Dutch Civil Code

Book 7A Particular Contracts

Title 7A.9 5 Partnerships*)

*) In practice there are just four types of partnerships, whereby the type depends on whether the partners jointly conduct a business or a profession in the pursuance of profit, and whether they operate towards the outside world under a separate partnership name or not. The four types are: a silent partnership (a business or a practice of professionals, not acting under a separate partnership name), a professional partnership (a practice of professionals, thus of partners who jointly conduct a profession in the pursuance of profit, acting under a separate partnership name), a general partnership (a business acting under a separate partnership name) and a limited partnership (a business acting under a separate partnership name, but the identity of one or more of the participating partners is not disclosed to the outside world). The partners cannot decide themselves which type they prefer. As soon as the contract meets the requirements of a certain type, the law specifies that that type has come into existence, regardless of the name that partners themselves have given to their partnership contract. Where the parties to a contract, for instance, have named their partnership a professional practice, while in reality they jointly conduct a business under a partnership name, their relationship shall be treated as a general partnership. Of course the partners may decide themselves whether they present their partnership outwards under a separate name and also, where they conduct a business jointly under such name, whether the identity of one or more of them shall be disclosed and have the capacity of a limited partner.
A partnership has no legal personality. All partnerships are simply contracts between the participating partners. The partners may be natural persons, legal persons or a combination of both. They all have to contribute at least something to the partnership, for instance their labour capacity or a part of their own property (money), or both. Where partners jointly own property in relation to their partnership, this property is dealt with as if it is owned by the partnership itself. In reality, naturally, this is not possible, since only natural persons and legal persons can bear rights and liabilities, not contracts. Nonetheless, this is done for a reason. The law attaches specific legal effects to assets and debts of the partnership and pretends that the partnership, until it is dissolved, functions as a legal person. Creditors with a debt-claim against the partnership namely may recover their claim from the assets of the partnership with priority over the creditors of the individual partners personally. Because of that, it seems that the partnership has property of its own still. Only after all creditors of the partnership have been satisfied from the partnership property, the remaining becomes available to the personal creditors of the partners. First each partner shall acquire by apportionment from the remaining partnership property a number of assets with an equal value as his share in that partnership property. As of then, the partnership property has ended and the former partners only have their personal property, that is to say, the property each of them owned himself and that has never been connected with the partnership and the assets received by apportionment from the partnership property. The personal creditors of each partner may now recoup themselves from that own personal property of the individual partner who is his debtor. Where the partnership property was not sufficient to cover all partnership debts, the creditors of the partnership may recover the unsatisfied part of their debt-claim from the personal property of each individual partner. Both, the creditors of the partnership and the personal creditors of each partner, are ranked equally at such foreclosure.
Where a partner, when entering into a partnership with others, has contributed his own property to the partnership, this does not necessarily implicate that a community of property is created between all partners, in the sense that all partners have acquired a share in the ownership thereof, thus that a community of property under the partnership has arisen. It is possible as well that the personal property of a partner, for the purpose of contributing it to the partnership, is only placed at the disposal of all partners in order to enable them to make use of it in the pursuance of their mutual enterprise. Then the other partners shall not have obtained any title or share in it. Only after a contributing asset of a partner has been transferred in the legally required way to all partners, there shall arise a community of property between them, so that the partnership, in that sense, shall have property of its own. Where it concerns movable things, it is not always certain whether the partners have intended to acquire a real property right therein or that their intention was that they are only allowed to make use of it. The annual accounts of the partnership may clarify what was intended. As a rule the partnership shall have its own bank account, meaning that at least the debt-claim of the joint partners against the bank forms a community of property between them.
The difference between a general and a professional practice is slightly vague. Decisive is what kind of activities are performed in the partnership. Where the activities merely consist of the sale of goods or the performance of services for which no high education or specific art skills are required (like services performed by a plumber, electrician, bricklayer, chauffeur or farm hand), they are regarded as business activities. Where the activities performed by the partners do not relate to the sale of products, but mainly to the provision of services for which the partners must have obtained a high education or possess particular creative skills, they are regarded as professional activities. Because this distinction is so fuzzy, it is usually clarified by means of an example. The activities of doctors, dentists, veterinaries, psychologists, speech therapists, lawyers, notaries, accountants, consultants, architects, computer programmers, web designers, advertising designers, artists, musicians and other distinguished professions, are regarded as professional activities which, in a partnership, are conducted jointly in a practice for mutual benefit. But there are situations in which this criterion is not helpful. A pharmacist, for instance, mainly sells products, although a high education is required to conduct such profession.
