1896de Book2 Chapter07 Title14

GERMAN CIVIL CODE OF 1896

• Based on the English Translation by: Wang, Chung Hui (1907). The German Civil Code, translated and annotated with historical introduction and appendices. London: Stevens and Sons. [available on Archive.org]

BOOK II. Law of Obligations.

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Chapter VII. Particular Kinds of Obligations.

Title XIV. Partnership.

Section 705.

• By a contract of partnership the partners bind themselves mutually to promote the attainment of a common object in the manner specified by the contract, e.g., to make the contributions agreed upon.

Section 706.

• [I] In the absence of a contrary agreement, the partners shall make equal contributions.
• [II] If fungible or consumable things are to be contributed, it is to be presumed, in case of doubt, that they become common property of the partners. The same rule applies to non-fungible and non-consumable things if they are to be contributed according to a valuation which is not intended merely for the distribution of profits.
• [III] The contribution of a partner may also consist in services to be rendered.

Section 707.

• A partner is not bound to provide an increase of the contribution agreed upon, nor to make up the capital diminished by losses.

Section 708.

• A partner, in the fulfilment of the duties imposed upon him, is responsible only for such care as he is accustomed to exercise in his own affairs.

Section 709.

• [I] The management of the affairs of the partnership belongs to all the partners in common; for every affair the consent of all the partners is necessary.
• [II] If, according to the contract of partnership, the majority of votes is to decide, the majority shall, in case of doubt, be reckoned according to the number of the partners.

Section 710.

• If, in the contract of partnership, the management of affairs is entrusted to one partner or to several partners, the other partners are excluded from the management of the business. If the management of the business is entrusted to several partners the provisions of 709 apply mutatis mutandis.

Section 711.

• If, according to the contract of partnership, the management of affairs belongs to all or to several partners in such manner that each is entitled to act alone, then each may oppose the undertaking of any affair by another. In case of opposition the affair must be left undone.

Section 712.

• [I] The authority conferred upon one partner by the contract of partnership to manage the business may be withdrawn from him by a unanimous resolution, or where, according to the contract of partnership the majority of votes decides, by a majority resolution of the other partners if a grave reason exists; such a reason is, e.g., gross breach of duty or incapacity for the proper management of business.
• [II] The partner may also on his part resign the management of the business if a grave reason exists; the provisions of 671, pars. 2,3 applicable to mandate apply mutatis mutandis.

Section 713.

• The rights and obligations of the managing partners are determined according to the provisions of 664 to 670 applicable to mandate, unless a contrary intention appears from the partnership relation.

Section 714.

• Where the authority to manage the business belongs to one partner according to the contract of partnership he is also authorized, in case of doubt, to represent the other partners in respect of third parties.

Section 715.

• If, in the contract of partnership, one partner is authorized to represent the other partners in respect of third parties, the representative authority may be withdrawn only in conformity with 712, par. 1; and if it has been conferred in connection with the authority to manage the business, it may be withdrawn only in connection with such authority.

Section 716.

• [I] A partner may, even if he is excluded from the management of the business, personally inform himself of the affairs of the partnership; inspect the business books and papers of the partnership; and from them draw up a summary statement of the condition of the partnership property.
• [II] An agreement excluding or limiting this right does not prevent its exercise, if there is reason to suspect dishonest management of the business.

Section 717.

• The claims which the partners have against each other arising from the partnership relation are not transferable. Claims belonging to a partner arising from his management of the business, where their satisfaction can be demanded before liquidation, and claims to a dividend and to what accrues to a partner in case of liquidation are excepted.

Section 718.

• [I] The contributions of the partners and the objects acquired for the partnership through the management of the business become common property of the partners (i.e., partnership property).
• [II] Partnership property includes also what is acquired by virtue of a right forming part of the partnership property, or as compensation for the destruction, damage, or deprivation of an object forming part of such property.

Section 719.

• [I] A partner may not dispose of his share in the partnership property, or in the several objects belonging thereto; he is not entitled to demand partition.
• [II] A debtor may not set off a claim which he has against a single partner against a claim which belongs to the partnership property.

Section 720.

• The fact that a claim acquired under 718, par. 1, belongs to the partnership property does not avail against the debtor until he has knowledge of such fact; the provisions of 406 to 408 apply mutatis mutandis.

Section 721.

• [I] A partner may not demand a balancing of accounts and the division of profit and loss until after the dissolution of the partnership.
• [II] If the partnership is of more than one year's duration, in case of doubt the balancing of accounts and division of profits shall be made at the end of each business year.

Section 722.

• [I] If the shares of the partners in profit and loss are not specified, each partner has an equal share in the profit and loss, without regard to the kind and amount of his contribution.
• [II] If only the share in profit or in loss is specified, in case of doubt the provision applies to profit and loss.

Section 723.

• [I] If a partnership is not entered into for a fixed time, every partner may at any time give notice of its dissolution. If a time is fixed, notice of dissolution may be given before the expiration of the time if a grave reason exists; such a reason exists, e.g., where another partner wilfully or by gross negligence commits a breach of an important duty imposed upon him by the contract of partnership, or where the performance of such a duty becomes impossible. Under the same conditions, if a term of notice of dissolution is fixed notice may be given without observance of such term.
• [II] Notice may not be given at an improper time unless a grave reason exists for the improper notice. If a partner gives improper notice without such reason, he shall make compensation to the other partners for any damage arising therefrom.
• [III] An agreement whereby the right of giving notice is excluded or limited contrary to these provisions is void.

