Explanation of Article 529
Article Two clarifies what data must be included in the partnership contract and the consequences of missing such data.
The first paragraph specifies the data that must be included in the partnership contract, which are:
First: Determining the partners' shares in the capital if the company is financial; this is done by stating the amount of each share, whether it is a sum of money, an asset, a benefit, or work.
Second: Determining the partners' share in the profit, or both profit and loss if the company is non-financial; this is done by stating each partner's percentage in the profit and what they bear of the loss, if any. The paragraph does not require the partners' share in the loss to be mentioned in the contract, but suffices with mentioning their share in the profit; because the partner's share in the loss is proportional to their share in the capital if the company is financial, and proportional to their share in the profit if the company is non-financial.
Third: Determining the purpose of the company; this is done by stating the type of activity the company will engage in and the purpose for which it was established, and the purpose must be legitimate; because the company's contract, like other contracts, cannot have an illegitimate subject.
The second paragraph explains the consequence of not mentioning the mandatory data in the first paragraph. If the data mentioned in the first paragraph is not included, it does not result in the invalidity of the contract; rather, the contract is unenforceable concerning these data and becomes enforceable only if the parties agree on them. This means that the contract can be amended regarding these data; it is not entirely void. For example, if the contract does not include determining the partners' shares in the capital, or does not include determining the partners' share in the profit, or does not include determining the purpose of the company; in this case, the contract is not void, but can be amended regarding these data, and becomes enforceable only if the parties agree on them; meaning that the partners can agree on determining their shares in the capital, or on determining their share in the profit, or on determining the purpose of the company.
Related To
Article 529
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Company is a contract under which two or more partners participate in an enterprise by contributing property or work, or both, to share any profit realized or loss incurred from such enterprise.
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The provisions of this Section shall not apply to companies subject to specific legal provisions.