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Q: Why business law?

S1: Business law is important because the generation nowadays, business is prevalent. Many
people venture into business for their life. It’s where they get their money among others.

Q: Anything else? That’s good business life. Money.

This is different because it’s supposed to be a law which involves our day to day activities,
criminal law, persons and family relations but here we are to study business, why do you think?

S2: Because business plays an important role in our everyday life. Wherever we go there are
businesses and so, business law is important for regulation and impose order in the business

S3: Business law is important because everyday wherever we go, we will encounter business
law in a certain manner, the way the business law affects us individuals and the community as a
whole plays also an important in the way economics turns out. Business law in a way helps keep
things in motion.

S4: Business law is important because business is the main factor that pushes our economy.
When we talk about business, it not only talks about profits nor is it only limited to the goods
the consumers receive in the end but also generates things like employment, it’s a source of
income for the government in the form of taxes. Therefore in this case, there has to be laws
that would govern business in a day to day basis in order to ensure that all businesses are
complying with regulations set forth by the government to benefit the entire economy at the
end of the day.

S5: Business relations happen everywhere and every time. The importance of studying business
law is that in this way, we can understand the relations going on, the legal rights and
obligations of the people involved in those relations and sanctions.

S6: Business law is pretty relevant and you cannot live without business. People must earn
profit in order to continue with our lives and survive. It is important in our day to day
transactions, in order to preserve our rights when we interact with certain people and

S7: It is important because business really is already around us and it needs to be regulated
because it affects almost everyone. Since it affects everyone, it must be regulated so that it will
resolves conflicts which may arise in relationships. Fro example, between the business owners
and consumers.
S8: Business law is important because it is prevalent in our society. We face business problem
day to day and also with the regulations provided by the state, reportorial requirements and
paying of the taxes and in order for us to be knowledgeable of the types of business that each
person would like to enter into because there are different types of business and has different
requirements that needs to be qualified. And also in order to protect the assets of the parties
have put into or contributed into the business.

Suddenly, we are talking about business. Something new to us. We are always talking about
criminal law, constitutional law. Suddenly we are talking about business. Suddenly our mindset
has changed. Suddenly out perspective in life has become wider. So that law does not inly
involve constitution, criminal law, or taxation. Here it’s business. It is our livelihood. It gives
employment. we have to regulate so that relationship and conflicts shall be settled. Protect
property rights. Regulate business activities and settle conflicts among businessmen, partners,
investors and that’s the reason why there should be a law on this. Partnership begun when God
created two parties. Suddenly, there has to be a regulation because if there was only one going
around the world, there is no need for this. There is no expected conflict. Like motor vehicles,
the moment you manufacture more than one car, there is possible collision. If there is only one
car, there is no need for the law. But when conflict arises, rights and interests have to be
protected. Regulate relationships. The need to establish a law depends on the form of business

When we talk about business organizations, we talk about juridical persons. Like the genesis,
these are persons, God created natural persons. While the law creates juridical persons.

Q: What do you remember in the story of Genesis?

A: In Genesis, God created the world in 7 days then he created Adam. From the ribs of Adam,
he created Eve. They had kids and the beginning of the world.

Discussion: First there was only Adam who was given everything. He was told everything is
yours. Enjoy paradise. Adam started to enjoy paradise until one evening, God told Adam go to
sleep, you are very noisy always singing. “Lonely, I’m Mr. Lonely…”
As he was sleeping, got one rib from Adam and out of that one rib, the birth of partnership.
From single proprietorship to partnership. So as partners, they enjoyed together. Day and night,
they are working as partners. They had kids. No longer partners, they became a corporation.

Forms of Business Organizations are:

a) Sole Proprietorship
b) Partnership
c) Corporation

Partnership is just a contract.

Q: What do you remember from Oblicon?

A: A contract is perfected when these three requisites concur:

1) Consent
2) Object or Subject Matter of the Contract
3) Cause or consideration
Absence of any one of the elements would make the contract void. It does not bind at all.

Discussion: Consent must be freely given. If not freely given, it is not a binding agreement.

A minor does not have a capacity to enter into contract because he does not have the right to
give any consent. Any consent he gives is not freely given and therefore does not bind. That is
why if a minor agrees into a marriage agreement and the husband later on enters into a second
marriage, can the husband be guilty of bigamy?

A: No. Because the first marriage was void.

Discussion: Subject matter- there must be something they have agreed. Either to give
something or render service. Contracts could either be, real or personal.
Real when there is something in agreement to deliver or give something. Comes from the word,
“re” which is the Latin word for THING.

Personal contract which is the performance/ rendering of a service by a person.

Cause or consideration- the reason why the parties have entered into that agreement.
Example: was he paid for that? Was there are exchange for the thing he delivered or the service
he has rendered.

Although consideration is not indicated (need not be expressly provided), it is presumed. Unlike
consent, it must be established and subject matter must be definite.
Example: execute a promissory note
“I promise to pay Mr. X Php5,000.00”

That is binding already. There is consent: I signed; is there subject matter? Php5,000.00
is there a cause/consideration? Not indicated but presumed. You do not obliged yourself to pay
something unless you have received something in return.

Q: What are the Sources of obligations?

1) Law
2) Contracts
3) Quasi-delict
4) Delict
5) Quasi-contracts
Discussion: Quasi-delicts- acts perfomed without observing the diligence of a good father of the
In every relationship, it is between a debtor and a creditor.Somebody owes and somebody is
entitled to collect. Difference between debtor and creditor relationship.

