Section IV Partnership

Article 505

Partnership is a contract by which two or more persons undertake to contribute jointly in an undertaking of a pecuniary nature by the provision of contributions of property or services, with the object of sharing in the profits or the losses of the undertaking.

Article 506

A partnership is deemed, by the fact of its constitution, to be a juristic person; such juristic personality is however acquired, as regards third parties, only upon completion of the formalities of publication required by law.

Third parties may, however, if the partnership has not completed the prescribed formalities of publication, avail themselves of the juristic personality of the partnership.

Elements of the Contract of Partnership

Article 507

A partnership deed must be in writing under pain of nullity. All modifications to the partnership deed are also void if they are not executed in the same form as the deed.

Such nullity cannot, however, be pleaded by the partners against third parties and has no effect on the relationship of the partners between themselves until a demand for such nullity has been made in court by one of the partners.

Article 508

In the absence of agreement or custom to the contrary, the contributions of the partners are presumed to be equal and to consist of the ownership of the property brought in and not merely of its enjoyment.

Article 509

The influence or the credit of a partner cannot alone constitute his contribution.

Article 510

A partner who has undertaken to contribute a sum of money and who does not pay this sum into the partnership is liable, without recourse to legal proceedings or to any formal demand, to payment of interest from the date that his contribution fell due, apart from payment, in addition, of compensation for any loss, if such compensation is due.

Article 511

If the contribution of a partner consists of a right of ownership, of an usufruct, or of any other real right, the provisions as to sale shall apply as regards warranties against loss, dispossession, hidden defects or deficiencies.

If, however, the contribution consists merely of the use of the property, the provisions as to lease apply as regards the above warranties.

Article 512

If the contribution of a partner consists of his services, he shall carry out the services he has undertaken to perform and render an account of the profits realized from the date of the formation of the partnership as a result of the services he has undertaken as his contribution.

In the absence of an agreement to the contrary, he is not bound, however, to contribute to the partnership patents which he has obtained.

Article 513

If the contribution of a partner consists of debts due by third parties, his obligation to the partnership is only extinguished by the recovery of these debts. He is also liable for damages if the debts are not paid when they fall due.

Article 514

If the share of each of the partners in the profits and the losses of the partnership is not fixed in the deed of partnership, their respective shares shall be proportional to their respective contributions in the capital of the partnership.

If the deed of partnership only fixes the share of each partner in the profits, the same proportion shall apply as regards the losses, and reciprocally if only the share in the losses is fixed in the partnership deed.

If the contribution of one of the partners consists only of his services, his share in the profits and the losses is estimated in accordance with the profits that the partnership realizes as a result of his services. If, in addition to his services, a partner has made a contribution in money or in kind, he will be entitled to a share in respect of his services and another share in respect of the contribution he has made in addition to his services.

Article 515

If it is agreed that one of the partners shall not participate in the profits or losses of the partnership, the partnership deed is void.

A partner who only contributes his services may be relieved by agreement from participation in the losses of the partnership, provided that no remuneration is allowed to him in respect of his services.

2. The Management of Partnership

Article 516

A partner entrusted with the management of the partnership by a special clause in the partnership deed is entitled, notwithstanding objections by the other partners, to perform acts of management and acts of disposition coming within the objects of the partnership, provided that these administrative acts and acts of disposition are not tainted with fraud. Such partner cannot, without legitimate reason, be discharged from his post as managing partner so long as the partnership exists.

If the appointment of a managing partner is made subsequent to the partnership deed, such an appointment may be revoked in the same manner as an ordinary mandate.

Managers who are not partners may be discharged at any time.

Article 517

When several partners are entrusted with the management of the partnership without their respective attributions being defined and it is not provided that anyone of them cannot act alone, each partner may separately perform any act of management, subject to the right which each of the other managing partners has to object to such an act before it has been completed, and to the right of the majority of the managing partners to override such an objection; in the case of equal voting by the managing partners, the rights to override the objection belongs to the majority of all the partners.

If it is provided that decisions of managing partners shall be taken unanimously or by a majority, such a provision cannot be departed from, except in the case of an urgent matter in which failure to take action would involve the partnership in serious and irreparable loss.

Article 518

When a decision must be taken by the majority, it will, in the absence of an agreement to the contrary, be decided by the numerical majority.

Article 519

Partners who are not managing partners are excluded from the management. They are entitled, however, personally to examine the books and documents of the partnership. Any agreement to the contrary is void.

Article 520

In the absence of any special provisions as to the form of management, each partner is deemed to have been authorized by the other partners to manage the partnership, and may carry out the management without consulting the other partners, subject to the right of such other partners or of anyone of them to object to any act of management before it has been finally completed and to the right of the majority of the partners to override such objection.

3. The Effects of Partnership

Article 521

Each partner shall abstain from any activity prejudicial to the interests of the partnership or contrary to the object for which the partnership was formed.

He shall watch over the interests of the partnership as if they were his own, unless he has been appointed a manager on remuneration, in which case he shall not exercise less care than would a prudent man.

Article 522

A partner who takes or retains a sum of money belonging to the partnership will, without any legal summons or formal demand, be liable for interest on the sum from the day he took it or retained it, and will also be liable for the payment of damages should loss arise thereby.

A partner who advances money to the partnership from his private funds or incurs in good faith without imprudence trifling expenses for the benefit and on behalf of the partnership, is entitled to interest thereon from the partnership from the date of payment thereof.