After it has been ascertained what kind of activities are performed in the partnership, the question arises whether the partners have made clear to the outside world that they jointly act as a partnership in the pursuance of a business or professional practice. When they use a separate partnership name on their stationary and website, on the nameplate of their office and when entering into contracts with third parties, they present themselves outwards as a partnership. Note that when the names of the professionals working in a practice, for instance the initials and surnames of the doctors or lawyers employed there, are merely mentioned stacked above one another, this does not point towards the existence of a partnership between them. If, however, the names of two or more professionals are placed behind each other, this is an indication that those people form a partnership.
A partnership that presents itself outwards under a partnership name and that pursues a business, is by operation of law a general partnership. A partnership that presents itself outwards under a partnership name, but that pursues professional activities, is by operation of law a professional partnership. A partnership that pursues a business or professional practice, yet without acting under a separate partnership name, is called a silent partnership. Silent partnerships are often formed for tax purposes (a silent partnership between a farmer and his wife or son who is working on the farm too) or to reduce costs (a silent partnership of lawyers who practice law independently under their own name, but share the costs of lodging, professional literature or computer data).
The law connects different legal effects to each of the aforementioned types of partnerships. Section 7A.9.1 (General provisions), Section 7A.9.2 (Obligations between the partners mutually) and Section 7A.9.4 (Ending of partnerships) apply to all types of partnerships, therefore also to a silent partnership. The main difference between the four types of partnerships relates to the position of the partners towards third parties with whom they have entered into a contract within the scope and for the purpose of the partnership. Since a silent partnership is not disclosed (and therefore is not registered in the commercial register), a third party who enters into a contract with a partner of such silent partnership shall think that he is dealing solely with that partner as an independent natural or legal person. Therefore, the other silent partners, of whose existence the third party probably is not aware, cannot be held liable by him, not even when the partner in fact, albeit indirectly, performed the juridical act on behalf of the business or professional practice of the silent partnership. For the other types of partnerships this outward relation is different, because they act under a partnership name, which brings along that the third party knows that he may get connected to more partners and therefore may, under specific circumstances, rely on that. Section 7A.9.3 (Obligations of the partners towards third parties) has in principle only effect for professional partnerships, thus a practice of professionals acting outwards under a partnership name. It is, however, also relevant for general partnerships and limited partnerships, yet only to the extent that Title 1.3 of the Commercial Code does not provide another regulation. A partner of a professional partnership who has entered into a contract with a third person who may assume that this partner acts on behalf of the professional practice in which the latter participates, for instance because the partnership name is used in the contract or in view of the nature of the performance and the fact that the third person is aware of the existence of the professional practice, shall create a partnership debt, but not a debt for which all partners are joint and several liable towards that third party. The third party may only claim from each partner a proportional part of the debt. So if one of the partners is insolvent, the third party bears the risk, and not the other partners of the professional partnership, who merely can be held liable for their own equal share in the debt. Where the partnership pursues a business under a separate partnership name, and therefore is shaped by law as a general partnership or a limited partnership, all partners are towards the third party joint and several liable for partnership debts, except, there where it concerns a limited partnership, for the partners whose identity has not been disclosed.
Another difference between a professional partnership and a general partnership relates to the power of a partner to represent the other partners by performing acts in the name of the partnership with others.
When a partnership has acquired ‘its own’ partnership property, in the sense that there are assets of which the purpose is to be used in the pursuance of the partnership’s enterprise and in which all partners have a share, this shall form a separated property, specifically a property from which the creditors of the partnership may recover their claims first and in that as such is separated from the personal property of the participating partners. This right of priority exists in regard of all types of partnerships.