Difference debtor creditor relationship and an investor?

Debtor creditor relationship- the lender lends you money and the borrower obliges himself to
pay most likely with interest after a certain period so that if the borrower fails to pay, the
lender can demand payment and if there are security or some collaterals then foreclosure, go
after it.

An investor however also puts up money. Can the investor after a certain period demand for
the payment of his investment? Answer: It does not.
An investor is NOT a lender.
An investor invests on the condition that if the investments will succeeds of course he will be
entitled to the return of his investments plus and profit that will accrue.
But if the investment fails/the business fails – the investor cannot insist that he should be given
back his investment.

In other words, main difference is an INVESTOR assumes the RISK. He cannot insist to be paid if
the business does not succeed. Partnership is just a relationship.

What have you learned about partnership for today?

A: I have learned that partnership is a contract entered into by two or more persons and these
persons contribute either money, property or industry to a common fund with the intention of
dividing the profits among themselves.

Discussion: In other words, partnership is a contract and thru this a relationship is established
so that a contract may either be personal or real.

How do you classify partnership now?

Discussion: subject matter in a contract of partnership is Money, Property or Industry (Service

they will render)
If Money and Property ( Real Contract)
If Industry (Personal Contract) – something to do or not to do

How else do you want to describe partnership as a contract?

The contract of partnership is:
(1) Consensual, because it is perfected by mere consent, that is, upon the express or implied
agreement of two or more persons;
(2) Nominate, because it has a special name or designation in our law;
(3) Bilateral, because it is entered into by two or more persons and the rights and obligations
arising therefrom are always reciprocal;
(4) Onerous, because each of the parties aspires to procure for himself a benefit through the
giving of something;
(5) Commutative, because the undertaking of each of the partners is considered as the
equivalent of that of the others;
(6) Principal, because it does not depend for its existence or validity upon some other
contracts; and
(7) Preparatory, because it is entered into as a means to an end, i.e., to engage in business or
specific venture for the realization of profits with the view of dividing them among the
contracting parties.

You parents gave you and your brother an apartment A, hence you will receiving the rentals
of the apartment. Earning 50K a month and must be shared equally to both of you. Are you
and your brother partners?

- No. They are not partners but Co-owners.

Differentiate co-ownership from partnership?

The following are the distinctions between a partnership and a co-ownership: CJPDDPE
(1) Creation. — Co-ownership is generally created by law. It may exist even without a contract,
but partnership is always created by a contract (Art. 1767.), either express or implied;
(2) Juridical personality. — A partnership has a juridical personality separate and distinct from
that of each partner (Art. 1768.), while a co-ownership has none;
(3) Purpose. — The purpose of a partnership is the realization of profits (Art. 1767.), while in co-
ownership, it is the commonenjoyment of a thing or right (see Art. 486.) which does not
necessarily involve the sharing of profits;
(4) Duration. — Under the law, there is no limitation upon the duration of a partnership (see
Arts. 1767, 1785.) while in co- ownership, an agreement to keep the thing undivided for more
than ten years is not allowed (see Art. 494.);
(5) Disposal of interests. — A partner may not dispose of his individual interest in the
partnership (Art. 1812.) so as to make the assignee a partner unless agreed upon by all of the
partners (see comments under Art. 1814.), while a co-owner may freely do so (see Art. 495.);
(6) Power to act with third persons. — In the absence of any stipulation to the contrary (Art.
1803.), a partner may bind the partnership, while a co-owner cannot represent the co-
ownership (see Arts. 491, 492.); hence, a judgment secured against only one of the co-owners
will not bind the other co-owners (Smith vs. Lopez, 5 Phil. 78 [1905].); and
(7) Effect of death. — The death of a partner results in the dissolution of the partnership (Art.
1830[5].), but the death of a co-owner does not necessarily dissolve the co-ownership.
(Rodriguez vs. Ravalan, 17 Phil. 63 [1910].)

When we say Juridical Personality, what does it mean?

- It has a separate and distinct form that of each partner
- As result of juridical personality it requires rights. So that if A and B entered into
partnership we now talk about 3 persons. A, B and the Partnership.
- A and B – Natural Persons
- A and B partnership – Juridical

A and B enjoy the bill of rights under the consti, what are the examples?
- Equal protection of laws and Due process
- Right to property and liberty
- Right to travel
- Right to abode
- Right to vote and be voted upon
- Right to against illegal searches and seizures
- Right against double jeopardy
- Right to marry
- In short basic bill of rights.

Would the A and B partnership enjoy the said rights?

- Some rights yes.
- Not right to life (though arguable by some authors because they have a life of 50yrs)
- Not right to liberty (since it cannot be sent to jail) In most laws now, the company will
be liable for a fine and the PRINCIPAL officers should be Imprinsoned. Hence it does not
enjoy such rights.
- Right against illegal searches and seizures (the company cannot be compelled to be
searched without the proper search warrant
- Right against self incrimination
Other than the bill of rights, what other rights that a partnership can exercise?
- Right to own property in his own name. (In case the partnership buys a lot, it will be
registered in the name of the company or partership, because if registered in the name
of A and B (partners) then they’ll become co-owners.
- Right to possess, utilize, dispose and fruits thereof with respect to the
property.(Ownership rights)
- Right to sue and be sued separate from the partners themselves