264 / 521
If the partnership terminates due to a reason other than the termi-
nation notice, the management authority of a partner should cease
when he learns about the termination or when he could have become
aware of it had he taken sufficient care.
Pursuant to Article 642 TCO, the partnership can be liquidated
based on the value of the contributions. The profit of the partnership,
if any, shall be distributed among the partners only after (i) the part-
nerships’ debts, (ii) partners’ expenditures and advance payments, and
(iii) the capital contributions are paid off. Losses shall be borne by the
partners personally if the assets of the partnership are not sufficient to
pay off the above listed items. Termination or liquidation of the part-
nership does not amend or otherwise affect the validity of the partner-
ship’s commitments already made towards third parties. In other
words, termination or liquidation of a partnership does not invalidate
or otherwise terminate the partnerships obligations (e.g. debts that are
not due at the time of termination). The partners remain personally,
jointly and severally liable for performance and/or payment for such
obligations.
Conclusion
Ordinary partnerships are mostly formed for joint venture projects
because it allows partners to seek a common goal by undertaking dif-
ferent and separable parts of a project (e.g. construction, financing,
management, etc.), and does not impose a commercial company struc-
ture. Therefore, it is preferable. On the other hand, the liability rules of
the ordinary partnership (i.e. the personal liability of the partners) pre-
vent parties from engaging in ordinary partnerships at all times.
248
NEWSLETTER 2014