Section 7A.9.1 General provisions

Article 7A:1655 Definition of a 'partnership'
A partnership is a contract under which two or more persons have engaged themselves towards each other to put something together with the purpose to share the benefits that may result therefrom.

Article 7A:1656 [repealed]

Article 7A:1657 Complete or special partnerships
Partnerships are either complete or special.

Article 7A:1658 Complete partnership pursuing profits*)
The law only provides for a complete partnership that is pursing profits. It prohibits all partnerships under universal title, either enclosing all property of the participating partners or a specific part thereof, all without prejudice, however, to Title 1.7 (Marital community of property) and Title 1.8 (Nuptial agreements) of the Dutch Civil Code.

*) A complete partnership is a partnership that extends itself to all assets and debts falling within its scope as described in the contract. A complete partnership for property, for instance, is a partnership that encloses all present and future assets and debts of the partners, since all these assets and debts fall under the definition of the partnership property. Such complete partnerships of property are very similar to general marital communities of property. They are, however, not allowed under Dutch civil law. The only admitted complete partnership is the commercial partnership where the partners in a joint effort try to make a profit by working together for their mutual benefit. In view of Article 7:A1659, the partners in such complete partnership may initially only contribute their labour capacity, and no money or any other property. One may state, however, that a complete partnership of property between two legal persons is possible, since there is no restriction for them to use all their property (assets and liability), either already present or to be acquired or incurred in future, in the pursuance of a joint objective of such purport.

Article 7A:1659 Property of a complete partnership
A complete partnership pursuing profits shall consist only of what the partners during the existence of their partnership, under whatever name, shall acquire as a result of their activities.

*) Although the partners in a complete partnership may only bring in their labour capacity, it is to be expected that they shall acquire property in return for their efforts, like cash paid to them or money transferred to their bank account by third parties as counter performance. Probably they will buy some kind of assets in course of time, like furniture or computers, paid with the money received. All that is acquired as a result of their efforts, shall belong to the complete partnership, therefore to all partners jointly, each having a share therein.

Article 7A:1660 Special partnership*)
A special partnership is a partnership which relates only to specific property or to the use or the benefits thereof or to a specific enterprise or the conduct of a specific business or profession.

*) Most partnerships start with a contribution made by one or more partners. It is possible, for example, that one partner contributes his one-man business and the other partner a sum of money equal to the value of that business. Usually all or most partners shall also make a contribution by using their labour capacity and skills for the benefit of the partnership. Such partnerships are a mix of a complete partnership in regard to the contributed labour capacity and a special partnership pursuing profits for the mutual benefit of the participating partners by means of a joint enterprise.

Section 7A.9.2 Obligations between the partners mutually

Article 7A:1661 Starting point of a partnership
The partnership starts as of the moment of the conclusion of the contract, if no other starting point has been specified in that contract.

Article 7A:1662 Contributions that may be made to the partnership
- 1. The contribution of a partner may consist of money, property*), the right to use and enjoy property**) and labour.
- 2. The provisions for a sale contract shall apply accordingly to a contribution of property and the provisions for a lease contract shall apply accordingly to a contribution of the right to use and enjoy property, all to the extent that the nature of the legal relationship between the partners does not oppose to this.

*) Contribution of property means the transfer of property to all participating partners, so that each of them shall acquire a share in the right of ownership thereof. This implies that the requirements set by law for a valid transfer of property have to be fulfilled. Where immovable property is contributed to the partnership, the partners shall have to ask a notary to draw up a notarial deed of transfer, which deed has to be registered in the public registers for immovable property. The contribution of movable property requires the actual delivery of the goods to all partners, which transfer can be effectuated by placing the goods in the storage or office of the partnership, in such a way that all partners are able to exercise control over it, provided that there is an intention by all partners, including the one to whom the property belonged prior to the contribution, to make all partners joint owner of the movable good (legal basis). The transfer of a debt-claim or a right to name, for instance a license or a contractual position, requires a notarial or private deed drawn up for this purpose between the partners, followed by an announcement to the debtor or counterparty to the contract that de debt-claim or right has been transferred to all partners. The property that is transferred in the required way to all partners constitutes the partnership’s community of property. Limited real property rights can also form a part of that community. The formal requirements are largely the same for limited real property rights as for a transfer of the encumbered asset.
**) Where the proprietor of property makes a contribution by granting all partners the right to use and enjoy that property in the pursuance of the business or professional practice of the partnership, he shall remain the sole proprietor thereof. This means that his property does not belong to any possible community of property of the partnership and that it remains the personal property during the course of the partnership of the partner who has made such contribution. When the partnership ceases to exist, he may take his own property back (now without any obligation which forces him to accept that his former partners also make use of it) and is not compelled to pay the others any compensation. Such personal property, therefore, is not subject of the winding up and apportionment of the community of property of the dissolved partnership.
Often a proprietor retains the right of ownership of the property contributed by him to the partnership, yet under the arrangement agreed with the other partners that a decrease or increase in value of that property during the partnership has to be born by or shared with all partners (‘beneficial ownership’).

