner who collected must return that share so it can be split evenly among all partners. Article 1794 establishes that partners are responsible for any damages caused to the partnership through their fault. Profits earned for the partnership cannot be used to compensate for such damages, but courts may reduce the responsibility if the partner's extraordinary efforts generated unusual profits in other areas. For example, if one partner uses the wrong paint on a customer's car, causing $30,000 in damages to repair it, they cannot use profits earned

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Article 1793

    A partner who has received, in whole or in part, his share of a


    partnership credit, when the other partners have not collected theirs,
    shall be obliged, if the debtor should thereafter become insolvent, to
    bring to the partnership capital what he received even though he may
    have given receipt for his share only.
    In this case, there is only one debt but two or more debtors, both of
    each are partners.
    Example: A and B are partner and C owes the partnership a sum of Php10,000.B is
    the managing partner but A collects his share in the Php10,000 and C pays Php5000
    to which A issues a receipt in his name. When Bs turn to collect comes, C is already
    insolvent.
    In this case A shall return his Php5000 to the partnership and split it with B
    because C has already become insolvent. It would be unjust for B not to share
    in the loss of the partnership. It is based on the underlying provision of
    community of interest among partners.
    Take note that whoever collects doesnt matter as it doesnt make a
    difference
    If you get your share early, and the other parties cannot get theirs because
    the debtor has become insolvent the n you must return your share to the
    partnership so that no one gets more than he should have.
    Article 1794
    Every partner is responsible to the partnership for damages suffered by it
    through his fault, and he cannot compensate them with the profits and
    benefits which he may have earned for the partnership by his industry.
    However, the courts may equitably lessen this responsibility if through the
    partner's extraordinary efforts in other activities of the partnership, unusual
    profits have been realized.
    Why compensation will not apply?
    Compensation will not apply because in compensation, you should be both a
    debtor and a creditor at the same time. However, the partner here is only a
    debtor for damages and he cannot compensate using his profits and benefits
    earned for the partnership because it is hi duty to do so in the first place.
    Responsibility may be equitably mitigated by the court if, through
    extraordinary efforts of the partner, unusual profits are recognized/realized.
    If a partner is guilty of fraud or damages, he shall be liable for that.
    Example: A partnership between A and B is engaged in an autoshop business. A
    customer brought his car in to be painted Yellow but A bought red paint instead and
    the car is painted red. Damages are suffered by the partnership Php30000 due to

    the repainting. Can A compensate this loss using the profits he earned for the
    partnership?
    Answer: A cannot compensate it with the profits he earned because it his obligation
    to bring profits in the first place. The responsibility of the Php30000, however, may
    be mitigated by the court if by other activities, A is able to bring about unusual or
    extraordinary profits, meaning, he may be allowed by the courts to pay back
    Php15,000 instead.

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