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13 March 2006
A simple partnership pursuant to Articles 530 and following of the Swiss Code of Obligations is a contractual relationship between two or more persons to attain a joint purpose with joint endeavours or means. In Switzerland, the simple partnership is often chosen if two or more persons plan to carry out a single project (eg, a construction project or a concert), but it can also be used to establish a longer working relationship (eg, two doctors who decide to practise in a common medical practice). Often, the partners to the simple partnership govern their relationship with detailed contracts which specifically address issues such as who is entitled to act with management authority or to represent the simple partnership. In case the partners do not address an issue, the provisions of the Code of Obligations can be drawn upon.
With regard to agency, Article 543, Paragraph 3 of the Code of Obligations states that an authorization of any individual partner to represent the partnership or all of the partners to third parties is presumed as soon as he or she has been granted management authority. According to Article 535 of the Code of Obligations, all partners of a partnership are entitled to participate in management to the extent that it has not been delegated exclusively to one or more partners, or to third parties by contract or resolution. Furthermore, if all or some partners are in charge of management, each may act on behalf of the partnership without the concurrence of the others. However, each of the other partners in charge of management has the right to prevent an act by raising an objection before it is completed. In addition, the law provides that the consent of all partners is required for the appointment of a general representative and for legal acts which go beyond the ordinary scope of the joint business, except in cases of imminent danger (Article 535, Paragraphs 1 and 2 of the Code of Obligations).
Provided that there are no resolution or contractual obligations to the contrary, a partner who is granted management authority is entitled to represent the partnership to third parties for acts which are within the ordinary scope of the joint business.
The Supreme Court recently decided a case which involved the question of whether a partner in a partnership had acted within or beyond the ordinary scope of the partnership's business and whether the partner's actions had been binding on the partnership.(1) The case involved two partners who came together in a simple partnership to organize and arrange concerts. To finance the partnership, both partners had to make contributions in cash to the partnership. One partner entered into a loan agreement with a third party in order to acquire the capital. The loan agreement between the lender and the partner stated that:
For further information on this topic please contact Markus Dörig or Philipp Schaller at Badertscher Dörig Poledna by telephone (+41 44 266 20 66) or by fax (+41 1 266 20 70) or by email (firstname.lastname@example.org or email@example.com).
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