Article 7A:1663 [repealed]

Article 7A:1664 [repealed]

Article 7A:1665 Proportional attribution of payment received
When one of the partners may claim, for his own account, the payment of a due and demandable sum of money from a third person who has a due and demandable debt to the partnership on account of which he has to pay a sum of money to that partnership, then the payment received by that partner on his own claim from that third person must be attributed by him proportionally to both claims, that of his own and that of the partnership, even when he has discharged the third person only for the latter’s debt against him. But when he has stated towards the third person that his payment serves in full for the settlement of the claim of the partnership, this statement must be complied with towards the other partners.

Article 7A:1666 Non-payment of partnership claims and mutual attribution*)
If one of the partners has received payment of his share in a debt-claim of the partnership against a third person, and that third person becomes insolvent after that, then that partner must transfer what he has received from that third person earlier on that claim to the partnership, even when he had discharged the third person for his share in the claim.

*) When a partnership has a debt-claim against a debtor for the payment of a sum of money (dividable performance), each partner shall have a separate claim of his own against that debtor equal to his internal share in the claim of the partnership (Article 6:15, paragraph 1) or in proportion to the number of participating partners. So, when a partnership of two partners may claim from one debtor a sum of money of € 100,000, each partner shall have an independent claim of € 50,000 against that debtor. Where the debtor first pays € 50,000 to one of the partners and, before he has paid off the other partner, gets bankrupt, the partner receiving payment has to share the received sum of € 50,000 with that other partner.
Article 7A:1666 has relevance insofar as the debt-claim of the partnership does not form a part of any community of property of the partnership and the independent debt to one of the partners is not paid by transferring a sum of money to the bank account of the partnership. In the last case, all partners shall automatically become entitled to the bank account in accordance with their internal share in that account. In reality, Article 7A:1666 is hardly of any influence. When a partnership has sent a bill to a third person, it shall claim payment of the total amount for itself. The debtor not even knows what the part of each partner is or how many partners are participating in that partnership. One must acknowledge that, in such event, the juridical act between the partnership (or one of its partners in its name) with a third person brings along that the claim has to be regarded as one single debt-claim of all partners jointly as referred to in Article 6:15.

Article 7A:1667 [repealed]

Article 7A:1668 [repealed]

Article 7A:1669 [repealed]

Article 7A:1670 Share of the partners in the profits and losses of the partnership
- 1. Where the share of each partner in the profits and losses has not been determined in the partnership contract, the share of each partner shall be in proportion to what he has contributed to the partnership.
- 2. In regard of the partners who have only contributed their labour capacity and skills, their share in the profits and losses is equal to the share of the partner who has contributed the least.

Article 7A:1671 Assessment of shares by one of the partners
- 1. The partners cannot stipulate that they leave the assessment of the size of their shares up to one of them or to a third person.
- 2. Such a stipulation is deemed not to have been written, so that the previous Articles have to be observed.

Article 7A:1672 Benefits and losses assigned to one partner
- 1. A stipulation under which all benefits are offered to one of the partners, is null and void.
- 2. Nevertheless, it is allowed to stipulate that all losses shall be born exclusively by one or more partners.

Article 7A:1673 Management and administration
- 1. The partner who by virtue of a special stipulation in the partnership contract is charged with the management and administration of the partnership may, even despite of the wishes of the other partners, perform all acts in regard of his management and administration.
- 2. Such power cannot be revoked as long as the partnership lasts, unless for important reasons. But where such power has not been granted in the partnership contract, but by virtue of a later deed, it is revocable, just as a mandate is.

Article 7A:1674 Task and duties of the administrating partners
Where several partners are charged with the management and administration, without a specification of their duties or without a stipulation indicating that one partner may not perform any activities without the involvement of the others, each of them is empowered to perform all acts falling within the scope of the management and administration of the partnership.

Article 7A:1675 Stipulated duty to administrate jointly with one or more others
Where it has been stipulated that one of the administrating partners may not act without the involvement of the other administrating partners, he is not allowed, as long as no new contract for this purpose has been made, to act without the cooperation of those others, even when those others find themselves for a moment in a situation where it is impossible for them to participate in acts of management and administration.

