10 To Bind the Principal in a Contract of Partnership Every agreement by the

10 to bind the principal in a contract of partnership

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(10) To Bind the Principal in a Contract of Partnership Every agreement by the agent on behalf of the principal which has the effect of obliging the principal to contribute money or industry to a common fund with the intention of deriving profits therefrom would be unenforceable without a special power of attorney having been previously given to the agent, for it in effect makes the principal a partner in a partnership. (Art. 1767). (11) To Obligate the Principal as a Guarantor or Surety Under Article 2047 of the Civil Code, by the contract of guaranty, the guarantor binds himself to fulfill the obligation of the principal debtor in case the latter should fail to do so; and if the person binds himself solidarily with the principal debtor, he becomes a surety under a contract of suretyship. Therefore, under paragraph numbered 11 of Article 1878, no contract of guaranty or surety is enforceable against the principal when it has been entered into by an agent who possesses no special power of attorney to do so It has been held that a contract of guaranty or surety cannot be inferred from us of vague or general words of commitment. Thus, the authority given by the corporation to its agent to approve a loan up to P 350,000 without any security requirement does not include the authority to issue guarantees for any amount. BA Finance Corp. v. Court of Appeals , 211 SCRA 112 (1992). Thus: A power of attorney to sell or lease the property of the principal with the provision that empowers the agent "to perform and execute all and every lawful and reasonable act as fully and effectively as I might or could do if personally present," cannot be construed to include the power to enter into a contract of guaranty to bind the principal. Director of Public Works v. Sing Juco , 53 Phil. 205 (1929) . A power of attorney to loan money does not include the implied power to make the principle a surety for the payment of the debt a third person. Bank of P.I. v. Coster , 47 Phil. 594 (1925) . 49
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It should be recalled that under Article 1403[2][b] of the Civil Code, a contract of guaranty is unenforceable unless it is made in writing. Consequently, even when the agent has the requisite special power of attorney to enter into a contract of guaranty in behalf of the principal, the result contract would be unenforceable if not reduced in writing. (12) To Create or Convey Real Rights Over Immovable Under paragraph numbered 12 of Article 1878, an agent cannot, in the name of the principal, create or convey real rights over immovable property without being possessed of a special power of attorney; otherwise, the resulting contract would be unforceable against the principal. The paragraph intends to cover dealings on immovable property outside of the sale of a piece of land or any interest therein covered specifically under Article 1874, and contracts of purchase of a piece of land, and contracts of donations of every type of immovable property.
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