ARTICLES OF PARTNERSHIP.
A written agreement by which the parties enter into a partnership upon the conditions therein mentioned.
These are to be distinguished from agreements to enter into a partnership at a future time. By articles of partnership a partnership is sotually established; while an agreement for a partnership is merely a contract, which may be taken advantage of in a manner similar to other contracts. Where an agreement to enter into a partnership is broken, an action lies at law to recover damages; and equity, in some cases, to prevent frauds or manifestly mis chievous consequences, will enforce speoifio perform ance. Watson, Partn. 60; Gow. Partn. 109; Story, Partn. 109; Story, Eq. Jur. 666, n.; 3 Atk. Ch. 383; 1 Swank. Ch. 513, n.; but not when the part nership may be immediately dissolved. 9 Ves. Ch. 380.
2. The instrument should contain the names of the contracting parties severally set out; the agreement that the parties do by the instrument enter into a partnership, ex pressed in such terms as to distinguish it from a covenant to enter into partnership at a subsequent time; the date, and necessary stipulations, some of the more common of which follow.
The commencement of the partnership should be expressly provided for. The date of the articles is the time, when no other time is fixed by them. Collyer, Partn. 140; 5 Barnew. & C. 108.
The duration of the partnership should be stated. It may be for life; for a limited period of time, or for a limited number of adventures. 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 mu tual consent, or operation of law. Story, Partn. 84. The duration will not be pre= sumed to be beyond the life of all the part ners, 1 Swanst. 521; but provision may be made for the succession of the executors or administrators or a child or children of a de ceased partner to his place and rights. Coll yer, Partn. 147 ; 9 Yes. Ch. 500. pro vision is made for a succession by ment, and the partner dies without appoint ing, his executors or administrators may con tinue the partnership or not, at their option. Collyer, Partn. 149; 1 M'Clell. & Y. Exrh. 579; Colly. Ch. 157. A continuance of the partnership beyond the period fixed for itS termination, in the absence of circumstanceit showing intent, will be implied to be upon the basis of the old articles, 5 Mas. C. C. 176, 185; 15 Yes. Ch. 218 ; 1 Moll. Ch. Jr. 466; but for an indefinite time. 17 Yes. Ch. 298.
3. The nature of the business and the place of carrying it on should be very care fully and exactly specified. 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. 193; Gower, Partn. 398.
The name of the firm should be ascertained. The members of the partnership are required to use the name thus agreed upon, and a de parture from it will make them individually liable to third persons or to their partners, in particular cases. Collyer, Partn. 141; 2 Jac.
& W. Ch. 266; 9 Ad. & E. 314 ; 11 id. 339; Story, Partn. 102, 136, 142, 202.
The management of the business, or of some particular branch of it, is frequently in trusted by stipulation to one partner, and such partner will be protected in his rights by equity, Collyer, Partn. 753; Story, Partn.
172, 182, 193, 202; and see La. Civ. Code, art. 2838-2840; Pothier, Societe, n. 71 ; Dig. 14. 1. 1. 13 ; Pothier, Pand. 14. 1. 4; or it may be to a majority of the partners, and should be where they are numerous. See PARTNERS.
4. The manner of furnishing' capital and stock should be provided for. When a part ner is required to furnish his proportion of the stock at stated periods, or pay by instal ments, he will, where there are no stipula tions to the contrary, be considered a debtor to the firm. Collyer, Partn. 141; Story, Partn. 203; 1 Swaust. Ch. 89. Sometimes a provision is inserted that real estate and fixtures belonging to the firm shall be con sidered, as between the partners, not as part nership but as several property. In cases of bankruptcy, this property will be treated as the separate property of the partners. Coll yer, Partn. 141, 595, 600; 5 Ves. Ch. 189; 3 Madd. Ch. 63.
The apportionment of profits and losses should be provided for. The law distributes these equally, in the absence of controlling circumstances, without regard to the capital furnished by each. Watson, Partn. 59; Story, Partn. 24; 3 Kent, Comm. 28 ; 6 Wend. N. Y. 263. But see 7 Bligh, 432; 5 Wils. & S. Hou. L. 16.
5. Periodical accounts of the property of the partnership may be stipulated for. These, when settled, are at least prima facie evidence of the facts they contain. 7 Sim. Ch. 239.
The expulsion of a partner for gross mis conduct, bankruptcy, or other specified causes may be provided for; and the provision will govern, when the case occurs.
A settlement of the affairs of the partnership should always be provided for. It is generally accomplished in one of the three thllowing ways: first, by turning all the assets into cash, and, after paying all the liabilities of the partnership, dividing such money in pro portion to the several interests of the parties; or, second, by providing that one or more of the partners shall be entitled to purchase the shares of the others at a valuation ; or, third, that all the property of the partnership shall be appraised, and that after paying the part nership 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. Collyer, Partn. 145; Story, Partn. 207; 8 Sim. Ch. 529.
Submission of disputes to arbitration is provided for frequently ; but such a clause is nugatory, as no action will lie for a breach. Story, Partn. 215. The articles should be executed by the parties, but need not be under seal. See PARTIES; PARTNERS; PART