Article 7A:1676 Conduct of management and administration
In the event that no special stipulations are made in regard of the conduct of the management and administration of the partnership, the following rules must be observed:
1° all partners are regarded to have granted each other mutually the power to manage and administrate the partnership on behalf of each other; what is performed by each of them, shall be binding also for the shares of the other partners, without the need to have obtained their consent for this, on the understanding, however, that the other partners or one of them has the right to oppose to an act as long as it has not been performed;
2° each of the partners may make use of the assets of the partnership, provided he uses them in accordance with the intended purposes and not against the interests of the partnership or not in such a way that the other partners are prevented from exercising their right to make use of those assets as well;
3° every partner may require from the other partners that they bear the costs necessarily made for the preservation of the assets of the partnership;
4° none of the partners may, without the consent of the others, add any novelties to the immovable things of the partnership, even when he claims that this is done for the benefit of the partnership.

Article 7A:1677 [repealed]

Article 7A:1678 Participation of third person in the partnership
Each of the partners is entitled, even without the consent of the others, to make a third person a participant in his own share in the partnership, but he is not able, without the consent of the others, to admit that third person as a co-partner to the partnership, regardless whether he is charged with the management and administration of the partnership.

Section 7A.9.3 Obligations of the partners towards third persons

Article 7A:1679 Liability and power of representation of the partners*)
The partners are not liable for the total debts of the partnership and a partner is not empowered to bind the other partners if no procuration (power of attorney) has been granted to him to this end.

*) Because the law provides other rules for a general and limited partnership and because the partners in a silent partnership by nature do not perform juridical acts in the name of their partnership, so that the counterparty could not assume that it was performed on behalf of all partners, thus on behalf of the partnership, the provisions of Section 7A.9.3 are in particular relevant for a professional partnership, i.e., a partnership of professionals acting under a separate partnership name. The law specifies that a partner in a professional partnership is not. merely because of that capacity. entitled to perform juridical acts in the name and for account of the partnership or, in other words, in the name and for account of all participating partners. A partner may only act as an authorized representative of another partner, regardless whether the juridical act is performed in the course of or for the benefit of the partnership, when that other partner has granted him the right to perform juridical acts in his name, like in the case of any representative. As a result, a partner in a professional partnership is neither empowered to act in the name and for account of all partners, thus of the partnership itself, unless the other partners have empowered him by procuration to do so.
In regard of juridical acts that a partner in a professional partnership has performed in his own name, he shall be the only person who is liable towards his counterparty for performance and non-performance of that juridical act, even when the juridical act itself has come about, either directly or indirectly, in relation to or on behalf of the partnership or its undertaking, and even when his counterparty reasonably was allowed to assume that the juridical act was performed as such in relation to that partnership. But since the counterparty knew that the juridical act was entered into by the partner in his own name, his claim cannot be regarded as a debt of the partnership. The juridical act has created only legal relations and effects between the counterparty and that specific partner personally. Only that partner is liable towards his counterparty for performance or non-performance, so that the counterparty cannot turn to the other partners of the professional partnership, although he was aware of their or the partnership’s existence.
The same applies when a partner in a professional partnership has performed, on the basis of a procuration granted to him for this purpose, a juridical act in the name of several partners mentioned by him to his counterparty. Now the counterparty has merely entered into a legal relationship with those specific partners. The effects thereof are defined in Sections 6.1.2 and 6.1.3, unless all partners are involved and the juridical act is entered into in the course of the partnership’s professional practice.
When a partner performs a juridical act in the name of the professional partnership as such, he is only allowed to do so when he has obtained a sufficient procuration to this end. If he has, the claim of his counterparty shall be, from the point of view of the partners, a debt of the professional partnership. This, however, does not implicate that the counterparty may hold the partnership or all partners joint and several liable for the performance or non-performance of that juridical act, although it was performed with the consent of all partners and probably for the benefit of the partnership or its practice, while the counterparty knew or was allowed to assume that the juridical act was entered into on behalf of the professional partnership. Nevertheless, Article 7A:1679 and Article 7A:1680 indicate that the counterparty only has a split up claim against each of the partners separately for a part of the total claim. Such creditor, however, may still recover his debt-claim with priority over the personal creditors from the assets of the professional partnership, provided of course there exists a community of property between the partners jointly in relation to their partnership.

