Explanation of Article 570
The reasons for the termination of the partnership contract are similar to those for the termination of other contracts, as stated in the general rules, except for the following: the expiration of the agreed term, the completion of the agreed work, the mutual agreement to terminate, or the impossibility of performance due to the destruction of the subject matter. This article does not address these reasons, as they are covered by the general rules applicable to other contracts, unless the partnership contract differs from other contracts in this regard.
The first paragraph clarifies that the partnership contract is typically for a specified period or for a specific work; similarly, in agriculture, it is for a specific quantity of produce. In both cases, the contract terminates upon the expiration of the specified term or the completion of the agreed work, or if the purpose for which it was concluded is achieved.
If the contracting parties do not agree on a term for the contract or on a specific work, the contract terminates upon the completion of the work according to the circumstances of the custom; as stated in Article (276), if no term is specified for the obligations in the contract, it is presumed that the contract is intended to last for a reasonable period according to the circumstances of the custom; this is not considered an interpretation of their intention but rather what the nature of the transaction and the contract require.
The second paragraph explains the two cases in which the partnership contract terminates before the expiration of the term or the completion of the work: the first case is the death of the worker if the work is intended for a specific person; in this case, the contract is considered terminated due to the personal nature of the obligation, and the contract is rescinded without compensation; this is similar to the provisions of Article (110) regarding the impossibility of performance due to the death of the worker, as the contract becomes impossible to perform.
The second case is the death of the worker if the work is not intended for a specific person and is not conditional upon the worker; in this case, the contract is not rescinded unless the heirs choose not to complete the work due to the personal nature of the contract; the heirs have the right to request the rescission of the contract if they do not wish to complete the work, as the nature of this contract does not allow for the substitution of the worker; similarly, the heirs may request the rescission of the contract if there are insufficient guarantees for the execution of the work, such as the absence of a skilled worker among them; the court will determine this.
The third paragraph clarifies that the partnership contract does not terminate upon the death of the financier; the contract continues as the financier's role is not considered personal in relation to the financier's obligations, unlike other contracts where the personal consideration of the contracting party is not relevant.
Related To
Article 570
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An output sharing contract shall terminate upon the expiration of its term, or upon the completion of the work.
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An output sharing contract shall terminate upon the worker’s death if the person of the worker was a decisive factor in concluding the contract, or if the heirs decide not to complete the work. The capital owner may demand termination of the contract if the heirs do not possess sufficient capabilities to perform the work.
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The output sharing contract shall not terminate upon the death of the capital owner.