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Different Essential Elements of Partnership
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Existence of a Valid Contract- The partners have come to agreement to established a
partnership that will be known as the Caffè Avenue Partnership. To participate in the
activities described in the following terms and conditions, the partnership has been
established. The partnership must have a signed contract that binds all of the partners.
Legal Capacity of Parties to Enter into the Contract- A contract of partnership can only
be entered into by those who are legally able and competent to engage into contracts.
Mutual Contribution to a Common Fund- The partners agreed to contribute based on
their cash investments, intellectual property and skills and labor they commit to
business operations at the outset of the partnership.
Legality of Object- Only activities that are sanctioned by the law can be engaged in by
the partners. Any illegal behavior that is carried out by partners is not protected by the
law and will not receive legal penalty.
Intention to Realize and Divide Profit- This key component states that the agreement to
do business must have the goal of sharing profits among all participants. The manner in
which earnings and losses will be divided should be clearly outlined in the partnership
agreement.
Contributions of Partners
Each of the Partners has contributed to the capital of the partnership, in cash, land, building,
equipment and furniture and fixtures in agreed upon value, as follows:
Contribution
Ms. Mejia
Ms. Bejar
250,000
30,000
Ms.
Hermoso
150,000
1,000,000
500,000
8,000
25,000
Cash
Land
Building
Equipment
Furniture
and Fixtures
TOTAL
200,000
300,000
Mr.
Antonio
200,000
Ms.
Carnate
100,000
480,000
1,675,000
Partnership
300,000
20,000
350,000
20,000
300,000
20,000
950,000
1,000,000
500,000
1,200,000
115,000
620,000
570,000
420,000
3,765,000
The partnership business is funded by five major sources: Partner Investments. Ms. Mejia
contributed P480,000, Ms. Hermoso contributed P1,675,000, Ms. Bejar contributed P620,000,
Mr. Antonio contributed P570,000, and Ms. Carnate contributed P420,000, which bring a total
partnership investment of P3,765,000.
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Organizational Structure
Financial Manager
Ms. Jheda Hermoso
Marketing Manager
Ms. Christine Lou
Pearl Bejar
Sales Manager
Mr. Kenneth
Antonio
Production Manager
Ms. Nice Richelle
Karyll Faith Carnate
Ms. Melanie Mejia
(Caffè Avenue
General Manager)
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Type of Partners, Roles and Responsibilities
Each of the Partners has equal rights in the management of the Partnership. The partners will
each commit to devoting as much of their time and energy as is required to the business of the
partnership in order to ensure that the partnership is successful in achieving its goals.
NAME
Ms. Melanie
Mejia
Ms. Jheda
Hermoso
Ms. Christine Lou
Pearl Bejar
TYPE OF
PARTNERS
Capitalist,
General,
Managing
Partner
Capitalist,
General,
Managing
Partner
Capitalist,
General,
Managing
Partner
ROLES
Coffee Store
General Manager
Financial
Manager
Marketing
Manager
RESPONSIBILITIES
The coffee store manager is
responsible for various aspects of
the company, including but not
limited to managing workers,
controlling the budget,
implementing marketing initiatives,
and many more facets of the
business.
A company’s ability to receive
financial advise and support is
significantly impacted by the
performance of its financial
manager. It conducts research on
the topic, among other things like
monitoring cash flow.
The marketing manager is
responsible for promoting and
positioning a brand in addition to
the products and services that are
sold by the company.
Mr. Kenneth
Antonio
Ms. Nice Richelle
Karyll Carnate
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Capitalist,
General,
Managing
Partner
Capitalist,
General,
Managing
Partner
Sales Manager
Production
Manager
The responsibility for ensuring the
sales goals are attained rests on the
sales manager.
The production manager is
responsible for supervising the
production process and organizing
all activities and operations related
to production.
Capitalist Partner- a partner who contributes money to the capital of the company.
General Partner- a part owner of a partnership business and is involved with its
operations and shares in profits.
Managing Partner- is responsible for the day-to-day management of the partnership
business.
Profit and Loss Sharing Scheme
The profit or losses will be allocated in accordance with the agreement of the partnership.
NAME OF THE PARTNER
TOTAL CONTRIBUTION
PERCENTAGE
Ms. Mejia
480,000
13%
Ms. Hermoso
1,675,000
45%
Ms. Bejar
620,000
16%
Mr. Antonio
570,000
15%
Ms. Carnate
420,000
11%
Total
3,765,000
100%
The partnership agreed that the distribution of profits and losses shall divided based on capital
contributions.
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Scenario
On the month of March 2021, Mr. Antonio received an offer from Ms. Carpio to directly
purchased 25% of her interest in the partnership of P145,000. Ms. Carpio is a successful young
entrepreneur. Thus, continuing partners agree to admit Ms. Carpio as a member of the firm.
Mr. Antonio, Capital
Ms. Carpio, Capital
142,000
142,000
Computation: 570,000 x 25% = 142,000
The new partner received a one-fourth transfer of Mr. Antonio’s capital. The partnership did not
receive the cash paid because the transaction is between Mr. Antonio and Ms. Carpio
personally, not between Ms. Carpio and the partnership.