Article 7A:1680 Liability of the partners for juridical acts of the professional partnership*)
The partners can be held liable by the creditors with whom they have performed a juridical act [in the name and for account of the partnership] for an equal amount and an equal share, even when the share of one of the partners in the partnership is less or smaller than that of the others, unless it was stipulated, when entering into the obligation with the third person, that each of the partners is liable towards him in proportion to all partner’s real share in the partnership.

*) Irrespective of the actual share of each partner in the professional partnership, each of them shall be liable towards the counterparty of the partnership (i.e. of all partners participating therein) for a part of the total claim in proportion of the number of partners participating in the professional partnership. So when there are four partners, of whom one has a share of one half of the partnership property, each of them shall nonetheless be liable towards a creditor of the partnership for one fourth part of the total claim. Only when they have stipulated towards the counterparty that they shall be responsible in accordance to their actual share in the partnership, meaning that the counterparty (creditor) must know the shares of all partners when he enters into the obligation with them and has accepted an according liability, not the number of partners shall be decisive, but the proportion of each actual individual share. Nonetheless, the creditor with a debt-claim against the partnership, may recover his claim firstly from all assets of the separate community of property of the partnership.

Article 7A:1681 Juridical acts performed in the name and on behalf of the professional partnership
A stipulation indicating that a juridical act has been entered into for account of the partnership, shall only bind the partner who has performed that juridical act, but not the other partners, unless they have granted him a procuration (power of attorney) to act in the name of the partnership or unless the result of such juridical act has come to the advantage of the partnership.*

*) The third party may nevertheless hold all partners liable if he reasonably was allowed to assume that the acting partner was empowered to perform the juridical act in the name and for account of the partnership, that is to say, as a representative of all participating partners. Yet, where the power of representation of the partners of the partnership is registered in the commercial register, he shall not easily regarded to have acted in good faith. The statement of the acting partner that he is authorized to act in the name and on behalf of the partnership, is not enough for the third person to be allowed to assume that the acting partner has power of representation. Additional circumstances must strengthen this assumption, for instance the fact that this particular partner in the past has performed a number of times a juridical act in the name and for account of the partnership, without any protest of the other partners.

Article 7A:1682 Right of the professional partnership to claim performance*)
If one of the partners has entered into a contract in the name and on behalf of the partnership, the partnership may claim performance of that contract.

* Even when a partner, in view of the partnership contract and the registration in the commercial register, has performed unauthorized a juridical act in the name and on behalf of the partnership with a third person, the partnership may always claim that that juridical act has to be performed on behalf of the partnership, in which case the partnership, of course, is liable towards the third party for the fulfilment of the counter performance.

Section 7A.9.4 The ending of a partnership

Article 7A:1683 Dissolution of a partnership
A partnership gets dissolved:
1° upon the expiration of the period of time for which it was entered into;
2° upon the loss of the property or the realization of the operation that was the objective of the partnership;
3° by a termination of the partnership by one of the partners towards the other partners;
4° when one of the partners has died, has been placed under adult guardianship, has gone bankrupt or has been subjected to the Debt Repayment Scheme for Natural Persons.

Article 7A:1684 Dissolution of the partnership by the court
- 1. Upon the request of any of the partners, the court may dissolve the partnership for important reasons.
- 2. Such dissolution has no retroactive effect. The court may award the request under conditions to be set by it and condemn a partner who has failed to comply with his obligations to pay damages in accordance with Article 6:277.
- 3. Articles 6:265 up to and including 6:279*) do not apply to a partnership.

*) These Articles regulate the right of rescission of a reciprocal contract when the counterparty to the contract has failed to perform his obligations.

Article 7A:1685 [repealed]

Article 7A:1686 Restrictions to the right of termination
- 1. The termination of the partnership by a partner may be declared voidable if it is done in conflict with reasonableness and fairness.
- 2. A partnership entered into for a specific period of time or for a specific work, cannot be terminated, unless such right of termination has been stipulated.

Article 7A:1687 [repealed]

Article 7A:1688 Legal effects when one of the partners dies*)
- 1. If it has been stipulated that the partnership, when one of the partners dies, shall continue to exist with the heirs of the deceased or between the remaining partners only, such stipulation has to be complied with.
- 2. In the second case, the heirs of the deceased partner have no other right than to claim the division and apportionment of the property of the partnership in the state as it was on the time of death of the deceased partner, on the understanding that they share in the benefits and bear the losses that are the necessary implications of acts performed prior to the time of death of the partner to whose estate they have been called as heirs.

