ABSTRACT
An ordinary partnership agreement is a contract in which two or more people undertake to combine their labor or property to achieve a common purpose. Such a contract is signed as a common type of partnership across Continental Europe. This article examines the responsibility the partners have for their debts and the removal of their joint liability.
I. INTRODUCTION
The ordinary partnership regulated as a contract type under the Code of Obligations does not constitute a legal entity. However, since it is a “partnership”, it comes within the corporate context of the Code of Obligations.
When two or more natural or legal persons come together in order to accomplish a common purpose, they adhere to certain rules in order to satisfy a legally defined minimum capital by following the legal procedure without a limitation in terms of purpose. For those looking for a partnership scheme involving a simple process and minimum costs, the most reliable procedure is undoubtedly the “ordinary partnership”1.
This article evaluates the context of ordinary partnership in Turkish Law and the issue of the partners' joint liability, both toward each other and toward third parties.
I I . ORDINARY PARTNERSHIP
Although there is no strict consensus on the definition of an ordinary partnership, one of the most common and comprehensive definitions is that it involves a group of people, who do not have legal personality, who are contractually liable to combine their efforts or resources for a common purpose and to strive to achieve this common purpose together. The ordinary partnership includes a joint aim, a joint effort, a participation share, and a contractual link to the partnership. In the ordinary partnership, the subject of the relations between the partners constitutes the rights and obligations of those people who come together with a company contract. In this regard, the ordinary partnership agreement regulates the various debts and obligations of the partners, the powers they assume, as well as the various activities of the partners2. The most distinctive features of an ordinary partnership are: individual responsibility is identifiable, there exists unity of persons, there is no legal person or right, the partnership, bases on joint ownership of the partnership, and, finally, mutual responsibility. This final features is the subject of this article.
Before moving on to a detailed explanation of mutual responsibility, we first clarify liability in the ordinary environment.
I I I . RESPONSIBILITY FOR OWN PARTNER SHIP PAYABLES
The title "results of representation" in TCO 638 / III constitutes the only legal basis for responsibility. The legal provision in this title regulates responsibility both for representation and for liability for debts. According to the relevant provision, “(p)artners, together or through a representative, are jointly liable to a third party for the debts they have undertaken within the framework of the partnership relationship, unless otherwise agreed.” Since an ordinary partnership does not have a legal personality or a separate governing body, representation may be considered important. Although Article 637 / III of the TCO assumes that the manager is also authorized to represent, it may be otherwise regulated between the parties. It is essential that the authority regarding the significant savings transactions to be made by the managing partner with representative authority is given unanimously and that this issue should be clearly stated in the authorization document3. In an ordinary partnership, a transaction with third parties takes place with the participation of all partners or through a representative of all partners. These two ways of performing transactions are the sources of reliance on a joint liability in an ordinary partnership. However, legal transactions are not the only partners’ responsibility. Some issues regarding debts arising from unfair action and unjust enrichment will first be clarified.
For the responsibility for an unfair act to be considered as the responsibility of the partnership, all partners should participate in the unfair act and perform the act together. Otherwise, the unfair act of any partner towards a third party will not be the responsibility of the whole partnership. The criteria for responsibility of a partnership regarding unjust enrichment does not fall to one or a few of the partners, but the enrichment of the partnership as a whole. In other words, enrichment should have occurred in a situation in which the whole partnership is involved. Partners do not have the responsibility from the sources of the responsibility of the partnership that mentioned above . In order to say a word about this responsibility, the conditions required for the responsibility of the partners must be occured . In this context, firstly, the existence of a general partnership relationship and the debt undertaken must be related to the partnership. Another requirement is that the partners should carry out the debt event together or through a representative. The third requirement is that the debt is undertaken against a third person or a partner with the title of a third person, and, as a final condition, there is no consensus between partners to narrow or remove the responsibility. Here, the partners’ mutual responsibility may be considered where all these conditions are met and the resources that make up the debt are also present.
IV. JOINT LIABILITY
In ordinary partnerships, the partners are the party, not the partnership, in carrying out transactions since ordinary partnership does not constitute a legal personality since the partners are kept directly, jointly accountable without any limitation . This responsibility is addressed in Article 638/3 of the TCO as “the type of responsibility in all kinds of debt is joint liability in an ordinary partnership”. One of the most important functions of joint liability is to strengthen the legal status of the creditor by expanding the scope of the ability to claim since the creditor has the right to demand all receivables from each debtor4.