Article 523

If the assets of the partnership does not cover its debts, the partners shall, in the absence of an agreement providing for another division, be liable for these debts from their own property, each in proportion to his share in the losses of the partnership. Any agreement relieving a partner from liability in respect of the partnership's debts is void.

The creditors of the partnership have in all cases a claim against each of the partners to the extent of his share in the profits of the partnership.

Article 524

In the absence of an agreement to the contrary, the partners are not jointly and severally liable as regards their respective shares in the debts of the partnership.

If, however, one of the partners becomes insolvent, his share in the debts of the partnership is apportioned among all the others in proportion to their respective shares in the losses.

Article 525

Personal creditors of a partner cannot, during the continuance of a partnership, obtain payment of their claims out of such partner's share in the capital but only out of his share in the profits. Such creditors may, upon liquidation of the partnership, enforce their rights on their debtor's share in the partnership assets after payment of the partnership debts, and may, before the liquidation of the partnership, make a protective attachment (saisic conservatoire) on his share.

4. Ways in Which a Partnership Comes to an End

Article 526

A partnership comes to an end upon the expiration of its term or by the achievement of the object for which it was formed.

If, notwithstanding the expiration of the term or the achievement of the object for which the partnership was formed, the partners continue to carry on work of the same nature as that for which the partnership was formed, the partnership deed is extended from year to year on the same conditions.

A creditor of a partner may oppose this extension. His opposition will suspend the effect of the extension of the partnership so far as such creditor is concerned.

Article 527

A partnership comes to an end upon the total loss of its capital or upon its partial loss to such an extent as to render the continuation of the partnership useless.

If one of the partners has undertaken to contribute by way of a definite and specific thing which perishes before it is brought into the partnership, the partnership is dissolved as regards all partners.

Article 528

A partnership is terminated by the death, interdiction, insolvency or bankruptcy of one of the partners.

It may be agreed, however, that in the event of the death of one partner, the partnership will continue with his heirs, even if they are minors.

It may also be agreed that, in case of death, interdiction, insolvency, bankruptcy or retirement of one of the partners in accordance with the provisions of the following article, the partnership will continue between the other partners.

In such a case, such partner or his heirs will only be entitled to his share in the assets of the partnership. This share will be estimated in accordance with its value at the date of the event, which resulted in the partner ceasing to be a partner, and must be paid in money. Such partner will share in subsequent rights only to the extent that such rights arise from operations prior to the event which resulted in his ceasing to be a partner.

Article 529

A partnership comes to an end by the retirement of one of the partners when its duration has not been fixed, provided that such partner gives previous notice to his other co-partners of his intention to retire and that his retirement is free of fraudulent intent and not at an unsuitable time.

It comes to an end also by the unanimous agreement of the partners.

Article 530

The court may, on the demand of any one of the partners, order the dissolution of a partnership for non-performance by a partner of his obligations, or for any other reason not attributable to the partners; the judge will decide whether such reason is sufficiently serious to justify dissolution.

Any agreement to the contrary is void.

Article 531

A partner may apply to the court for the exclusion of any one for the partners whose presence in the partnership has given rise to objections to the extension of the duration of the partnership, or whose actions might be held to provide good grounds for the dissolution of the partnership, while the partnership continues between the other partners.

A partner may also, if the duration of the partnership is fixed, apply to the court to authorize his retirement from the partnership if he gives adequate reasons for his application. In such case, unless the other partners agree to continue the partnership, it will be dissolved.

5. Liquidation and Partition of the Partnership Property

Article 532

The liquidation and the partition of the partnership property is carried out in the manner laid down by the partnership deed. When the partnership deed is silent, the following provisions will be applied.

Article 533

The powers of the managers shall cease upon the dissolution of the partnership, but the juristic personality of the partnership shall continue, in so far as is necessary, for and up to the end of the liquidation.

Article 534

The liquidation will be carried out either by all the partners or by one or more liquidators appointed by the majority of the partners, as the case may be.

If the partners do not agree on the appointment of a liquidator, such liquidator will, upon the application of one of the partners, be appointed by the judge.

In case of nullity of partnership, the court will appoint a liquidator and will decide upon the method of liquidation upon the application of any interested party.

Until a liquidator is appointed, the managing partners shall be deemed, as far as third parties are concerned, to be the liquidators.

Article 535

A liquidator may not undertake new business on behalf of the partnership, unless it is necessary for the purpose of terminating the old business.

He may sell movables and immovables belonging to the partnership by auction or by private treaty, unless his powers in this respect have been restricted by the instrument by which he was appointed.

Article 536

The partnership assets are divided between all the partners after payment of the creditors, deduction of amounts required to cover debts that have not fallen due or are subject to litigation and repayment of disbursements or loans that may have been made by one of the partners for the benefit of the partnership.

Each partner shall take a sum equal to the value of his contribution to the capital of the partnership, as recorded in the partnership deed, or, if not recorded in the partnership deed, at its value at the time the contribution was brought to the partnership, unless he has only contributed his services, the usufruct or the mere use of the thing that he has brought to the partnership.

The balance, if any, will be distributed between the partners proportionally to each partner's share in the profits.

If the partnership assets are not sufficient to cover the repayment of the partners' contributions, the loss is shared between the partners proportionately to each partner's share in the losses.

Article 537

The rules laid down with reference to the partition of property held in common, apply to partitions between partners.