*) Where the partnership contract does not provide for an arrangement that the partnership shall continue to exist in case of the death of one of the partners, the partnership shall dissolve by operation of law upon the death of a partner. When the remaining partners want to continue the partnership, they shall have to divide and apportion the property of the partnership between them and the heirs of the deceased partner and enter into a new partnership with each other. The same applies when one of the partners terminates the contract and the others want to continue their partnership or when a new partner as admitted to the partnership.

Title 3 of Book 1 General and limited partnerships

Article 15 Com. Code*) - Applicability of the Commercial Code and Civil law
The partnerships mentioned in the present Title*) (Title 1.3 of the Commercial Code) are governed by the contract between the partners, by the Commercial Code and by Dutch civil law.

*) Com. Code means the Dutch Commercial Code. The partnerships regulated in the Commercial Code are the general partnership and the limited partnership. Both pursue a business under a separate partnership name, whereas a professional partnership pursues professional activities under a separate partnership name. The provisions of the Civil Code only apply to a general and limited partnership to the extent that the rules of the Commercial Code do not specify otherwise.

Article 16 Com. Code - Definition 'general partnership'
A general partnership is a partnership for the purpose of pursuing a business under a separate own name.

Article 17 Com. Code - Right of representation of the general partners
- 1. Every partner, who is not excluded therefrom*), is entitled to act in the name and for account of the general partnership, to spend and collect money, and to bind the general partnership to third persons and third persons to the general partnership.
- 2. Acts that do not relate to the general partnership**) or in regard of which a partner is unauthorized to perform them under the partnership contract, are not included in the previous paragraph.

*) The partnership contract may provide rules limiting the right of representation of the general partners (in a general and limited partnership). It is possible, for example, that one or more general partners are excluded entirely from the right to perform juridical acts in the name of the partnership or that they may do so only in cooperation with one or more other partners. It is possible as well that a general partner may not perform on behalf of the partnership juridical acts of a specific nature (for instance entering into an employment contract with a third person, termination of an existing contract with a dealer or client) or juridical acts exceeding a certain amount (he is, for instance, not allowed to perform on his own a juridical act exceeding a value of more than € 5,000). All kind of possibilities may be stipulated in this respect. After registration in the commercial register, the other partners may invoke such limitations against third persons. Nevertheless, at least all general partners jointly must be empowered to perform all juridical acts falling within the scope of the objective of the partnership, because otherwise the partnership is not able to participate in the economic society.
**) The objective of a partnership must be registered in the commercial register. The partners may, in any event, not cross the borders specified therein. When one of them does so anyway, by performing a juridical act in the name of the partnership that falls outside the scope of that objective, the other partners may invoke the incapacity of the acting partner against the third person who has dealt with him. This may be the case, for example, where that third person has sold a yacht to the general partnership, while he must have known that this act, in view of its nature, could not contribute in any way to the objective of the partnership.

Article 18 Com. Code - Liability of general partners
Within a general partnership each of the partners is joint and several liable for the obligations of the partnership.

Article 19 Com. Code - Definition of a 'limited partnership'
- 1. A limited partnership is entered into between one person or more joint and several liable persons on the one hand and on or more persons as financier, also known as limited partners*).
- 2. A partnership can simultaneously be a general partnership in regard of the partners in such general partnership and a limited partnership in regard of the financiers (limited partners)*).
- 3. A limited partnership shall have no capital divided into stocks (shares).

*) It is possible to form a limited partnership with only one general partner and one or more limited partners. In such event only the general partner is liable for the debts entered into in the pursuance of the business of that limited partnership. When the general partner has assets attributable to the limited partnership, these assets make out the community of property of the limited partnership, so that the creditors of the limited partnerships, although that partnership only has one liable general partner, may recover their claim with priority over the personal creditors of that partner from the property of the limited partnership. The property of the limited partnership still constitutes a separate property which is disconnected for this purpose from the personal property of the general partner. It is allowed that a Closed Corporation acts as the sole general partner while the natural person holding all shares in that Corporation is the limited partner of the partnership.
**) When a limited partnership was two or more general partners, beside one or more limited partners, the position of the general partners mutually is the same of the general partners in a general partnership. So, in that sense, it is possible that within a limited partnership one has to distinguish a general partnership consisting of all general partners and the limited partnership consisting of all general partners and all limited partners.