Section 724.

• If a partnership is entered into for the lifetime of one of the partners, notice of its dissolution may be given in the same manner as in the case of a partnership entered into for an indeterminate time. The same applies if a partnership is tacitly continued after the expiration of the fixed time.

Section 725.

• If a creditor of one partner has levied judicial attachment on the share of the partner in the partnership property, he may give notice of the dissolution of the partnership without observance of any term of notice, unless his title in the debt is only provisionally executory.
• [II] So long as the partnership exists the creditor may not enforce the rights of the partner arising out of the partnership, with the exception of the claim to a dividend.

Section 726.

• A partnership is dissolved if the object agreed upon has been attained or its attainment has become impossible.

Section 727.

• [I] A partnership is dissolved by the death of one of the partners, unless a contrary intention appears from the contract of partnership.
• [II] Where the partnership is dissolved by the death of one of the partners the heir of the deceased partner shall without delay give notice of the death to the other partners, and shall, if there is danger in delay, carry on the affairs entrusted to the deceased by the contract of partnership until the other partners in common with him can make other arrangements. In the same manner the other partners are bound to temporarily carry on the affairs entrusted to them. The partnership is to such extent deemed to be continuing.

Section 728.

• A partnership is dissolved by the institution of bankruptcy proceedings against the property of one of the partners. The provisions of 727, par. 2, sentences 2 and 3, apply.

Section 729.

• Where a partnership is dissolved otherwise than by notice of dissolution, the authority to manage the business conferred by the contract of partnership on one partner is, nevertheless, deemed to be continuing in his favour, until he knows or ought to know of the dissolution.

Section 730.

• [I] After the dissolution of a partnership liquidation takes place among the partners in respect of the partnership property.
• [II] For the winding up of current affairs, for the taking up of new affairs necessary thereto, and for the preservation and management of the partnership property, the partnership is deemed to be continuing so far as is necessary for carrying out the object of the liquidation. The authority to manage the business which one partner has under the contract of partnership is, however, extinguished on the dissolution of the partnership, unless a contrary intention appears from the contract; the management of the business belongs, from and after the dissolution, to all the partners in common.

Section 731.

• The liquidation takes place, in the absence of a contrary agreement, in accordance with 732 to 735. For the rest the provisions relating to community of ownership apply to the partition.

Section 732.

• Objects which a partner has made over to the partnership for use shall be given back to him. He may not demand compensation for an object which has been destroyed or damaged by accident.

Section 733.

• [I] Out of the partnership property shall first be settled the common debts, including those debts which, in respect of the creditors, are apportioned between the partners, or for which the other partners are liable as debtors to one partner. If a debt is not yet due or is contested, the amount necessary for its settlement shall be reserved.
• [II] Out of the partnership property remaining over after the settlement of the debts the contributions shall be returned. For contributions which did not consist in money, their value at the time they were made shall be substituted. For contributions which consisted in services or in the transfer of the use of an object compensation may not be demanded.
• [III] For the settlement of the debts and the return of the contributions the partnership property shall be converted into money so far as necessary.

Section 734.

• After the settlement of the common debts and the return of the contributions the residue, if there is any, accrues to the partners in proportion to their shares in profit.

Section 735.

• If the partnership property is not sufficient for the settlement of the common debts and the return of the contributions, the partners are responsible for the deficiency in the proportion in which they have to bear the losses. If the contribution due from one of the partners cannot be obtained from him, the other partners shall bear the deficiency in the same proportion.

Section 736.

• Where it is provided in the contract of partnership that if one of the partners gives notice of dissolution or dies, or if bankruptcy proceedings are instituted against his property, the partnership shall continue among the other partners, then in the event of such an occurrence such partner retires from the partnership.

Section 737.

• Where it is provided in the contract of partnership that if a partner give notice of dissolution the partnership shall continue among the other partners, a partner may be removed from the partnership in respect of whom a circumstance occurs which, according to 723, par. 1, sentence 2, entitles the other partners to give notice of dissolution. The right of removal belongs to the other partners in common. The removal is effected by a declaration made to the partner to be removed.

Section 738.

• [I] If a partner retires from the partnership, his share in the partnership property accrues to the other partners. They are bound to return to the retiring partner, in conformity with 732, the objects which he has made over to the partnership for use; to release him from the common debts; and to pay to him what he would have received in liquidation, if the partnership had been dissolved at the time of his retirement. If common debts are not yet due, the other partners may give security to the retiring partner, instead of releasing him.
• [II] The value of the partnership property shall be ascertained, so far as necessary, by means of appraisement.

Section 739.

• If the value of the partnership property is not sufficient to cover the common debts and the contributions, the retiring partner shall be responsible to the other partners for the deficiency in the proportion of his share in losses.

Section 740.

• [I] The partner who has retired shares in the profit and loss which result from the affairs pending at the time of his retirement. The other partners are entitled to wind up these affairs in such manner as appears to them most advantageous.
• [II] The partner who has retired may, at the end of each business year, require an account of the affairs wound up in the meantime, payment of the amount due to him, and information concerning the condition of still pending affairs.