V . REMOVING JOINT LIABILITY
Several conditions are provided for the continuity of joint liability. If these conditions are not met, joint liability is removed.
The first condition is that the partners shall not decide against the principle of joint liability. According to Article 638/3, the principle of joint liability is not absolute as it provides “unless otherwise agreed” for joint liability5. An agreement should be signed by the partners in order to remove this non-absolute responsibility as determined by law. The agreement in question may not be sufficient to remove joint liability. To do so, the situation arising from the agreement should be notified externally and the creditor's must give their approval. This is to protect any third party who has established a business relationship with the ordinary partnership. Otherwise, in the absence of a continuity, it would be equitable to apply to each partner with a limited share, since the third person trades with the assumption that he/she can request from any partner. An exception to the lifting of joint liability in agreement between the partners is where the third party has not been notified, as the third party, the opposite side of the transaction, would not be in good faith. If this person knows that the principle of joint liability is no longer available, he/she will no longer be able to take advantage of this opportunity6. Another condition for removing joint liability is that all partners are involved in the transaction. This condition is necessary for legal action. Otherwise, we cannot talk about several liabilities. This requirement lies in the phrase "from the partners (...) from the debts they assume (...)" in Article 638/3 of the TCO. An exception to this condition is where the representative made the transaction. In this case, partners are not required to participate in the transaction in person. A second possibility for the removal of joint liability is where the partners and the counterparty (creditor) agree, before the establishment of the contract or, at the latest, at the time of entering into the contract, that the principle of joint liability is no longer valid if the partners assume responsibility for the debt severally. If the partners decide on this as an internal transaction and stipulate in the agreement that joint liability will not be an issue, this may not be sufficient to remove the principle of mutual responsibility in the transaction security at the market and protect those third parties acting in good faith. However, if the creditor knows or the creditor is able to know about this arrangement, then the partners will be free from mutual responsibility against the principle of trust7.
VI. CONCLUSION
Ordinary partnerships are partnerships that do not have a legal personality. This partnership may be established by the combination of at least two real or legal works in a contractual relationship and is not subject to any form as a rule. Since an ordinary partnership does not have a legal personality and the ordinary partnership agreement does not create a new legal entity, the community does not have the ability to exercise civil rights. For this reason, debts and receivables arising from all ordinary partnership legal transactions with third parties shall arise above the partners in this partnership. Article 638/3 of the TCO states that "(i)n the ordinary partnership, the type of responsibility for all types of debt is several types of responsibility." The joint liability principle may be removed between the partners for a certain share rate in the ordinary partnership agreement. However, the creditor should be aware or, at least, should be able to know that such an arrangement may be decided between the parties. Thus, partners’ joint liability may be removed in an ordinary partnership.
BIBLIOGRAPHY
NAMI BARLAS, Adi Ortaklık Temeline Dayalı Sözleşme İlişkileri, Vedat Publication, İstanbul, 2016.
ÖMER ALI GIRGIN, 6098 Sayılı Türk Borçlar Kanunu’na Göre Adi Ortaklıkta Temsil ve Borçlardan Sorumluluk, On İki Levha Publicaton, Istanbul, 2017.
HASAN PULAŞLI, Şirketler Hukuku Şerhi, Volume I, Adalet Publication, Ankara, 2011.
MEHMET BAHTIYAR, Ortaklıklar Hukuku, 13thEdition, Beta Publication, İstanbul, 2019.
FOOTNOTE
1 Nami Barlas, Adi Ortaklık Temeline Dayalı Sözleşme İlişkileri, Vedat Publication, İstanbul, 2016, p.13.
2 Nami Barlas, Adi Ortaklık Temeline Dayalı Sozleşme İlişkileri, Vedat Publication, İstanbul, 2016, p. 7.
3 Hasan Pulaşlı, Şirketler Hukuku Şerhi, Cilt I, Adalet Publication, Ankara, 2011, p. 61.
4 Ömer Ali Girgin, Mehmet Bahtiyar, Ortaklıklar Hukuku, 13th Edition, Beta Publication, İstanbul, 2019, p. 42.
4 Ömer Ali Girgin, Mehmet Bahtiyar, Ortaklıklar Hukuku, 13th Edition, Beta Publication, İstanbul, 2019, p. 42.
6 Girgin, 6098 Sayılı Turk Borclar Kanunu’na Gore Adi Ortaklıkta Temsil ve Borclardan Sorumluluk, On İki Levha Publication, İstanbul,p. 36.
7 Nami Barlas, p.111