Article 20 Com. Code - Restrictions for a limited partner
- 1. Except for what is provided in Article 30, paragraph 2, of the Commercial Code, the name of the limited partner may not be used in the separate name of the partnership.
- 2. Such partner may not perform any act of management or administration, nor function in or on behalf of the operations of the partnership, not even by virtue of a procuration (power of attorney).*)
- 3. He shall not contribute to the damage any further than for what he has contributed or still has to contribute to the partnership, without being compelled to return the profits distributed already to him.**)

*) This means also that a limited partner cannot be employed as employee of the partnership.
**) The limited partners are not liable towards the creditors of the partnership. The contribution they have made at the start of the limited partnership, is lost when the partnership goes bankrupt. Insofar as a limited partner has not paid up the contribution that he had to pay, the missing contribution may still be claimed from him. Apart from that, the limited partner cannot be held liable for any debts of the partnership. Where the partnership in the course of time has distributed profit to the limited partners, these distributions do not have to be paid back in case of a bankruptcy or foreclosure of the partnership. In other words, the creditors of the partnership are not allowed to recover their claim from the distributions made to the limited partners.

Article 21 Com. Code - Limited partner may become joint and several liable
The limited partner who has broken the rules of Article 20, paragraph 1 and 2, shall become joint and several liable for all debts and obligations of the partnership*).

*) Where a limited partner has acted towards the outside as if he was a general partner, for instance because his name is used in the partnership name or because he has been active in the business of the partnership, he shall become joint and several liable, just as a general partner, for all debts and obligations of the limited partnership.

Article 22 Com. Code - Formal requirements for a general partnership
General partnerships must be entered into by authentic (notarial) or private deed, although the absence of such deed cannot be invoked against third parties.

Article 23 Com. Code - Registration in the commercial register
The partners in a general partnership must cause the registration of the general partnership in the commercial register in accordance with the statutory provisions applicable for such registration*).

*) A limited partnership must be registered as well in the commercial register, but the identity of the limited partners shall not be disclosed therein. Since a several years also a professional partnership has to registered in the commercial register.

Articles 24 – 28 Commercial Code [repealed on 15 March 1921]

Article 29 Com. Code - Legal effects when the required registration is absent
As long as a general partnership has not been registered in the commercial register, it will be regarded towards third persons as comprising all operations, entered into for an indefinite period of time and excluding none of the partners to act in the name and on behalf of the general partnership or to sign in its name.

Article 30 Com. Code - Names of the partners to be used in the partnership name
- 1. The separate name of a general partnership may, either by virtue of the contract or, if the former partner whose name appeared in the separate name of the partnership has explicitly given his consent to do so, or, in case of death of a partner and his heirs do not oppose to this, be kept by one or more partners who, as an indication that that name is kept, must draw up a deed and cause its registration in the commercial register in accordance with the statutory provisions for such registration.
- 2. The provisions of Article 20, paragraph 1, of the Commercial Code, do not apply if a partner has seceded from the general partnership and has become a limited partner*).

*) The name of a limited partner may not form a part of the partnership name. But when a general partner, whose name appeared (also) in the partnership name, steps back to continue his involvement in the partnership as a limited partner, his name does not have to be deleted from the partnership name.

Article 31 Com. Code - Data to be registered into the commercial register
A dissolution of a general partnership effected prior to the moment set for the ending of the partnership in the contract, or through an abandonment (waiver) or termination, and all alterations made to the initial contract, as far as they are of interest for the position of third persons, have to be registered in the commercial registers.

Article 32 Com. Code - Winding up of a dissolved general or limited partnership
- 1. In the case of a dissolution of the partnership, the partners who had the right of management and administration shall wind up (liquidate) the property and operations of the former partnership in the name and on behalf of that partnership, unless the contract provides otherwise or unless the joint partners, to the exclusion of the limited partners, have appointed another liquidator by a majority of votes by call.
- 2. Where the votes are equal, the District Court shall give such an order as it deems fit for the dissolved partnership

Article 33 Com. Code - Right of the liquidators to claim additional payments
Where the property of the dissolved partnership is not sufficient to pay all due and demandable debts of the partnership, the persons charged with the winding up (liquidation) may claim additional means from each of the partners in accordance with his share in the partnership, which means then have to be contributed by them to the partnership.

Article 34 Com. Code - Provisional distribution of financial means that are not required for the winding up
The financial means that can be missed during the winding up (liquidation) from the partnership’s financial assets, shall be divided provisionally among the partners.